Finding the talent to staff an international procurement office (IPO)
Fourth in a series
Arvid Pedersen -- Purchasing, 11/4/2004 7:00:00 AM
Staffing and Recruitment:
One of the many challenging tasks in organizing an International Procurement Office (IPO) is effectively staffing the office with the optimal skill sets and talent. Although every organization, whether domestic or international in nature must ensure that the most qualified and talented staff are hired, working across international borders presents some additional challenges.
IPO Management:
Executive Leadership. Quite often the IPO executive leader is identified or developed in concert with the IPO site selection process. While this is a logical process, care must be taken that the site evaluation process is conducted in a fair and objective basis, and not subject to nationalistic or other personal bias that could influence this decision. Also, involving the company stakeholders in the hiring of the IPO executive leadership and planning process creates a greater level of buy-in to the organization, ensuring a greater chance of success. Do you want to say anything about reporting relationships, either to back home purchasing supervisors or local operating company authorities? They are also stakeholders/evaluators of the IPO effectiveness, and can play a large part in its success or failure.
Candidate Qualifications. There are numerous viewpoints in regards to the "ideal" profile of an IPO executive. Although most companies agree on the goal of localization to the greatest degree possible, there are numerous opinions on the hiring of local management. If the IPO is to be a regional office, identifying which nationality is almost an impossible task. In the case of Asia, there are significant cultural differences between China, Korea, and Japan, where respect for (and historical relationships with) ethnic backgrounds play a major part in management effectiveness. Age is also a factor as "elder" managers are held in higher regard due to the perceived wisdom and social position that is attained over an extended career. If the IPO is to have regional responsibility, expatriate management from the US, Europe, or Australasia can work across cultural borders more effectively, as cross-cultural management can often be more easily accepted from "foreigners".
Salary and Benefits. Supply Managers with experience in Emerging Markets are in short supply, resulting in ever rising salary levels. A study of professional salaries conducted by the American Chamber of Commerce in Shanghai found that supply management salaries increased 28% in 2003.
IPO Staff:
Staffing the IPO with local buyers and quality engineers has become somewhat easier as the talent pool has increased in recent years. However salaries have risen quickly for English-speaking talent. Retention is a serious problem, as it is difficult for the HR organization in the home country to understand or accept the rate of salary increases. In order to address the challenge of retaining experienced employees, organizations must be creative in offering incentives. Schemes such as offering loans for housing purchases, deferred bonuses, foreign training opportunities, and other initiatives can help address this issue.
Concluding Considerations:
Even more so then in domestic operations, identifying, hiring, and retaining IPO management and staff is critical to its success. Cultural differences, language skills, local business environment, and lack of networks with the home office management can be a challenge. There are many hidden cost and performance issues to consider when making a decision whether to hire an expatriate manager or local management. It is a good idea to have a home office mentor to provide guidance in the repatriation process upon the end of the term.
Retaining staff can also be a large challenge as trained supply management and quality engineers can command salary premiums in emerging markets. Keeping home office HR management well informed of salary level movements as well as using creativity in offering incentives can help.
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