Hoping for a big raise? Get technical training!
By Anne M Porter -- Purchasing, 4/23/1998
Against a backdrop of strong economic expansion and a national civilian unemployment rate of only 4.6%, the availability and creation of new procurement jobs appear surprisingly low, according to a recent Purchasing survey.Despite persistently strong economic growth, the survey detects a hearty resistance to adding new procurement jobs. Fewer than half of the purchasing organizations surveyed report hiring in the past twelve months and only 29% have plans for hiring in the coming 6-9 months. While the survey questions don't distinguish between job creation and replacement hiring, there are other indications that job creation in procurement remains sluggish. For example, only one out of four procurement professionals feels that new hiring is necessary to handle current workloads.
Resistance to new job creation in procurement seems to have two main sources--one negative, the other positive. On one hand, the scars of radical downsizing are still in evidence among many managers. While staff-level buyers may feel overworked, many say management is extremely hesitant to enter another hiring-firing cycle. The PA for a chemicals firm in Kentucky says: "Workload is more than our current staff can handle, but management will not allow me to hire more staff due to downsizing and cost reductions." A purchasing manager in Lancaster, Pa., tells a similar tale: "We are three times as busy, but upper management will only consider part-time support staff."
On a more positive note, however, many say technology investments and process-improvement programs have begun to reap real efficiencies in procurement. The PM for a manufacturer in St. Louis, says, "Automation and supplier contracts have reduced the processing efforts required." The PM for a lighting manufacturer in Washington, says, "We are currently implementing new software for manufacturing and purchasing that will speed information flow and consolidate tasks." Another purchasing exec says, "We are finding better ways to do things like using more EDI, faxing orders automatically to suppliers, and moving requisitions through our system more quickly."
Good help is hard to find...
The Federal Reserve's latest Beige Book roundup of regional economic conditions says, "the demand for labor remains strong, with nearly all districts reporting shortages of workers at the entry level and in certain skilled categories." And despite the apparent low rate of job growth in procurement, Purchasing's survey does pick up the threads of this national trend.
For example, among organizations that have recently attempted new hires, slightly more than two-thirds say the available applicant pool has been either moderately tight or very tight. Only 25% rate the purchasing labor pool as comfortable and only 9% say it is somewhat or very loose. What is more, only 6% say people applying for procurement positions are highly qualified for listed jobs. Thirty-nine percent say most applicants are "adequately qualified" versus 52% who say candidates are generally "under qualified but trainable."
...and even harder to keep
Fifty-nine percent of survey respondents cite no recent instances where talented procurement employees have defected for higher paying jobs at other companies. Still, the query does turn up evidence that--in some hot markets--companies are cherry picking people with high-end technical skills.
For example, one Boston-based PM says "software developers have been pirated away to financial institutions." The sourcing manager for a major consumer products firm in New York has witnessed, "lots of turnover," a portion of which he attributes to their SAP training. "This training makes them valuable to other companies." Says another purchasing exec: "Some employees have obtained training and experience with SAP software and have taken their experience to other companies for higher pay." One PA laments the migration of experienced well-trained personnel to higher-paying regions within the state. "After training," he says, "people tend to test the market for better wages. We are located in a low-wage-scale area."
There also is some evidence to suggest that tight labor conditions may be felt more profoundly among the very smallest of companies. Says one Michigan buyer: "Life is very difficult for a small company (fewer than 50 employees) operating close to the Big 3 [automakers]."
Take the money and run
"With labor markets stretched to the limit in many areas, there have been reports of rather large wage increases--although this is by no means consistent across all districts," says the Fed Beige Book summary. This same dichotomy is reflected in Purchasing's survey.
For example, a purchasing agent for a furniture maker in Tennessee says, "In the last 12 months, we have lost 50% of buyers to competitive salary packages." A director of purchasing in Vernon Hills, Ill., says he has seen employees leave to pursue "20%-30% more pay." An MRO buyer for a major office-equipment manufacturer in Calif., says, "With the economy getting better, people are leaving the company and making more money."
Michael Morgan, director of purchasing for Sea World of Florida in Orlando, says "The job market in Orlando is very hot." A PM from Erie, Pa., has seen people leave to pursue, "high pay at other firms."
Still, such isolated examples do not yet add up to a national trend. Of the total survey pool, only 6% say procurement salaries have come under strong upward pressure in recent months. Twenty-nine percent cite modest upward pressure on salaries, versus 30% who say there is no upward pressure, and 9% who have actually witnessed salary attrition in the regions.
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