Starting with the EU referendum decision last year, how many of us have witnessed such a combination of global economic and political events which have created such high levels of business uncertainty.
Very few of us have ever experienced a situation like this in our business lives, yet many people from the procurement and supply chain professions believe it will fall on them to manage the inherent risk and navigate their organisations through it.
As we’ve asked in previous editions of our quarterly report on the procurement job market, do the skills exist in the profession to get this right?
It’s a question we’ve asked in the past about the implementation and use of spend management tools and now we ask it again about supply chain risk, currency hedging and all the associated considerations.
One potential source of comfort is the increasing power of technology to help organisations manage the aforementioned risk in their supply chains. For example, the latest generation of the Ariba solution will enable organisations to dig deeper into their supply chains providing all sorts of benefits.
Again the challenge is to find people with the knowledge and/or experience to really harness the power of these solutions.
Some of these issues were highlighted in the Recent Deloitte CPO Study In our opinion, this is one the foremost research studies for the procurement sector and several of their findings tie in with our comments above. Most notably Deloitte flag the following:
- The growing importance of risk management as a procurement priority
- 60% of procurement leaders do not believe they have the internal capabilities to deliver on their vision
- Talent: Whilst there is an increased requirement for leadership and digital skills there is limited change in the investment or approach to close the talent gap. With improvements in technology enabling automation, the skills of the past will not deliver the needs of the future – organisations should look to attract and develop the next generation of procurement leaders who will act as innovators, challengers, and digitally minded-thinkers.
“The skills of the past will not deliver the future” as Deloitte put it is a message we have been conscious of for some time. The profession needs to grasp this message, invest in training and development if its to continue to thrive in an ever changing world.
At Edbury Daley we work with companies who need to hire professionals with experience of leading edge technology solutions and the more advanced procurement and supply chain skills we refer to above. As a result of this work and our regular research, we know where to find and how to engage the best people in these areas in conversations about potential career moves.
If you need to hire these skills, we are the specialist recruiters who can help you succeed in a competitive market. Contact us via firstname.lastname@example.org
We’ve observed significant growth in salaries in these sectors in the past three years and we’ve attributed much of that to the supply and demand equation in markets characterised by skills shortages.
However in the final quarter of 2016 we started to notice some changes of mentality in the market as some organisations responded to the climate of political and economic uncertainty.
Given our extensive network in these sectors we are uniquely well placed to research this subject and spent part of January 2017 questioning business leaders in our network about their approach to end of year pay reviews, basic salary and bonus differentials. We specifically asked if Brexit, Trump or any other factors had a tangible impact on their decision making.
We have received an interesting range of responses to the question “has the current economic climate had any impact on your decision making around salaries and bonuses for 2017?” Here are a selection of the responses that reflect the overall picture:
Spend Management Technology
Several cases here which demonstrate the range of performance across the sector:
Case 1 – Spend Analytics Company
“We are doing really well so growth is very much on the agenda and there has been no real Brexit impact on our sales. However our overseas salary costs for the team have gone up because of the weakness in the pound so we are looking at reshoring some of that team.
What has changed is that we are giving relatively small pay rises (in line with inflation and no more generally) but offering the opportunity to earn more through better bonus schemes. We are moving away from purely annual to monthly, quarterly and yearly bonuses, the first two of which are based on personal and the yearly is based on company performance. This has two benefits – it mitigates against the rising salary costs and it encourages certain key behaviours that we want to develop.
So in summary the Brexit impact has increased our salary costs due to weakness of pound and led to realignment of fixed versus variable remuneration.”
Case 2 Mid Tier Spend Management Company – UK focused
“We haven’t experienced any real change as yet, we think it’s more likely next year. We’ve had a great year so most people have got 100% of bonus capability. There are pay reviews to come, so any early signs in 2017 maybe factored in but no specific concerns as yet.”
Case 3 Mid Tier Spend Management Company – International
“We missed several key targets last year, largely because we had to address some issues with our product, so pay rises weren’t really on the agenda anyway, but there has still been a tangible shift towards greater bonuses to keep sales people motivated without exposing the business to higher basic salaries.
Client retention is at the top of our agenda, so we are heavily bonused for that.”
Case 4 European arm of a US owned Spend Management Company
“Nothing has been announced in terms of any official policy, however its noticeable that the payment of ad hoc bonuses has increased for high performers whilst base salaries have stayed the same.”
Case 5 Mid Tier Spend Management Company – UK focused
We’ve made a small number of redundancies because it’s clear that P2P deals aren’t progressing through the pipeline the way they were a year or so back. Analytics and invoicing are our strongest areas currently. Also professional services is doing quite well which suggests customers are sweating what they’ve got rather than going to market for new technology. We also saw signs of declining overall investment in 2016.” However this company hasn’t materially altered it’s approach to salaries.
Further Anecdotal Evidence
We know from our conversations with business leaders and established sales people that the bigger players are enjoying really healthy growth, and several of the sales people are earning impressive bonuses based on exceeding ambitious sales targets.
The market leaders continue to hire aggressively across Europe, both from direct competitors and other neighbouring sectors suggesting they remain bullish about their growth prospects.
On balance we believe the sector remains in rude health as companies with a strong product offering and clear go to market strategy continue to thrive. That said, there is clear evidence of keeping costs under control and a greater desire to retain staff through better performance related pay rather than big increases in fixed pay.
Big multi-disciplinary consultancies have, in our opinion, been falling behind on salary and particularly bonus numbers for some time now but continue to command a lot of loyalty from their staff. However it’s increasingly difficult for them to hire externally at Senior Consultant, Manager and Senior Manager grades because many other consultancies and corporates are paying better salaries.
Furthermore in procurement technology consulting some of the smaller niche players are consistently winning projects against bigger consulting players on the strength of greater expertise and agility combined with lower costs, so this is something they have to contend with.
One of our regular niche consulting customers in the technology sector told us:
“We had a really good year in 2016 and our pipeline is as strong as ever so there’s no need for us to factor any wider concerns into our salary and bonus decisions at this stage. Our business has a nice spread across Europe, so we expect to be insulated from Brexit. Also we’re not really involved in the US so we can’t see any direct impact from Trump at the moment.”
A concern for this type of organisation is that their staff are being targeted by the bigger consultancies so staff retention is a key driver. Thankfully they are in a position where they can reward their staff well which often makes them unaffordable for the bigger consultancies who have rigid salary bands.
If you would like to discuss any of the issues raised in this post or want up to date salary advice for yourself or your team, please contact us via email@example.com
One of our Directors Peter Brophy has previously worked as Head of Recruitment / Resourcing in organisations such as Rolls-Royce, BDO and Proxima as well as for Manpower the global recruitment and workforce solutions business. He has also worked within specialist Executive Search and Selection recruitment businesses. He has experienced and implemented different recruitment models and processes across a number of sectors at a senior level giving a deep insight into the strengths and weaknesses of these from both sides of the fence.
Here he offers his expert opinion on the merits of the various recruitment models available to large organisations.
Edbury Daley is considered by many to be the leading specialist recruiter in the Spend Management sector. We have a long established presence in the UK market along with significant experience of recruiting on behalf of our clients across Europe, the US and Asia.
Our new website is designed to offer everything you need to know about the sector, whether it be as a hiring manager or with the emphasis on your own future career options.
We cover the latest industry news and jobs along with helpful advice on recruiting and looking for new career opportunities.
You can take a look at the new site here – http://www.spendmanagement.co.uk/
Why A Quality Focus To Recruitment Makes A Difference
One of our key clients is a rapidly growing Spend Management Company that is gaining market share because of the quality of both its product and its people.
It recognises that to attract the best talent and to retain its staff it has to give them exciting career paths, and needs to send a clear message to the market place so that talented individuals understand the opportunities they can provide.
They understand the value that we can bring by acting as their ‘ambassadors’ in the market and the value we add by both Talent Identification and also by how we present a consistent and compelling message about their business.
They have invested considerable time with us to jointly build the relationship so that we fully understand their business and the skills and attributes they require and the kinds of opportunities they offer. They recognise that they need an external partner who can sell their brand and position them well and not just source CV’s. They need a business that really understands a very competitive candidate marketplace.
How Does This Approach Make A Difference?
For one Senior Consultant role we had two offers rejected – one was very aggressively counter offered by their current employer and the other candidate was offered £10k more basic salary elsewhere.
We realised that market conditions may have changed so we undertook some salary benchmarking research on their behalf.
It is easy and all too common for recruiters to drive salary increases and to claim that a client needs to raise their pay bands – we will always advise a client based on real data so that they can make an informed decision.
In this situation based on our research and a full open discussion with the client they reviewed and raised their basic salaries and with them we refined the message we took to the market – the role has now successfully been filled as a result.
Based on this success this approach was adopted further and we have since successfully filled a number of other roles and have candidates in reserve for future appointments such as:
- Account Manager
- Pre- Sales Director
- Senior Analyst
We are currently working on four more roles for this client
It is clearly a success story for us and the client. It proves that even when facing incredibly competitive market conditions because we work together and they trust our advice we have some superb recruitment success and have together driven and produced market leading KPI’s
- Our interview to offer rate this year of 75%.
- Our interview to appointment rate this year is 50%
- Our interview to appointment rate since our client realigned their salary bands using our research is 80%
The Lesson Learnt?
If your organisation achieved these levels of performance in your recruitment process how much time and money would be saved?
Yes we usually cost more than those rates typically quoted on many PSL’s but our value and advice on key issues like process, salary, availability of relevant skills and market conditions makes a significant difference to the actual cost.
Equally our expertise is understood and recognised by candidates and this allows us to influence and persuade the best people to consider leaving their current jobs to join a new team when others may not. Detailed sector knowledge is critical, particularly in a job market like procurement technology.
Ultimately to save time and money and to add real value, you must invest time together with a business that knows the market. We seek to understand your recruitment challenges and give credible advice so that we can deliver candidates that fit your brief.
So ask yourself this, do you want a low price/high volume option for your recruitment or do you want value and a source of competitive advantage?
If it’s the latter, I look forward to hearing from you.