Introduction
Over the past five years, much has been written on the topic of talent management and the importance of implementing an effective talent management program to retain and develop a workforce capable of meeting the challenges of an evolving economy. There is a wealth of online resources and information on talent management issues, ranging from recruitment to developing and maintaining a high-performance workforce. How-ever, companies still struggle with how to create opportunities for highly talented indi-viduals, recognizing that tomorrow’s supply management employee will likely require a different set of skills to operate in a different economic climate. Talent management no longer means simply hiring the most likely candidates to fill job openings. Human resource organizations are still integral to the talent management solution, but effective supply management organizations are starting to consider talent management to be a viable business strategy. Talent management, like other evolving business strategies, will adapt to shifting global business dynamics and sourcing locations; will integrate highly efficient tools and technologies into the workplace; and will evolve as economic and political climates continuously impact operational processes. When adopting this new business strategy, supply management organizations will require different professional development methodologies and employee retention approaches that recognize genera-tional and geographic differences. Successful enablers will also be effective in recruiting and training talent from developing economies.
Background
In November 2009, CAPS Research published its first benchmarking report on talent management1. The survey and report were developed in collaboration with the Ohio State University Fisher College of Business and Rutgers Business School. The talent man-agement benchmarking report provided detailed information pertinent to recruitment, development, retention, evaluation, compensation and advancement opportunities for supply management employees. Also addressed in the 2009 report is information on
Table of Contents
Introduction . . . . 1 Background . . . . 1 Talent Management 2012 Survey . . . . 2 Benchmark 1 . . . . 2 Benchmark 2 . . . . 2 Benchmark 3 . . . . 2 Benchmark 4 . . . . 3 Benchmark 5 . . . . 3 Benchmark 6 . . . . 3 Benchmark 7 . . . . 3 Benchmark 8 . . . . 4 Benchmark 9 . . . . 4 Benchmark 10 . . . . 4 Benchmark 11 . . . . 5 Benchmark 12 . . . . 5 Benchmark 13 . . . . 5 Benchmark 14 . . . . 5 Benchmarks 15 and 16 . . . . 6 Metric Report . . . . 6 Conclusions . . . . 6 Endnotes . . . . 7A benchmarking survey from ISM, CAPS Research and Zycus identifies current talent
management issues and strategies.
how technology has impacted (and will impact) an organiza-tion’s talent management business strategy.
During a recent CAPS Research event for Fortune 500 chief procurement officers2, two of the world’s leading experts on supply management research — Phillip L. Carter, DBA3 and Robert M. Monczka, Ph.D.4 — identified specific mega-trends that are impacting supply/value chain strategies in this changing decade. Their discussion and presentation was based on supply management research conducted by CAPS Research over the past few years. Their in-depth analysis of various research studies provides insight into the mega-trends and value chain strategies that will be critical for companies to develop in order to cope with external trends and business model changes. Carter and Monczka point out that one of the eight critical supply/value chain chal-lenges that organizations will face in the next decade is talent management. Companies must learn to address a variety of talent management issues, including topics such as supply management career expectations, generational conflict, uneven distribution of supply management talent across dif-ferent global regions, the need for new training/development and retention programs to address generational differences, the potential for labor shortages in developed countries and labor growth in rapidly developing economies.
This key research, along with the earlier (2009) bench-marking research on talent management, set the founda-tion for the most recent benchmarking survey, which was released in February 2012. The metric report published in late March 2012 includes responses from 90 organizations.
Talent Management 2012 Survey
Are there sufficient numbers of new and existing jobs avail-able for supply professionals who are moving forward in their supply management careers or who are new to the profession? What functions in the supply management orga-nization offer the best opportunity for employment? What is the likelihood that my company will outsource or offshore some procurement-related functions? Is there a shortage of supply management talent at my company, and if so, how is my leadership addressing the shortfall in talent? In today’s marketplace, what am I worth to the company?
As noted above, CAPS Research was asked to release a survey on talent management and, where feasible, com-pare some of the outcomes with results from the talent
management survey launched in 2009. In addition, updated information on the role that technology plays in formulating an organization’s talent management business strategy was included in this summary report. Throughout this report are references to both the 2009 and 2012 surveys.
Benchmark 1
On average, the number of supply management employees (SMEs) assigned to the supply management organization account for 2.5 percent of total company employees, with the median percentage at 1.6 percent. This median value closely approximates the average number reported in the November 2011 edition of the CAPS Research Cross-Industry Report of
Standard Benchmarks, which is 1.8 percent.
Benchmark 2
Figure 1 lists various supply management functions that may be included in supply management organizations, and the percent of SMEs assigned to support these functions.
Benchmark 3
Figure 2 shows that more than half of the sample popula-tion (51 percent) reported an increase in the total number of SMEs during the past two years. About 27 percent reported a
decrease, and the remaining 22 percent reported no change.
It is important to note that the total increase reported repre-sents 10.4 percent of the total number of SMEs reported by the survey participants.
Figure 2: Percent of Survey Participants Reporting Their Total Number of SMEs Increased, Decreased or Did Not Change
51.22%
21.95%
26.83%
Percent of Survey Participants Reporting Their Total Numbers of SM Employees Increased, Decreased or Did Not Change
No Change Decreased Increased
Figure 1: Percent of Participants Reporting the Following Functions Are Included in Their Supply Management Organizations, and the Percent of Total SMEs Assigned to Each Function
Accounts Payable Administration Support Contract Administration Logistics Procurement/Purchasing Quality Assurance Risk Management Supplier Relationship Management Other 0%
Percent of SM Orgs. Percent of SMEs Assigned Percent of Participants Reporting the Following Functions are Included in
Their Supply Management Organization, and the Percent of Total SME Assigned to Each Function
Benchmark 4
The survey question corresponding to this benchmark asks, “During the past year, did your organization experience a
talent shortage in any of the functional areas listed?” About 80 percent of the population reported they experienced talent shortages in one or more of the functional areas listed below. In the 2009 CAPS Research Supply Management Development
and Retention Benchmarking Report, only 46 percent of the
survey population reported a talent shortage. Figure 3 shows the percent of the survey population that reported experi-encing shortages in the supply management functions as listed in the 2012 survey.
As noted earlier, all the survey participants reported that procurement/purchasing functions are part of their supply management organizations, and 37 percent of all supply management employees are assigned to support that func-tion. Figure 3 shows that about 56 percent of the survey participants reported experiencing a talent shortage in their procurement/purchasing functions. In contrast, about 77 percent of the participants reported that administrative sup-port is included in their supply management organizations, and less than 10 percent reported experiencing a shortage in their administrative support staff.
Benchmark 5
In response to the question, “Was your organization able to fill all of the open positions with qualified candidates?” about 58 percent of the participants said “yes.” As noted in the 2009 benchmarking report, about 80 percent of the par-ticipants reported they were able to fill open positions with qualified candidates. Although there are some differences in the survey population for each reporting period, the data indicate that it is more difficult to fill supply management-related job openings with qualified candidates today than it was in 2009.
Benchmark 6
Reasons why the survey participants were not able to fill all the open positions with qualified candidates are listed in Figure 4.
Other reasons why the survey participants were not able to fill all the open positions include the following:
•
CFO wanted an ROI before authorizing new positions. My crystal ball was not able to tell me which contracts we would review over the next few years in order to generate firm cost-avoidance numbers, and he would not take his-torical information.•
Difficulties to contract imposed for the <country> legislation.•
Geographic needs not aligned with local talent supply.•
Managing to a reduced budget through open positions.•
Market pressure due to overall increase in hiring in compa-nies like ours and customers hiring these types of resources.•
We have not been able to afford several qualified candidates over the past year or two since their salary expectations were beyond our established salary range for the position.Benchmark 7
This benchmark reports the degree of difficulty survey par-ticipants reported experiencing when filling job vacancies with qualified candidates. Data indicate that it is more dif-ficult to find qualified candidates for more complex tasks such as risk management, quality assurance, procurement/ purchasing and contract administration. About 40 percent of the survey participants reported it was not difficult to find qualified candidates for their organizations’ procure-ment and purchasing function, and 53 percent of the par-ticipants reported that it was difficult or very difficult to do so. This is likely due to the different levels of supply man-agement experience being sought. One company that hired a significant number of new employees during the last year focused on recent graduates for entry-level positions that required little or no practical experience.
Figure 3: Percent of Participants Reporting the Functions Below Are Included in Their Supply Management Organization, and Percent That Reported Talent Shortages in Each
Accounts Payable Administration Support Contract Administration Logistics Procurement/Purchasing Quality Assurance Risk Management Supplier Relationship Management Other 0%
Part of SM Org. Talent Shortages Percent of Participants Reporting the Functions Below Are Included In
Their Supply Management Organization, and Percent That Reported Talent Shortages in Each
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Figure 4: Reasons Given for Not Being Able to Fill All Open Positions
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Lack of Qualified Applicants Hiring Freeze Compensation Other Reasons Given For Not Being Able to Fill All Open Positions
Figure 5 shows the percent of participants who reported it was either not difficult, difficult or very difficult to fill job vacancies with qualified candidates. The expression don’t
know indicates the percent of survey population who were
not aware of any difficulties being encountered.
Benchmark 8
When supply management positions are not filled with quali-fied job candidates, the work is being completed by someone else, the task is being automated or the work is just not get-ting done. There are a number of options a company can consider, and each alternative presents its own set of risks and rewards. For example, some companies have found it worthwhile and cost-effective to invest more heavily in auto-mated tools to offset staffing shortages, outsource certain supply management functions or hire temporary employees. Both the 2012 survey and the 2009 survey asked the partici-pants to rate the importance of different courses of action taken when job positions were not filled with qualified can-didates. Participants rated different choices on a scale of 1 to 5 (1 = not important, and 5 = very important).
When looking at Figure 6, there doesn’t appear to be any sig-nificant change in the degree of importance assigned each of the choices listed. For example, having the flexibility to assign additional work to current SMEs was rated very important in 2012 and 2009 (average = 4.4 in 2012, and average = 4.1 in 2009).
Benchmark 9
A talent shortage may require some organizations to exceed salary guidelines in order to attract qualified can-didates. Survey participants were asked if “normal” salary guidelines were exceeded in both survey years (2012 and 2009). In 2009, 24 percent of the responses indicated salary guidelines were exceeded, and in 2012, 31 percent of the survey population also reported that salary guidelines were exceeded. The participants were also asked to provide the percent that normal salary guidelines were exceeded (1 percent to 5 percent; 6 percent to 10 percent; 11 percent to 15 percent; and more than 15 percent). Figure 7 shows there isn’t a significant difference between the two survey years, but there is an indication that companies have been more willing to exceed established salary guidelines in 2012 to hire qualified candidates.
Benchmark 10
This benchmark provides information on the first of two questions about future demands. The 2012 survey question asked, “In the future, many new demands are expected to be made on supply management. Using a scale of 1 to 5 (1 = highly unlikely, and 5 = highly likely), what is the probable likelihood that each of the following statements will occur Figure 5: Percent of Survey Participants Who Reported That Filling Job
Vacancies Within the Following Functions Was Either Not Difficult, Difficult or Very Difficult
Function Not Difficult Difficult Very Difficult Don’t Know Accounts Payable 100.0% 0.0% 0.0% 0.0% Admin. Support 66.7% 12.5% 0.0% 20.8% Contract Admin. 45.5% 33.3% 9.1% 12.1% Logistics 47.1% 23.5% 5.9% 23.5% Proc./Purch. 40.4% 38.3% 14.9% 6.4% Quality Assurance 37.5% 62.5% 0.0% 0.0% Risk Mgmt. 16.7% 50.0% 16.7% 16.7% Supplier Risk Mgmt. 28.0% 32.0% 4.0% 36.0%
Figure 6: Rating the Importance of Alternative Choices to Complete Work Left Unfinished Due to Talent Shortages
Outsourced the Work Assigned Additional Work to Current Personnel Hired Temp. Personnel With Required Skills Hired Personnel Without Required Skills and Provided Training Transferred Personnel From Other Areas and Provided Training Automated Work to Eliminate the Need for Additional Personnel Work Was Not Completed
0.0 1.0 2.0 3.0 4.0 5.0
Rating the Importance of Alternative Choices to Complete Work Left Unfinished Due to Talent Shortages
2012 2009
Ratings: 1= Not Important, 5 = Very Important
Figure 7: Percent of Organizations That Reported Salary Guidelines Were Exceeded and Percent Above Normal Salary Guidelines
0% 10% 20% 30% 40% 50% 60% 70%
Percent of Survey Population
1-5 percent 6-10 percent 11-15 percent 15 percent or more Percent Where Salary Guidelines Were Exceeded
2012 2009
Percent of Oranizations Who Reported Salary Guidelines Were Exceeded and Percent Above Normal Salary Guidelines
during the next two years (for your company)?” Data in Figure 8 indicate that participants appear to be more likely to increase their use of automated tools and technology rather than outsource supply management job functions. However, most companies reported it highly likely they will need to increase the skill level of their personnel to meet the future demands expected to be placed on their supply management organization.
Benchmark 11
Figure 9 shows how the survey participants responded to our second “crystal ball” question. In this instance, survey partici-pants were asked to respond to six different statements about the increased demands being placed on supply management employees (scale: 1 = highly unlikely, and 5 = highly likely).
Benchmark 12
Participants were asked whether or not their organiza-tions have a formal process in place to measure the skills of their SMEs, such as ADR’s Development Needs Analysis
(ADR DNA™). Overall, only 31 percent of the survey popula-tion reported their organizapopula-tion has a formal process in place. The survey did not ask the participants who reported they do not currently have a formal process in place if they planned on doing so in the next two years. A list of pro-cesses and tools is included in the metric report that cor-responds to this summary report; see page 6 for additional information.
Benchmark 13
The survey participants reported an average of US$982 is spent each year on professional development/training for each SME. Figure 10 shows the data ranging from a high of US$4,333 per person to a low of US$0 per person.
It’s not uncommon for professional development and training spend to be reduced in a downward business economy. An improving economy may signal that additional dollars are budgeted for development and training, but this may not necessarily be the top priority for supply manage-ment leaders. However, as noted in Benchmarks 10 and 11, survey participants rated improved job training and skills development as being of key importance during the next two years, which will likely influence the amount of dollars bud-geted for professional development/training.
Benchmark 14
The survey asked participants to “indicate the extent to which your organization encourages supply management employees to improve their professional skills,” where a score of 1 indicates ”no encouragement” and a score of 5 indicates the organization “highly encourages” individuals to continu-ously improve their professional skills. The data in Figure 11 show that 78 percent of the survey participants believe their organizations encourage (47 percent), or highly encourage (31 percent), their supply management employees to improve their professional skills. At the other end of the scale, 6 percent (2 percent “little encouragement” and 4 percent “no Figure 8: Future Demands on Supply Management Organizations
Statement Average
Rate Likelihood
There is a need to increase the skill level of existing personnel in my supply management organization.
4.22 Highly
Likely Outsourcing of supply management
job functions is expected to increase. 2.16 Likely We will increase our use of automated
tools and technology. 3.82 Likely
Figure 9: Increased Demand on Supply Management Employees
Statement Average
Rate Likelihood
Job/skill levels will be upgraded. 3.85 Likely The number of qualified professionals
on the team will increase. 3.42 Likely
Work will be outsourced to
third-party service providers. 2.18 Unlikely
Supply management employees will utilize new or updated technology to automate certain functions.
3.66 Likely
Supply management employees and responsibilities will be delegated to the business unit level.
1.88 Unlikely
Supply management work will be
offshored. 1.65 Unlikely
Figure 10: Average Professional Devlopment/Training Spend Per Supply Management Employee $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 5 10 15 20 25 30 35 40 45 50 55 60 65 Survey Participants
Average Training Spend
Average Professional Devlopment/Training Spend Per Supply Management Employee
encouragement”) reported their organizations are not offering their SMEs the level of encouragement to improve their job skills.
Benchmarks 15 and 16
These two benchmarks focus on the percent of organizations that actively encourage supply management employees to pursue a professional certification (i.e., CPSM®, CPSD™, CSM™, etc.) and adjust compensation based on this professional certification. The survey asked for this data in two ques-tions, and the metric report provides this information as separate benchmarks. Data were received from 93 percent of the survey population. Every participant who answered the question about “actively encouraging professional certifica-tion” also answered the question about “compensation being adjusted for professional certification.” The bottom line is that 64 percent of the organizations surveyed encourage their supply management employees to pursue a profes-sional certification, and only 19 percent of these companies adjust salaries based on professional certifications. Figure 12 is a side-by-side comparison of the data provided by the
survey participants.
Metric Report
The CAPS Research metric report titled Maintaining a
Tal-ented Workforce in the Supply Management Organization
has been released to all the survey participants and is now posted on the CAPS Research website (www.capsresearch.org). The metric report includes a list of participating companies as well as the following addenda:
•
A list of other supply management functions provided by the survey participants that is included in their supply management organization (see Metric Report Benchmark 2)•
A list of other supply management functions and the total numbers of supply management employees assigned to each (see Metric Report Benchmark 3)•
A list of other functional areas that experienced a talent shortage in the past year (see Metric Report Benchmark 4)•
A list of other reasons for being unable to fill all open positions with qualified candidates (see Metric Report Benchmark 6)•
A list of other processes or tools being used to measure supply management employee skills (see Metric Report Benchmark 12).Conclusions
Key indicators based on different studies and research indicate that supply management organizations are still experiencing, and will continue to experience, a shortage of supply management professionals in the years ahead. Companies reported that the major reason for not being able to fill all open job positions was the lack of qualified candidates.
To remain competitive, companies will need to implement new training and professional development programs to improve their supply management employees’ skills to function in the new economy. As noted elsewhere in this report, most companies reported they have identified the need to increase the skill level of their personnel to meet the future demands expected to be placed on their supply management organization, and these companies are more likely to exceed normal salary guidelines to hire the right level of talent.
Professional certification is valued — but only a small per-centage of survey participants reported that compensation Figure 12: Actively Encouraging Certification and Adjusting Compensation
for Professional Certification
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent
“Yes” Percent“No” Encourages Certification
Percent
“Yes” Percent“No” Adjusts Compensation
Percent of Survey Respondents
Actively Encouraging Certification and Adjusting Compensation for Professional Certification
Figure 11: Encouraging Supply Management Employees to Improve Their Professional Skills No Encouragement Little Encouragement Some Encouragement Encourage Highly Encourage 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Percent of Survey Respondents
Scale: 5 = Highly Encourage,
1 = No Encouragement
Encouraging Supply Management Employees to Improve Their Professional Skills
is adjusted when an employee achieves professional certifi-cation. Most organizations also encourage SMEs to improve their professional skills. CAPS Research believes any suc-cessful approach to resolving talent management skill issues will require companies to consider different skill sets including cross-cultural skills, analytical skills, busi-ness management skills and leadership skills. These factors should, in turn, strongly influence the decision to increase spend for professional development, training programs and skills development.
More than half the companies participating in the 2012 talent management survey reported it was difficult or very difficult to hire qualified candidates for their organizations’ procurement and purchasing function. This is likely due to the different levels of supply management experience being sought. Moreover, companies reported they expect the job/ skill levels within their supply management organizations to be updated, that supply management employees will utilize new or updated technology to automate certain func-tions and that the overall number of qualified supply man-agement professionals will increase.
Survey data indicate there is not likely to be a rush to out-source key supply management functions or delegate supply management responsibilities to a business unit level. CAPS Research and the benchmarking team would like to express their appreciation to the companies that participated in this benchmarking research. For information on this report and other benchmarking activities, please send an email to the benchmarking team at [email protected]. D. Steven Wade is director of benchmarking programs for CAPS Research in Tempe, Arizona. For information on this report and other CAPS Research benchmarking activities, please send an email to [email protected].
Endnotes
1 CAPS Research Benchmarking Report, Supply Management Talent Development and Retention, December 2009.
2 CAPS Research presentation, “Supply Management Strate-gies for Success in the New Economy,” April 2011.
3 Philip L. Carter, DBA, Executive Director, CAPS Research, and Harold E. Fearon Chair of Purchasing, W. P. Carey School of Business, Arizona State University.
4 Robert M. Monczka, Ph.D., Director of Strategic Sourcing and Supply Chain Strategy Research, CAPS Research, and Distinguished Research Professor, W. P. Carey School of Business, Arizona State University.
About Zycus
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