Market Analysis Of The Procurement Consultancy Sector

Market Analysis Of The Procurement Consultancy Sector

Here’s an excerpt from our Procurement Quarterly Market Update for the second quarter of 2015 which addresses recruitment market trends and the availability of skills in the consulting sector.

Procurement Consultancy

The picture in the consultancy space is not as bullish as in quarter one. It is somewhat mixed as some niche areas (spend management) are doing well but many others are either static or struggling to win new deals and hence we have seen a number of examples of organisations pulling back on previous expansion plans.

Most consultancies are still recruiting but not at the rate anticipated or merely to cover leavers  or to backfill promotions. The picture varies according to each organisation’s project pipeline and this can change week by week currently. This is impacting on recruitment as candidates become nervous when recruitment drives are delayed or even cancelled.

Much of the new project work being awarded centres around technology led procurement transformation and many of these organisations are successfully ‘on-selling’ other services. In our view organisations not offering access to a technology solution seem to be at a disadvantage in the current market

The larger outsourcing deals appear to be less in number as many CPO’s or senior Procurement Leaders have indicated to us that they are focusing on ‘targeted help or consultancy on specific areas of spend or to speed up specific projects’ This implies they want to retain full control and don’t want to commit to the costs or risks of a long term outsource unless there is a long standing relationship or a specific business problem beyond the in-house capabilities.

Some organisations are in effect running transformation projects internally by carefully utilising interims directly instead of ‘outsourcing’. However there remains a shortage of experienced consultants with the requisite skill set to deliver major transformation projects in procurement and supply chain at senior levels.

An increasing trend that we have reported before is the shortage of junior level consultancy candidates with 2-3 years experience. Many consultancies are increasingly delivering projects via a tiered delivery model with good junior people increasingly being used to support senior people on-site from day one. Therefore they can only consider those with existing client facing skills and experience as they cannot risk putting those without this straight into this environment. This increasing demand means salary rates for these levels are becoming increasingly inflated as competition for good candidates becomes more intense.

As an example we are finding that good junior people with 2-4 years experience can command a base salary of £45-50k for a move to another consultancy. There are examples of individuals with only 3 years experience being offered £55k to move to some of the smaller niche consultancies. This we think will cause increasing problems for the bigger players or those organisations with strictly controlled salary and career bands who are unable to flex.

If you wish to discuss any of the points raised in this article, please contact Peter Brophy.

 

 

Procurement Technology & Spend Management – Q2 2015 Market Analysis

Procurement Technology & Spend Management – Q2 2015 Market Analysis

Here’s an excerpt from our Procurement Quarterly Market Update for the second quarter of 2015.

This market is the one that bucks the trend this quarter as the growth in the use of procurement technology continues unabated.  Several industry reports offer impressive growth predictions for this market over the rest of this decade and this is supported by anecdotal evidence from our clients in the sector.

The second quarter of 2015 has seen strong demand for people with proven skills in systems implementation, transformation consultancy, project leadership and business development.

The core areas that we see most activity in relate to P2P, e Sourcing, analytics and contract management technology with the first two leading the way.

Experienced professionals who can point to an impressive track record selling or implementing these systems are in strong demand.  Furthermore, with a finite talent pool in the UK to satisfy this demand, the skills shortage that we have observed in our last five regular quarterly reports is becoming more acute.  Salaries continue to rise as a result.

What’s more, we have now collated hard evidence of these salary trends in the sector over the past year to support some of our clients recruitment activities and they make for fascinating, if slightly worrying reading.

Those companies that are consistently successful in hiring the skills they need in these market conditions are the ones that adapt best to the challenges they face.  We’ve helped design several innovative solutions to enable our clients overcome these challenges in a market we know intimately and this has given them a valuable source of competitive advantage.

If you wish to discuss our sector specific salary data or our innovations in talent sourcing please contact Andrew Daley.

The market for “in house” roles requiring these skills hasn’t been as bouyant as the provider market largely because of the trend to use technology platform providers and associated consultancies.  However there have still been some interesting opportunities in major corporates for both P2P and e Sourcing specialists.

The interim market place for these specific skills has been steady throughout 2015 following a solid period in 2014 but there is still usually resource available when our clients need short term support to address spikes in their work load.

We anticipate that this particular interim market will get busier towards the end of Q3 of 2015 as a direct result of the talent shortage in the permanent market.

Here’s  a case study explaining how our range of services has enabled one of our clients in the sector to hire the people they need despite the challenging market conditions.

 

Procurement Market Summary – Q2 2015

Procurement Market Summary – Q2 2015

Here’s an excerpt from our Procurement Quarterly Market Update for the second quarter of 2015.

The second quarter of the year brought a UK general election and further concern about the economic stability of the Eurozone. At Edbury Daley, we saw a drop in the number of new procurement vacancies coming to the market prior to the election. With opinion polls predicting a hung parliament and political commentators speculating on which parties would be capable of striking a marriage of convenience to create a majority, uncertainty was rife in the business world.

For many businesses that uncertainty manifested itself in delayed hiring decisions with positions pulled or postponed. The unexpected Conservative majority provided a considerable boost to business confidence but also introduced the prospect of a referendum on the UK’s membership of the EU. For those businesses reliant on trade across EU member states a new uncertainty was created by the Conservative manifesto.

The wider economic landscape had a filtering effect on those business looking to hire. Those truly committed to expansion still went ahead and searched the market for the procurement people they needed. The more tentative recruiters drew back and waited. The impact at Edbury Daley was a surge in conversion from job instruction to placement.

Those businesses which still hired enjoyed the benefit of a window of opportunity whereby the strongest candidates briefly had slightly fewer potential career moves to choose from. Coupled with our advice on salary and talent attraction they were able to strengthen their procurement team during Q2.

The more tentative recruiters made little progress with sluggish recruitment processes and weak financial offers to the strongest candidates leading to offer rejection. The candidate market proved too competitive for those businesses unable to adapt to changing conditions and many still have unfilled vacancies that are months old. Specifically, these business recruitment processes’ were too cumbersome with excessive timescales and too many interview stages which results in a poor candidate experience. Several also suffered from wider company issues such as hiring freezes and changing corporate goals.

To address this issue directly, Edbury Daley conducted a survey amongst one hundred procurement professionals gauging their response to various components to a typical corporate recruitment process. Using the results as a basis for best practice, we have advised a number of clients who have been agile enough to implement a number of changes to improve their time to hire. You can see the results here. Procurement leaders who had endured multiple offers and rejections over the past six months are now getting the people they need in to the team.

The overall picture remains that the very best performers in procurement are hard to attract away from their existing employers. Post recession, businesses are more willing to provide basic salary increases and bonus payments to their best people. In addition, we are witnessing an increase in the counter offer on resignation. This last ditch attempt by the current employer is often too late to prevent the valued member of the team leaving but is a clear indication of the perceived difficulty of recruiting a high quality replacement. This trend is seen in the wider jobs market:

“our own survey indicates that three-quarters of organisations have struggled with recruitment challenges in the last year, particularly when filling skilled or niche roles” Mark Beatson, Chief Economist at the CIPD

If you would like to receive a copy of the full report please contact Simon Edbury via simon@edburydaley.com 

 

How Do Recruitment Processes Impact On The Battle For Procurement Talent?

How Do Recruitment Processes Impact On The Battle For Procurement Talent?

Edbury Daley have instigated some timely new research on the choice of recruitment and selection methods and the impact of those choices on the success rate of a getting a quality recruit in to the hiring business.

As the global economy recovers many companies are pursuing significant growth plans. Often, the key constraining factor is the ability to hire and retain the skills and expertise needed. Employer Branding and Talent Communities are becoming the new parlance of Human Resource Management as bigger corporations embrace the advent of social media to gain an advantage in finding the people they need. This is covered in some detail in a very interesting recent study by Deloitte.

(more…)

Q1 2015 Procurement Quarterly Market Update

Q1 2015 Procurement Quarterly Market Update

Our latest quarterly analysis of the employment market for the procurement profession is now available for you to download.

Regular readers will notice a change of emphasis this year as we move away from our established narrative in order to address some of the most common issues being faced by hiring managers when sourcing and recruiting talent into their teams.

The analysis covers each of our specialists markets which are direct and indirect spend, procurement consultancy, spend management technology and the associated interim markets with individual commentary on each sector.

Here are some of the headlines:

  • Procurement is a largely candidate driven market place as demand out strips supply for the top professionals.
  • This is placing significant upward pressure on salaries.  Many corporate salary structures are out of date and uncompetitive.
  • The leading procurement professionals in each niche area are continually approached about new career opportunities.
  • Slick recruitment processes are increasingly a point of competitive advantage.
  • Recruitment models need to change if companies are serious about hiring the best available talent.

The full report can be downloaded for free here: Procurement Market Update, Q1 2015.

 

What Makes Procurement People Want To Move Jobs?

As part of Spend Matters focus on Talent this month we are contributing a series of articles relating to the subject of recruitment and retention of outstanding procurement professionals.

A great recruitment strategy actually starts with the retention of your best people.  Why?  Retaining, developing and promoting your best people sends a very positive message to the market that your department is a great place to work.  Conversely an organisation with high staff turnover and unhappy staff will quickly gain a negative reputation.

So how do you keep your best people happy, motivated and away from what is a very busy job market?

Here we look at the reasons why procurement professionals to want to leave their current employer, what we in the recruitment profession call “push” factors.

Looking at this study from the US they list the top three reasons in order as:

  1. Career Advancement
  2. Work/life balance
  3. Money

We wouldn’t necessarily disagree with this but from our experience with procurement people there are a number of factors in play.  Using years of anecdotal experience, here’s a list of the most common reasons people tell us they want to move.

 Lack of career progression – when people reach the glass ceiling where they realise their future opportunities for advancement are limited they are generally willing to consider roles with organisations where those opportunities are considerably better. This is a common mindset amongst “passive” job seekers.

Lack of training and development – “I’m not learning anything” or “I don’t feel challenged” are common complaints that usually tie in with a lack of career progression.

Break down in relationship with boss/peers/stakeholders – this can lead to a pretty unhappy time at work and usually results in a desire to move jobs as quickly as possible.

Lack of senior management support – procurement needs sponsorship at the highest level to effect positive change.  A lack of support from the top is a common reason why departmental leaders want to move.  Similarly for those working with difficult or uncooperative stakeholders in Category Management roles, going to work can be very unrewarding and encourages people to seek an environment where their skills will be valued by others.

No challenge left in the role – many leading procurement people thrive on delivering the inherent change required to deliver better commercial outcomes.  When they have delivered significant improvements and are left with running a “steady state” they become bored and seek the next challenge, usually in a new employer.

Treated unfairly – when people perceive that others are being treated better by senior management, whether it be through promotions, pay rises or bigger bonuses, this breeds resentment and pushes that person onto the job market.

Colleagues moving on – when people see their friends at work moving to other organisations for better roles and salaries they begin to wonder if they should be considering options outside their current employer.

Company health/profitability – be definition procurement people are commercially savvy and have access to all sorts of financial data.  They know when the company is struggling and this brings the issue of job security onto the agenda.

Work/life balance – working long hours, making early or late calls to colleagues, stakeholders and suppliers in different time zones and excessive work loads will be tolerated by many in the short term but when it becomes a long term trend and impacts on your personal life it becomes a source of discontent.

Practical reasons – a significant change in personal circumstances often prompts people to look for a new job that is more suited to their lifestyle.  People also move because of excessive business travel and difficult commutes.

Financial – it is actually very rare that a procurement person lists salary as the principal reason why they want to consider a move.  In fact it’s usually us that raises the issue of salary and benefits when we first speak to a new candidate and most people will tell us that its only one consideration in a much broader picture.

However when it comes to actually discussing a job offer, it becomes clear that the salary is usually a critical factor.

This situation is perhaps best illustrated by something one of my senior management consulting clients once said to me:

 “The thing that irritates me about hiring procurement people is how they switch from sales mode in interview to buyer mode at offer stage.  They tell us that career progression is their top priority then feel the need to demonstrate their negotiation skills and end up giving the impression it was about salary all along.”

Whilst this maybe a slightly harsh judgement, it does offer an interesting insight into how many procurement professionals behave during the process, and confirms that salary is a key driver in almost every job move.

In our recent research into recruitment best practice we asked how much of an increase in basic salary would you require to commit to a move?

Only 10% of participants would move for an improvement of 5% on their salary, whilst 44% wanted at least a10% uplift.   39% said they would only move for an improvement of 20%.

With the skills shortage we mentioned above and this approach to negotiating job offers, its clear to us that companies looking to attract the best procurement people will have to look carefully at their budgets in 2015.  Quite simply, if the financial package on offer isn’t attractive, most procurement people will wait until someones makes them an offer that does meet their expectations.

Our message to procurement leaders is this – we are on the cusp of a skills shortage in key areas of the procurement profession.  Hiring good people is becoming increasingly difficult in a competitive job market and your best people will be in the sights of head hunters.  A key target for you in 2015 is to work hard to keep those best people.

Whilst a small degree of staff churn is viewed as healthy by most, keeping your best people will also make it easier to attract a quality replacement when you do lose somebody.

For an alternative view from the US on this subject, this article from Forbes magazine makes interesting reading.