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:
- Career Advancement
- Work/life balance
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.
Our report on the job market conditions for procurement professionals and associated markets in the second quarter of 2014 features some interesting and largely positive developments. Whether you read this with the mindset of a hiring manager or with an eye on your own career, this analysis provides very informative reading. Headlines include:
- We are seeing some classic symptoms of a recovering job market for the procurement profession.
- Technology remains the most sought after area of indirect spend category expertise.
- The Spend Management Technology market continues to grow rapidly.
- Consultancies face challenges around balancing resources.
The full report is available here: Q2 2014 Procurement Market Update Featuring The Indirect Spend Index
We’ve experienced a very positive start to year in terms of the recruitment market conditions for procurement professionals. Last year saw a marked improvement in the number of quality opportunities available in the market, with a particularly strong final quarter, and that increased demand has been sustained in the early months of 2014. Competition for the best procurement people remains fiercest in the middle market, experienced Category Managers in particular, but there is also healthy demand for emerging talent with strong academic backgrounds and a slight increase in the number of leadership roles. These are very encouraging signs for the profession and excellent news for those seeking to move roles in 2014. To view the Q1 indirect spend data and read the rest of our report please download the Procurement Quarterly Market Update Q1 2014
With competition for the best staff increasing in recent months, the value of an effective recruitment strategy will be emphasised in 2014. Here we look at the ten most common obstacles to attracting the talent required for your business:
1. Understand your internal recruitment processes from the start. A lack of awareness of standard recruitment procedure in your company leads to additional steps and delays. Typically this can be anything from an additional round of interviews or psychometric testing to a medical. Introducing these stages haphazardly part way through the recruitment process is very off putting to potentially strong candidates often leading them to lose interest or accept a job elsewhere. If you aren’t absolutely sure of the procedure speak to HR before you get started and be clear with candidates about the next stage throughout the hiring process.
2. Be realistic about candidates attitudes towards salary when moving jobs. Unless there is a huge improvement in non monetary terms such as a much shorter commute, candidates are looking for an absolute minimum of a 10% increase in basic salary, often more. Your company may well be a desirable employer but you still need to budget for a reasonable salary increase for your chosen candidate.
3. Be precise about the salary budget. A recruiting company states that the basic salary for a particular vacancy will be £50k to £55k and then when the offer is made to the successful candidate it is £50k which, it transpires, was always the absolute maximum. The extra £5k mentioned initially to the candidate could be crucial in creating an incentive for the candidate to be interested. So be clear from the start and therefore ensure that the candidates you see fall within salary budget.
4. Don’t cast the net too wide. Consider the following scenario: you’ve posted your vacancy on your company website and linkedin, you have an advert in a trade journal and on several of the online job boards and you have instructed six recruitment agencies. You have covered all the bases and are expecting some great candidates to interview. However, adverts on or offline have always been an unreliable source of quality candidates so you are probably hoping your recruitment agencies will produce the goods. But each agency knows that there is five other agencies and a slew of advertising to compete against. They are on a no placement no fee model and their chances are slim. So they spend their time working on other assignments where their chances of making a fee are greater and leave you without the quality shortlist you were hoping for. Be more strategic in your selection of recruitment methods and agencies rather than going for the catch all approach.
5. Develop a full understanding of the experience and the other clients of the recruiter working on your behalf. You create a PSL panel of recruiters and agreed terms. The successful companies impressed you with their slick presentation, powerful brand and big office networks. But did you meet the person who will be responsible for selling your senior level vacancies to the best candidates in your industry? Recruitment consultancies are typically high staff turnover businesses and you may have an inexperienced consultant placed on your account. Ask your recruiters which of your direct competitors they work with as this may limit their ability to approach and attract candidates who could be an ideal fit for your needs.
6. Don’t negotiate too hard on recruitment fees. If you have multiple vacancies in your department you can use this leverage to get your chosen recruitment consultancy down to a low percentage of basic salary as a placement fee. You may have got a great deal, but only if the recruiter fills all the vacancies. Remember they are working on a no placement no fee model and almost all of their other assignments will be more lucrative than your work if you have pushed too hard on their fee level. Given your multiple vacancy assignment you would expect to be near the top of their priority list. The fee deal you struck probably means you are a lot lower than you think so strike a balance whereby the terms are attractive for both parties to ensure you get the best results from your recruiter.
7. Don’t make the recruitment process too one sided. You want to make sure you put the shortlist of candidates through their paces and so you set up a half day assessment centre for stage one whereby there is a group interview and some psychometric testing. The problem is that the best candidates are probably only tentatively interested at this stage and unwilling to attend the assessment centre until they know more about the job. Maybe they are not entirely unhappy with their current employer or maybe they have multiple vacancies they are pursuing. Either way, you need to offer a little courtship before sending them to a formal assessment. Set up an initial interview which is as much about you selling the job opportunity and your company as it is assessing the candidate. Only when you have them excited about what you have to offer can you expect them to take half a days holiday and go through rigorous testing.
8. Communicate promptly with candidates following interview. Candidates assume no news is bad news. A delay of more than 48 hours will mean positive momentum will begin to drain away as will the candidates interest in the job. Going back to the strongest candidate quickly maintains the impetus and increases your chances of a job offer being accepted.
But don’t forget the candidates who you are discounting from the process. Dealing with them professionally creates good PR for your company as an employer and you may want to go back to them for a different position at a later date.
9. Take in to account the detail of fringe benefits when making a job offer. Generally both hiring manager and candidate will focus on basic salary when pitching their expectations on package but a failure to dig in to the detail of the benefits package may come back to haunt you. Corporate employment benefits include some or all of the following: car allowance, bonus, private medical insurance, life assurance, pension, discounts, vouchers, share options and signing on bonuses. You might be improving the candidates basic salary with your job offer but lowering their overall package. You need to gather this information early on to understand if you can make them a compelling financial offer.
10. Manage expectations on timing of the offer letter. If you have verbally offered the position and got a verbal acceptance in return you need to sort out the paperwork. Often someone else needs to sign the authority to recruit and may not be immediately available. Then the authority needs to go to HR to put together a benefits pack and then post out the contract and offer. If this is the case make sure you tell the candidate that the offer letter wouldn’t be with them for ten days and stay in touch until they have the contract in their hand.
Help to Buy is dominating the headlines at the moment, dividing opinion as to whether it is helping speed up the economic recovery or simply laying the foundation for another property price bubble. Regardless of which side of the argument you agree with, there is no question that the scheme is helping sales directors of housebuilding companies all over the UK meet or exceed their growing completions targets.
Interestingly, a number of sales directors were sceptical of the impact of the Help to Buy scheme when it was launched earlier this year. Their reasoning was simply that there were already a number of mortgage products available for the buyer with just a 5% deposit so Help to Buy wasn’t going to be a difference maker. However there is no question that the scheme has been highly effective in bringing more buyers to market. Interestingly, it may well be the controversy over the long term effects that has kept it in the news and therefore the potential buyers mind. The initial announcement was in the 2013 budget so right from day one, the message enjoyed a high profile platform and the ensuing debate over its merits has acted like a consistent marketing campaign through recent months. So in short the national profile of Help to Buy has been a huge driver behind it’s success.
The second phase of Help to Buy has been brought forward enabling the government backed equity loans to be utilised on second hand property. In theory this is bad news for the UKs housebuilders as the buyers previously were restricted to new build property if they want to participate in the scheme. They now have a choice. So will 2014 see Help to Buy purchasers drifting towards the second hand market and the positive impact on housebuilders diluted? Not necessarily. The number of buyers taking up the scheme may simply grow sufficiently to sustain both the ambitions of the new build and second hand market simultaneously. As the scheme becomes more and more widely used tentative potential buyers may well be drawn to the market. In property most buyers are also sellers. So any process which facilitates a quicker sale enables the seller to become a buyer. For example a family with a home with little or no equity may be able to more easily sell it to a first time buyer who needs the Help to Buy scheme to make the purchase. The family themselves can then utilise the same scheme to purchase another property which could be new build. In other words, by extending the scheme the chancellor is further unlocking the property market which ground to a halt during the recession. For everyone involved in the property industry that is very welcome news.
Simon Edbury is a specialist in the recruitment of experienced house building staff. His recent work has focused largely on sales positions in the new homes sector and he has successfully appointed people with existing house building industry experience, and those with transferable skills from other sectors.
If you need staff for your developments why not advertise on www.careersinhousebuilding.co.uk or contact Simon for advice on industry trends and how to recruit the staff you need in challenging market conditions.