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December 16, 2017
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Procurement Priorities

Procurement salary surveys: Underpaid and unrecognized

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Procurement professionals agree that salaries are too low. Here's what they can do about it.

Each spring, procurement professionals learn the results of the latest salary surveys and express their opinions. Usually they agree: Salaries are too low.

They may be right. Recently, the Next Level Purchasing Association (NLPA), a training and advisory organization, published the report Purchasing & Supply Management Salaries 2016. The report shows that average global salaries decreased 7.5 percent to $53,630.

NLPA calculates that figure based on information provided by procurement professionals working at all levels of organizations on six continents, and presents it in U.S. dollars. For North America, average annual compensation is $80,726, up 2.1 percent. Some say this is close to what procurement professionals actually earn.

Others, such as Tonia Deal of Tonia Deal Consultants, generally find published procurement salaries "significantly too low." According to Deal, a procurement and supply chain management recruiter who is placing procurement professionals with engineering or finance experience and MBAs or supply chain degrees, $80,000 is a base salary for an individual with two to three years of experience.

Spreading the word

If the NLPA and other surveys are right, and procurement professionals are underpaid, how should they respond? The NLPA salaries report suggests that they consider adding other responsibilities (such as assuming a post with direct reports or a bigger budget), continuing their education, pursuing professional certifications, or taking a job at another company.

These are good ideas, but there may be other ways to make more money and help advance the profession. Procurement professionals may want to consider taking time to expand the value they provide for their company, demonstrating that they do more than simply process purchase orders (POs) and shop for the best price. Once they have accomplished that, they can tell everyone they know, including colleagues in other departments, company management, and suppliers.

Consider the example of Jay Ding, contracts and negotiations manager at Intel. Ding and his team do not spend their days processing POs. Instead, they create significant value for the company by applying game theory to negotiations. One way Ding and his team communicated their value was by nominating themselves for—and winning—the 2016 EPIC Innovator Award, which is given each year at the ProcureCon Indirect conference.

In addition to helping increase individuals' compensation through a raise or a bonus, communicating procurement's value can extend the function's influence. Procurement can become involved in sourcing categories it previously did not manage, such as human resources benefits or legal services, which can bring cost reductions and other improvements to the organization.

Communicating value also can help ward off notions that procurement is purely tactical and is not doing enough strategically to reduce costs. These misperceptions often arise when there's a management change or a merger; procurement may have been adding value all along, but the new management needs to be made aware of it.

To do this, Source One Management Services, a procurement services provider and strategic sourcing consulting firm, suggests creating a protocol for reporting procurement's objectives and metrics to all interested parties.

Likewise, Tom DePaoli, management program director at Marian University in Fond du Lac, Wisconsin, recommends developing a communication plan that details how to educate management and other personnel, share survey results and supplier performance reviews, use newsletters to convey information, and create an intranet site to facilitate internal communication.

Efforts like these will help spread the word that procurement is about more than just saving money and deserves to be recognized for its contributions.

Susan Avery is a business journalist with 30 years of experience covering the procurement profession.

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