Today, we're seeing that effectively managing talent and knowledge within a procurement organization is more critical than ever before. In fact, it is catching the attention of the highest levels of the enterprise. It's essential that today's organizations develop a proactive approach to hire top talent and build a formal knowledge management program to capture and share vital information.
When we look at the shifts in today's workforce it's easy to see significant implications for procurement. With an unprecedented number of the baby boomer generation transitioning into retirement, a major shortage of skilled talent is predicted. Having held positions for years, these baby boomers have accumulated a tremendous amount of category-specific and stakeholder knowledge. Their departures mark an outflow of decades of institutional experience as well as related processes and information. It's critical to capture their intellectual capital before it leaves and make it available to the next-generation workforce.
Replacing the baby boomers is a generation of employees whose approach to business is vastly different from its predecessors. At 80 million strong, Gen Y will soon be the largest generation in the workplace. Trends with this new workforce make knowledge management more critical than ever, as most are predicted to stay less than two years with any given employer. Projections suggest that many Gen Y employees will have 25 different job positions in their lifetime. With such high turnover, organizations will no longer be able to rely on lifetime career professionals (like baby boomers) to be the keepers of institutional knowledge.
These shifts with the incoming generation drive the need for organizations to formalize processes to capture and manage knowledge and be prepared rather than surprised. Taking a proactive approach can keep knowledge from walking out the door with inevitable workforce departures.
Other key factors driving the need for managing internal talent and knowledge include: 1) the globalization of organizations, resulting in a virtual workforce; 2) workforce shrinkage creating a scarcity of skilled labor as well as new skillsets required; 3) job searching has shifted to social media job boards; technology (mobile devices) is creating a 24/7 work environment rather than 8 to 5.
Workforce trends show that progressive procurement organizations are recruiting a different type of worker, one with both hard and soft skills. This employee needs to understand dynamic global markets and navigate the ever-changing procurement-technology landscape. They must also be able to solve increasingly complex analytical problems as well as the soft skills necessary to build relationships with key stakeholders.
Given environmental changes and shifts in required skills, it becomes a significant challenge to find, attract, and recruit top talent. Best-in-class organizations are actively shifting their efforts toward attracting and motivating the next generation.
Another vital aspect of talent management is retention. Developing nontraditional, innovative approaches to compensation can help. In fact, some organizations are now tailoring compensation models to align better with motivating factors for the new generation of employee. Offerings such as soft dollars, flexible work schedules, remote work days, and inexpensive perks, including gym/club memberships and childcare subsidies, have already proven themselves to be effective.
Equally important to talent management is knowledge management. Knowledge is the intellectual capital essential to the long-term success of any procurement organization. So, the benefits of managing it effectively cannot be emphasized enough. Organizations need a robust in-house program to systematically capture information, processes, tools, and methodologies. It is the only way to ensure a seamless continuity of organizational processes and practices that create stability within a dynamic workforce.
Four key elements to include when developing an effective knowledge management program are 1) Process Knowledge - the documentation of formal processes, such as templates, examples, toolkits, and cost models to ensure standardization; 2) Technology Knowledge - technology, such as eSourcing tools, has become increasingly more complex and prevalent; 3) Training and Skills Development - Many procurement organizations are performing skills assessments to identify gaps and develop specific training for the individual or group; 4) Category Knowledge - progressive procurement organizations are using category playbooks to capture critical information on each spend category. They are also capturing items such as stakeholder requirements, sourcing best practices, and market intelligence to ensure that turnover doesn't affect category performance.
When it comes to process knowledge, it's important to focus on the best methods for capturing information. Key components for an effective formal knowledge-management program include
Toolkits - Process toolkits are an efficient process guide for documenting various stages of the organization's key processes as well as capturing useful templates, examples, and process aids.
Technology - There is a wide array of technology solutions that address knowledge management, including eSourcing, spend analysis, data cleansing, and supplier management.
Skills Assessment and Training -Perform regularly-scheduled skills assessments to gauge where employees are, identify gaps, and develop training programs tailored to enhance the desired skillsets. Many organizations are looking for expanded skillsets that include creativity and relationship-building skills (soft skills).
Category Playbooks - Category playbooks are used to document detailed information and processes for specific spend categories. They organize important information and strategies so that everything about a category is accessible to the organization.
Market Intelligence - A formalized documented market intelligence component is necessary to capture category knowledge and share it with others in the organization. Current market information can be provided by an internal or external provider.
Center of Excellence (CoE) - CoE is an in-house - keeper of the processes - for managing aspects such as keeping process knowledge current, technology expertise, internal and external market intelligence, category-specific knowledge and strategy, and best practice assessment.
More information on this topic can be found in Denali Group's recent whitepaper, which is available for complimentary download on www.denaliusa.com.