With unprecedented change in today's procurement space, effectively managing talent within an organization is more critical than ever. Procurement needs to understand the trends driving changes in the talent landscape, and learn how best to hire and retain top talent.
Enough emphasis cannot be placed on how shifts in today's workforce will have immediate and significant implications. With more than 70 million Baby Boomers transitioning into retirement before 2030, there is a known shortage of skilled talent predicted for the marketplace. Having held positions for years, many baby boomers have accumulated tremendous category-specific and stakeholder knowledge. Their departures mark an outflow of decades of institutional experience as well as related processes and information.
Replacing the baby boomers is a generation of employees whose approach to business is vastly different from their predecessors. According to new Pew Research Center analysis of U.S. Census Bureau data, one-in-three American workers are Millennials (ages 18-34), making them the largest generation in the workforce. These millennials actively seek change, unlike their counterparts in the Baby Boomer Generation who valued the stability of a single employer. With a higher rate of turnover, organizations will no longer be able to rely on lifetime career professionals to be the keepers of institutional knowledge.
Generational changes are not the only factors shifting dramatically in the workforce. Other key factors driving the need for talent management include:
Globalization and Virtualization: Increasing technology has led to improved work life balance and remote/virtual teams are increasing in popularity. As a more connected workforce, we have transitioned from the traditional 8-to-5 workday to a 24/7 environment.
Competitive Talent Market: Procurement talent is scare due to workforce shrinkage. As the procurement function continues to evolve, new and specific skill requirements are emerging, many of which are difficult to assess.
Accelerated Leadership Development: With a higher rate of turnover, the incoming generation will require efficient processes for training to prepare them to take on strategic procurement positions, as well as systems to capture new knowledge.
Resource Optimization: Productivity and savings goals are increasing in order for companies to maintain a favorable market position. Stakeholders have recognized procurement's value and are engaging them much more often. While this is a desired result, current resources are being taxed with additional workload. Critical to organizational success is strategic-minded talent that is adaptable to changing workforce needs.
Flexible Workforce Models: Rapidly changing market and economic conditions are necessitating a more flexible workforce. Employers are seeking greater flexibility and efficiency. We are not seeing organizations that reduced headcount during the recession returning to hiring employee's fulltime, but rather to more flexible, project based staffing models.
For procurement professionals, such changes require the cultivation and development of specialized skillsets. With major enhancements in processes, tools, and technologies - as well as global sourcing - procurement talent needs to ensure that its skills are aligned with the ever-evolving needs of the organization.
New Processes: Major shifts in processes that did not exist 10 or 15 years ago, including strategic sourcing, supplier development, supplier relationship management, and spend management.
Technology: An unprecedented number of new tools and technologies, including strategic sourcing suites and eSourcing tools; data mining and search capabilities; and spend analysis, contract development, compliance, and supplier performance tools.
Changing Markets and Regulatory Environments: A vast expansion of the marketplace from local to regional, national, and then global within a relatively short time has increased risk and created factors that drive market volatility, resulting in greater emphasis on risk management.
Higher Expectations: More than ever before, procurement organizations have higher expectations of being strategic partners and contributing to the operating results of the entire enterprise. This can be seen in 1) the transition from transactional to strategic activities; and 2) greater value contributions expected for bottom-line impact.
New workforce trends show that procurement is recruiting a different type of worker - one with both hard and soft skills - including the ability to understand dynamic global markets and navigate the ever-changing procurement-technology landscape. When it comes to assessing skillsets and attributes needed for the next generation of procurement, requirements need to be closely aligned with overall shifts in the procurement space. Most procurement organizations share an initiative to become more collaborative. As such, employees now need to be able to solve increasingly complex analytical problems in addition to having the soft skills necessary to build relationships with key stakeholder groups.
The following list includes updated skill requirements that break from traditional procurement skills:
Financial analysis and modeling
Strategic thinking/Conceptual ability
Passion for the procurement space
Communications and teaming skills
Sourcing process knowledge
Given environmental changes and shifts in required skills, it becomes a significant challenge to attract this new generation. Below are tips to help attract, recruit, and - ideally - retain top talent:
Emphasize the perception of your organization as a sought-after place to work. This can be done through social media by building brand/image and promoting positive aspects of company culture.
Focus on talent cultivation. Leading companies are recruiting top talent through internships, company visits, etc., before candidates look for a job, even starting in freshman year.
Promote diversity hiring. Celebrated by Gen Y, the most ethnically diverse generation to date, diversity hiring provides bottom-line organizational benefits. Diversity is currently defined as “accepting, respecting, and leveraging all the differences that make a person unique.”
Capitalize on your workforce connections. Current employees are often the best source for referrals. Consider offering a small referral bonus to attract talent.
Encourage employees to network through organizations and social media.
Top procurement organizations are tailoring their compensation models to align with motivating factors for the new generation of employee. These include:
Pay for Performance: Differentiate elements of the four general pay categories: cash, benefits, time and place, and equity.
Reallocate toward high performers to ensure retention and away from mediocre and poor performers. 20/60/20 rule: top 20 percent are top performers, middle 60 percent are average performers, bottom 20 percent are poor performers.
Soft Dollars: Allow for flexibility in the use of the currency of time and place.
Work life balance is consistently rated as the one of the most important aspects for attracting and retaining talent. Flexible work schedules, unpaid sabbaticals with benefits, extra vacation, additional work-at-home days, and childcare subsidies can all result in decreased turnover and increased productivity.
Inexpensive Perks: Partner with companies to provide discounts on services and products.
Auto and home insurance, gym/club memberships, dry cleaning services, intermural leagues, venue tickets and childcare.
Retaining top talent is the corollary to talent management. Fostering a culture aligned with the motivators of today's workers will keep them engaged and limit flight risk to a more enticing opportunity. While compensation is one driving factor, it is not the main motivator for incoming generations. Depicted in the graphic below, are results from a Denali Group survey of procurement professionals that reveal effective ways to retain high performers.
In summary, the procurement talent landscape is markedly shifting, creating the need for formalized talent management programs. It's imperative to understand what new skillsets are needed and then attract top talent by understanding their motivators. Best-in-class organizations are actively shifting expectations and approaches to recruiting employees, focusing their efforts on attracting, motivating, and retaining the next generation of talent.