Pain Points in Procurement Series
The Procurement Talent Shortage
Discover ways to rectify the procurement talent shortage by attracting and keeping top sourcing candidates.
By Hugo Britt | February 28, 2023
Welcome to Una’s Pain Points in Procurement series. Each week, the Una team will explore one of ten common pain points impacting procurement today, and put forth actionable solutions to each of these challenges.
Let’s begin with a pain point that nearly every sourcing team is currently facing: the procurement talent shortage.
For those of us fighting in the recruitment trenches, there may be some comfort to be found in the knowledge that procurement isn’t alone in its talent shortage. According to Korn Ferry’s Future of Work report, more than 85 million jobs could go unfilled by 2030 due to a global skills shortage.
Below, we explore why procurement is struggling to find talent in 2023, what the shortage is doing to organizations, and what can be done about it.
What’s causing the talent shortage?
Several factors, including the Great Resignation, demographic shifts, and fierce competition, are leading to a global talent shortage – for the procurement industry and beyond.
The Great Resignation
Catalyzed by Covid, the Great Resignation is far from over. Forbes points out that despite signs of stabilization, “turnover rates and inflation remain high, large percentages of employees remain disengaged and interested in making a move, [and] millions of job openings are unfilled.”
Workforce demographics are complicated, but here’s a simplified summary of what’s going on:
- The large Baby Boomer generation has nearly all retired in recent years.
- The equally large Millennial generation has moved past entry-level roles and is now swelling mid-level ranks.
- The smaller Gen Z generation is not large enough to fill entry-level roles.
- Gen X, also comparatively small, is not large enough to fill the leadership gap left by the Boomer generation.
Fierce external competition
Competition amongst procurement teams is tough. This increased competition for talent has driven up procurement salaries, which is welcome news for workers but puts under-resourced, smaller organizations at a hiring disadvantage.
Fierce internal competition
Several factors, including the Great Resignation, demographic shifts, and fierce competition, are leading to a global talent shortage - for the procurement industry and beyond.
What are the impacts of the procurement talent shortage?
Due to the extreme talent shortage, businesses will begin to see a drastic impact to their bottom line. Other challenges include decreased productivity, increased risk, delayed projects, and more.
Costs will inevitably rise if your procurement team is understaffed. While automation will help, overstretched procurement teams cannot hope to do their jobs properly, meaning savings opportunities are not identified, direct and indirect spend is not controlled, and the costs of doing business begin to skyrocket.
Smaller teams will produce fewer results. It’s all very well saying that we need to “do more with less,” but an under-resourced team may find it difficult to drive productivity or automation initiatives.
Not having enough people on the team can expose the organization to increased procurement risk. For example, failing to conduct due diligence in the supply chain can put your organization at risk of reputational or financial damage if a supplier goes bankrupt or behaves unethically.
Internally, an understaffed procurement team raises the risks of internal fraud, maverick spend, and processes not being followed.
Under-resourced procurement teams will be so focused on managing the day-to-day “churn” that longer-term projects that decrease costs and boost competitiveness will be delayed.
Understaffed teams know they can’t do everything, which means they are likely to narrow their focus to the essentials: cost and risk. This means that vital procurement initiatives such as supplier diversity, sustainability, and technology may fall by the wayside.
Here’s the scary part: understaffed teams tend to be overworked, leading to disengagement, burnout, and attrition. Every departure places more pressure on the remaining team, leading to a snowball effect.
What’s the solution?
There’s no silver bullet for solving the procurement talent shortage, especially given the scale of the trends driving the problem. However, here are some of the ways to stay competitive in the war for talent.
Ensure your salaries are competitive
There’s no silver bullet for There’s a lot of advice on the internet about how to attract talent without raising salaries, but let’s be realistic: everyone is facing cost-of-living pressures in 2023, which means that salary will be every candidate’s first consideration. Get familiar with average procurement salaries for different roles in your region and make sure you can compete.
Remote and hybrid jobs are attracting 7 times more applicants than in-person roles. If you’re one of the few managers still holding out against flexible working, it’s time to acknowledge that you are fighting a losing battle and hamstringing your organization’s hiring prospects. But remember, any shift to remote working must be supported with the right digital tools.
Promote the profession
We mentioned above that young people are gravitating towards better-perceived departments. Procurement is at a disadvantage in a talent war because of its ongoing perception problem as a back-office function, or (worse) a lack of awareness about what procurement actually is.
Together, we need to boost the function’s profile and show candidates that this is a fantastic career destination with genuine opportunities.
Broaden your procurement talent pool
Besides opening up your talent pool to remote applicants, another way to gain more applicants is to hire talent from other professions without requiring any particular procurement skill sets. This approach will win more applicants but places the burden on you to train them up quickly and effectively once they’ve joined the team.
The good news is that your function will benefit from an influx of diverse skills and experience.
Focus on culture and engagement
Hiring is only half the battle. Keeping team members is just as important, especially in a period of high attrition. Look for ways to create a vibrant team culture that keeps your valuable team members engaged and challenged.
Join a group purchasing organization
Group purchasing organizations aren’t just about leveraging increased buying power. If utilized correctly, a GPO partner essentially becomes an extension of your procurement team. This also potentially relieves the pressure to add procurement talent to your employee roster as the GPO can assist with your more immediate sourcing needs.
Beyond finding cost savings, group purchasing organizations can also help with category management, tail spend management, developing supplier relationships, running cost analyses, mitigating supply chain risks, and more.
Learn more about GPO membership and how a group purchasing organization can alleviate the need to fill seats amidst the procurement talent shortage: