Tag Archives: salary

Hold The Phone! Procurement Pay Increase Smashing The Average Salary

Both ISM and CIPS have released their annual salary surveys. Read on for a short summary of the similarities and differences in salaries across the Atlantic.

Salary surveys make for interesting reading. They reveal much about the perceived value of procurement and supply management, and provide a very helpful data set to have at your disposal the next time you ask for a raise.

If you haven’t seen them already, the two most comprehensive salary surveys for 2018 are available here:

Let’s look at 5 of the most interesting findings across the two surveys:

  1. Average salaries for the profession

  • ISM has announced that the average overall compensation for participating supply management professionals was US$117,425, while CPOs earnt an average of US$263,578.
  • CIPS reported an average salary of £46,422 for procurement and supply professionals, with CPOs earning an average salary of £124,000.
  1. Salary increase smashing the national average

  • In the U.S., ISM reported that supply management salaries rose an average of 4.1% over 2016 salaries, versus 3% for U.S. professionals generally.
  • CIPS found that 68% of procurement professionals received an average 5.1% increase in salary, versus a 2.2% increase for the UK national average.

Paul Lee, Director of ISM Research & Publications, offered the following explanation:

“In today’s global economy, excellence in supply management improves both top- and bottom-line performance, and advances companies’ leadership on the worldwide stage. Supply management professionals’ higher-than-average wage growth reflects the significant value they add every day”.

  1. Certifications DO boost salaries:

  • ISM: Those with the ISM Certified Professional in Supply Management (CPSM) certification averaged 14.7% higher salaries than those without any certification.
  • CIPS: The data reveals that MCIPS and FCIPS professionals have increased earning power, with an average 12% salary disparity between MCIPS and non-MCIPS, and an average of 11% disparity between FCIPS and non-FCIPS across all job levels.
  1. Most important factors when considering a new job

We’re a mercenary bunch. “Salary” has once again come out at the top of both ISM and CIPS’ research into what people consider when evaluating job opportunities. Beyond the money, however, are some other factors that employers should note:

ISM top 6 factors:

  • Salary: 85%
  • Job satisfaction: 81%
  • Improved work/life balance: 80%
  • Benefits package (medical/dental/vision): 79%
  • Pension/retirement plan/401(k) or similar: 78%
  • Organisational culture/work environment: 75% percent

CIPS top 6 factors:

  • Salary: 74%
  • Location: 71%
  • Content of the work: 65%
  • Career progression opportunities: 62%
  • Company reputation: 59%
  • Company commitment to training and development: 58%
  1. Gender gap disappointment

  • ISM’s data reveals women are paid less than men across every level in U.S. supply management, with male CPOs earning 26% more than female counterparts, male VPs earning 52% more than women, and male Emerging Professionals earning 13% more than women.

CIPS reports that the most striking pay disparity exists at the Advanced Professional level, where men earned 33% more than women, a pay gap that has widened since the previous year’s (25%). Pay disparity at the Professional and Managerial levels is also considerable, at 14% and 11% respectively

3 Ways To Increase Your Procurement Salary

Another day in your procurement job, another day moaning about your unsatisfactory salary… If you want things to change here’s how you take control!

I’ve always said that I’m extremely happy working in Procurement, and there’s no question that it’s great to be doing a job that I’m passionate about.

But no matter how much enjoyment we get from our work – money is always important and a key contributor to our chosen career path.

Of course, you and I would both be happy to double our monthly income; so I thought I’d outline three pieces of advice to help you get there!

  1. Get paid for your value, not your time

Do you have a clear understanding of how your current salary was calculated? Is your employer buying your time or buying your skills?

Many procurement professionals make the mistake of thinking they are paid per working hour. But the main consideration for your employer shouldn’t be  “how hard is this person working?” but rather  “how much value is the person generating for the company?”

So my first piece of advice to you is this: Start thinking about what value you are creating for the company – start measuring it! If you measure your results and your ambitions you have a much stronger argument when it comes to salary negotiations.

Take a look at these two scenarios. If you were to approach your manager to discuss a pay increase, which one sounds more authoritative?

A) I have worked overtime and several weekends during the past six months. I don’t give enough attention to my partner and family. So I think I deserve a salary increase of +20 per cent.

B) I have finalised three major RFQ’s within our category during the past 6 months and  I have reduced prices by 12 per cent per year for our company! I think this performance justifies a salary increase of 20 per cent.

Try to use the employer’s language as in scenario B. Find the arguments and KPI’s which you know they will value the most and think about how you can add influence in these areas. Then all you have to do is impress them with your results!

2. Take more responsibility

Do you enjoy responsibility  or do you avoid it at all costs – letting others make key business decisions for you?

Both behaviors are quite natural. After all, people are different. But ask yourself, what is the main difference between you and your manager at work? Why do they earn a significantly higher salary than you? Many managers have less knowledge and skills than their co-workers and employees, but they are still respected more by the top-executives. How does that always happen?!

The simple answer is that your manager has the responsibility for a much bigger area of the work.

The rule:  greater responsibility = greater salary.

So don’t allow yourself to hesitate when it comes to taking on responsibility. Don’t just wait to be asked, be proactive.

“I heard that our Procurement department plans to run the value stream mapping for Category XYZ. Can I lead this project as I know the processes and steps for VSM?”

“Can I take the responsibility for mapping new suppliers in South Asia, as I already have many business connections there?”

This approach to your work will stand you in good stead to get a significant salary increase when the time comes to negotiate.

Generate profit  for the company

In my experience most organisations consider their procurement department to be the cost centre of the business. Others regard it as a support or service function and,  in the worst cases, they dismiss procurement pros simply as buyers.

But you and I both know that procurement  has an enormous impact on an organisation’s profit.

Whatever your savings are – they contribute to the gross profits of the company. As we say at Future Procurement organisations: “one dollar saved is one dollar earned!”

So how can this knowledge help your salary?

Senior management in your organisation may not understand the value procurement brings to the business and they certainly won’t be familiar with your individual responsibilities and deliverables. They even may not understand the role of Procurement organisation…

But top management of any company cares about profit, this is the language they understand.  So modify your messaging and communicate the extra business profits that are connected to your procurement role.

To sum up; if you want your salary to increase you need to add value to the company, take more responsibility and concentrate on proving the profit you contribute to the company.

Remember; your employer will never care about you more than you care about yourself – it’s sad but it’s true!  Throughout my corporate career, the  biggest salary increases were never initiated by my boss.

Your salary is your own responsibility and if you don’t like it – it’s your problem to fix.

So get out there and fix it!