“HANN’S STANDS”: MID MARKET PROCUREMENT MANAGEMENT ROLES IN CANADA GOING UNFILLED

October 25, 2011

It’s a BIG concern

By Bronwen Hann, President, Argentus Search Group

An interesting article in yesterday’s Wall Street Journal, available here

http://online.wsj.com/article/SB10001424052970204422404576596630897409182.html?mod=wsj_share_in_bot

speaks to a serious issue currently affecting worker recruitment in the United States, which is actually affecting the nation’s economic performance. I’d like to weigh in with my viewpoint on this article, and add a Canadian perspective, specific to mid-level positions in Procurement (purchasing) and Supply Chain (SCM).

Mr. Cappelli’s major point is this: Although US employers are complaining they cant find workers with the right skills, what in fact is happening is that employers are trying too hard to find the “perfect fit.” As a result, they are overlooking large numbers of really terrific candidates who could do the job, and do it well. What Mr. Cappelli calls an “inflexibility problem” really boils down to an understandable wariness on the part of employers to invest time and resources training workers who may be subsequently lured away to other organisations.

The bottom line? American companies are seeking to “over-staff” their open positions. Traditionally (not in every case, but often), it made sense to hire someone who could immediately handle a “core” set of tasks, but who was capable of “growing” into the position, by taking on an expanding list of duties and responsibilities. This form of “continuous learning” was, and remains the major attraction for people moving jobs and one key way of creating worker loyalty, and ensuring that employees have the incentive to stay longer-term in a position.

Despite large numbers of available candidates due to bad economic conditions, positions are now going unfilled because today’s leaner, more tightly-staffed employers are looking for candidates who can immediately step into a rigidly defined role, without any training or “ramp-up” time.  In short, the “ideal” candidate, the person an employer wants to hire, is someone who is already doing essentially the identical job somewhere else, for someone else. Candidates for permanent positions are now being evaluated as if they were contractors, “hired guns” able to do 100 percent of the job from day one.

In Canada, the situation is similar, but with slight differences. For example, employment levels in Procurement and Supply Chain in all industries, including Retail, Financial/Insurance, Manufacturing, and Logistics, have been growing very fast.

In the “middle” of the market, positions with salary levels of say, 70k to 85k per annum, there are excellent candidates available – but not in the abundance companies might think. This part of the market is really getting squeezed as demand is very,very high putting tremendous upward pressure on salaries. Canadian employers, while seeking candidates who can step immediately into a role without training, are simultaneously and additionally taking a tough line when it comes to compensation levels.

The result is that a mismatch has developed. Employers are only willing to consider candidates who are  “fully qualified,” but at the same time, are unwilling to offer the compensation these candidates know they are worth. I can tell you that I’ve had several instances recently where clients were reluctant to proceed with anyone considered to be anything less than a perfect match, but were unwilling to offer the so-called “perfect” candidates the compensation package which the market is currently indicating. A frustrating state of affairs when as a recruiting partner we have the benefit of educating clients on the issues of the whole Supply Chain employment market.

Candidates are going to be reluctant to move if a new position does not offer the right combination of compensation and opportunity for career development. This situation will not change until and unless the market changes – and current projections are that the Canadian Procurement market will remain tight. As an increasing number of American firms are moving into Canada, particularly in Retail (Target and WalMart are not timid to pay TOP dollar for their staff), competition for the best people will only intensify, causing continued upward pressure on Procurement salaries and wages for some time.

One of several things could happen here. First, employers need to consider offering the most highly qualified candidates compensation packages more in line with the current reality of the market in mid level roles. In any market, supply and demand set prices, and employment is no exception.

Second,  greater consideration could be given to those candidates who represent slightly less than a “perfect match”, but who can demonstrate the ability to come quickly “up to speed.” This second group could be compensated at a closer desired compensation level initially, with an arrangement that once they demonstrate “full capability”, their compensation would move to market value to retain the talent. Alternatively, the difference could be made available as a bonus, to be earned when they had satisfied all of the objectives as originally laid out.

A third possibility is that some position descriptions may need to be modified in order to accommodate workers who possess most but not all of the necessary experience and/or skill-set, and who would be agreeable to more modest compensation. The prospect of career growth and development will be a powerful incentive for this group, which will act to moderate their expectations regarding compensation. Such “work-group restructuring” initiatives have been used in the past when tight labour market conditions made it difficult or impossible to find candidates who closely match the position.

The longer this market remains tight, the greater will be the urgency to do something – permitting positions to remain vacant can create significant “hidden” costs, including both lost opportunity and increased workload (and reduced job satisfaction) for other work-group members. Not filling that vacant position can easily prove more expensive and problematic than taking one of the above options – particularly if that excellent candidate you passed over ends up working for your competitor. It’s certainly something to think about.

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