2008
Going with the flow
By
Bettina Pickering
Supply Management,
03 July 2008
Good recruitment and retention are vital to successful businesses, but so too is some staff turnover
The emphasis in most organisations - and purchasing teams are no exception - is on attracting and retaining people who are going to help drive success and competitive advantage. But the phrase 'recruitment and retention' should perhaps be recast as 'recruitment, retention and release', because a certain level of staff turnover is essential to keep the team fresh, challenged and productive.
The trick is to achieve the appropriate level of turnover - and what is 'appropriate' depends on a number of factors, including the economic climate, the current challenges facing an organisation and the maturity of the team itself.
Bettina Pickering, a managing consultant in people and organisational change at PA Consulting Group, says although there is no substantive research indicating an optimum level of turnover, companies that aim for between 5 and 15 per cent of churn every year won't go far wrong.
"There should be ongoing dialogue about what types of people and skills are most important to an organisation or team at any time," she says. "Then they can weigh up the pros and cons of focusing on attracting new people or retaining those they already have."
Rising standards
Unfortunately, of course, the people who leave are often the ones you would most like to keep - and vice versa. But there are ways of dealing with both problems.
"Procurement is getting more complex and interesting and standards are rising all the time," says Chris Jones, director of procurement at EDF Energy. "It is attracting and engaging better people, but if you want to keep improving you shouldn't tolerate poor performance. Our staff know what is expected of them, and we have performance standards, rankings, objectives and all sorts of opportunities to help them improve. But if they don't perform they shouldn't expect to stay."
Conversely, some of your best staff will leave, however many development opportunities you provide. "You have to make the most of really good people while you have them," says Ron Jarman, CPO of Universal Music International and current CIPS president.
"At Reuters [where he was, until recently, global head of procurement] we talked about 'know, grow and flow' - identifying talent, developing it through training courses, secondments, special projects and so on, and then creating opportunities either in procurement or somewhere else in the organisation for it to move to. Losing people into the business might give you a short-term problem, but it creates advocates for procurement across the organisation."
For him, "growing talent is the key to retention". But where development opportunities are limited - in smaller companies or fledgling procurement teams - that must be augmented by other motivational tools. At Carphone Warehouse, for example, where the 20-strong procurement team has grown from scratch over the past two years, an individual performance and reward scheme has proved very effective in attracting and retaining some of the best people, according to Graham Stapleton, managing director, group purchasing and procurement.
To date Stapleton's focus has been on hiring experienced procurement professionals with category expertise who would have an immediate impact. "But now the team is established and is getting support from the stakeholders in the business, I will bring in people with broader commercial skills, move members of my team into marketing or HR, and swap people between the goods-for-resale and goods-not-for-resale teams, for example," he says.
The extra £5,000
In the current economic downturn companies ought, arguably, to be concentrating more on retention than hiring. And the best way to do that is to develop people rather than throw money at them, advises Graham Burden, who runs executive search and interim management company Burden Dare.
"If someone has been made an offer by another organisation, making a counter-offer is a waste of time and money," he says. "They have already made the mental leap out, so an extra £5,000 is not going to repair the dynamics of the relationship."
Burden believes that a good way of keeping a balance between a stable team and fresh thinking, even in a downturn, is to bring in interim procurement professionals on an ad hoc basis.
Stapleton agrees: "Interim executives bring great expertise and experience gained in different companies and industries. They give you flexibility, and are very helpful in specialist areas where you couldn't justify a permanent hire. So, in professional services for example, we might bring in someone for six to 12 months, get them to organise the area, embed the knowledge, set new benchmarks and establish procedures, so the team can carry on with it once the interim has left."
Over at United Utilities, new head of supply chain Colin Davis says that in his former role as head of procurement at E.ON UK he set a developmental target for 10 per cent of the team to move elsewhere in the organisation or to a different job in the team every year.
"In the last year I was there, about 15 of the 90-strong team moved, which was good. But had 30 gone, that would have undermined stability," he says.
Smart moves
And as well as creating development opportunities within the team and the business, Davis also tried to recruit strategically. "I would hire externally in particular situations," he says. "Those might include the need to achieve a goal quickly. Or to win stakeholder credibility we might bring in an external 'hot shot' to cover a new category of spend or topic. We would also recruit when we were working to maximum capacity or if we were moving into a new area. For example, we moved into supplier relationship management at E.ON, so hired in expertise from the car manufacturing industry. Similarly, it can help to bring someone in from the outside to act as a highly visible catalyst for a big change."
But Davis believes it is important to have no more than one-third of the team working in 'stretch' roles at any time. He explains: "Having too many people at the limit on learning and not enough seasoned professionals creating credibility in the organisation leaves you horribly exposed."
Stapleton endorses this view, arguing for the need to balance new thinking with a good and consistent group of solid procurement people who provide continuity for internal stakeholders and suppliers. But this may be compromised by the trend towards greater specialisation in areas such as marketing or HR procurement.
"Good organisations are constantly looking for opportunities to refresh the team by moving people around and bringing in new blood," says Gail Pyrah, managing director of CIPS-GPA. "People who stay too long get stale and don't give their best.
"Specialisation can offer additional development opportunities. But equally, having fewer transferable skills in the team encourages companies to look outside for a specialist rather than training up an internal candidate," she adds.
Unconventional tactics
IBM uses some unusual methods to keep its procurement talent pool - currently more than 5,000 people in 70 countries - well stocked. Torben Shioler, senior procurement centre manager, Latin America and Europe, IBM Integrated Supply Chain, recently sent 12 young procurement high-flyers, each with a digital camera and 100 euros, around the clubs of Budapest, where the centre is based, on a drive to recruit graduates. The team told them that IBM was hiring and the exercise resulted in 20 new recruits.
"We start the retention process as soon as we bring them in," says Shioler. "Ensuring people have a positive experience of the company from the outset is critical to keeping them. Generation Y is much more demanding of, and less loyal to, employers than previous generations were."
As well as having a 'shadow' who helps them find their feet, new recruits get an individual development plan to ease their progress through the business. And because IBM doesn't just have its own internal procurement operation but also buys goods and services on behalf of its clients, there are a lot of career development opportunities.
But there is an additional, very important, reason to keep members of the procurement function on the move as Rob Sweetland, talent manager for procurement and supply chain management in BP Exploration and Production, points out. "In our industry, external suppliers offer inducements, and procurement is one of the highest risk areas for corruption. For that reason we look at moving people internationally to avoid compromising their objectivity."
Most procurement heads want teams with complementary skills and talents, and the best are turning the shortage of traditional procurement specialists and the inevitable turnover of good people to their advantage. But in a climate where demand continues to outstrip supply, bringing in new talent - often from non-traditional backgrounds - will preoccupy purchasing heads for the foreseeable future.
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