When a professional organization publishes salary and compensation survey data concerning supply chain management or any other function, the first inclination of readers is often to assess how their individual compensation compares to industry averages. That is of course, a natural response. Beyond our natural personal inclinations, compensation data can point to some important indicators that we all need to be aware Two newly released surveys focused on procurement and supply management compensation point to some troubling trends related to compensation disparity by gender, equal opportunities, as well as the stark effects of the outsourcing of important services to lower-cost geographies.
Both the Next Level Purchasing Association (NLPA) and the Institute of Supply Management (ISM) released separate 2014 salary survey reports. Membership in either organization is required to access either of these surveys, although the NLPA report can be accessed by signing-up for free complimentary membership at this web link and then accessing the NLPA Library after receiving membership credentials. ISM can be accessed at this web link.
The NLPA survey was that organization’s fourth consecutive survey and included over 1100 responses from around the world. The survey was conducted in late 2013 and data was assimilated in early 2014. This year’s survey headlines noted that gender disparity in both pay and opportunities still exists, and where there was equal pay, there was unequal opportunities. This survey reports the average purchasing and supply management salary was $56,306 among five job title categories. That average up 18 percent from the 2013 survey. However, disparities exist across global levels. The average salary was $76,200 in North America but was $47,501 in Asia, nearly 38 percent lower.
In North America, men out earn their female counterparts by 24 percent on average. Globally it is a different picture where the average female salary is $57,696 and the average male salary was almost 8 percent lower, probably an indicator that more women occupy supply management roles among regions. In North America, compensation among females exceeds men at the Purchasing Executive level, but lags men at the broader and more extensive Manager, Buyer and Junior Buyer levels. Among global regions, the disparity of the overall procurement workforce was noted as “astounding.” The data indicates that Africa, Asia and South America have relatively low average salaries compared to other regions.
NLPA survey data further points to demonstration of years of experience provides compensation value. The report notes that someone with over 20 years of experience garners over three times the average salary of a new entrant into the profession.
ISM’s Ninth Annual Salary Survey’s headline was that 2013 was a year where employers appeared to be careful in managing compensation and that many organizations have cut back on salary and bonus. ISM further reinforced that supply management professionals working in the field for 15 or more years can expect to earn 56 percent more than those with four or fewer years of experience. The latest ISM salary data indicates that the average base compensation for all participating supply management professionals was $101,608 and was noted as a 2 percent decrease compared to the average of 2012. While a majority of the over 2300 professionals surveyed, 62 percent, indicated that they received a bonus in 2013, that number was down 6 percentage points from 2012 responses. Median bonus was reported as $8300, up 4 percent from 2012.
Obviously, the ISM data is probably weighted more heavily toward North America. Reviewing the graphs of average salary by position indicates that there remains disparity in compensation among men vs. women, particularly at the Director and Practitioner levels and similar to NLPA data, ISM data reflects that women exceed compensation over males at the top purchasing executive level. Supply Chain Matters was not provided access to ISM’s detailed data by specific geographic region.
From our Supply Chain Matters viewpoint, the takeaway from both of these surveys, beyond comparisons to your individual compensation is the trends that both surveys agree on. On a global scale, disparity in pay among men and women continues with significant gaps at various lower experience levels. Where there is equal pay, there are unequal opportunities for advancement. That is especially troubling when one considers trends of North America based firms to outsource tactical and strategic procurement and sourcing activity to lower-cost labor regions where jobs can be narrowly focused by skill and where upward mobility is limited by lack of opportunities.
Advanced technology has provided benefits for increased productivity, management and decision-making, freeing-up procurement teams to be able to focus more on tactical and strategic supply management needs. Supply chain management responsibilities are morphing to broader dimensions of product management, manufacturing, service and customer fulfillment. That demands broader skills and additional training opportunities.
Supply management leaders cannot ignore these trends, and must insure that hiring and salary practices are more equitable and that opportunities are broadened. Continued cost cutting, merger and acquisition and other efforts directed at reducing administrative costs among North American based companies can often target the highly experienced procurement executive whose experience is lengthy but salary is expensive. Annual bonuses may be attached to budget reduction requirements. The end result is that proven experience and leadership is exiting the door and the gaps at emerging experience levels are widening.
Talent management and retention across supply chain, manufacturing and B2B functions is consistently recognized as a significant challenge today. That challenge takes on added dimensions when considering average salary and outsourcing trends. Beyond just discussion and survey participation, added leadership and actions addressing growing disparities remain a very important objective. Purchasing and supply management is strategic to insuring successful business outcomes and multi-industry employers need to recognize the needs for skill requirements and advancement opportunities at all levels and in all geographic regions.