2008 Salary Survey Results Published
The results of the SmartProcurement 2008 Salary Survey has been finalised and some very interesting results have come to light. “The survey strongly confirms the global trend that the procurement function is on the rise within organisations”, says Bernie van Niekerk, Editor of SmartProcurement. 522 Procurement professionals completed the survey. The top responding industry sectors were Manufacturing, Mining, the Public Sector, Construction and Finance.
Conducted in conjunction with Specialist Supply Chain recruiter TechPro Personnel, BenchMarker Purchasing Index and Procurement Training Provider Commerce Edge, this was the first time that such a survey, on this scale, was done in Southern Africa.
The table below indicates the number of respondents per job description. (Click on the image to enlarge.)
Majority of Management White But the Ratio has Changed Significantly
A breakdown of the respondents by their main job categories and Employment Equity status shows that for Chief Procurement Officers (CPO’s) positions held were majority White (62%), Indian (8.33%), Coloured (11.46%) and Black (21.88%).
“To the extent that the results of the survey are representative of SA Procurement, this may reflect the effective skills / experience base. It will be interesting to see how reflection will change in future surveys,” says Alan Low, Managing Director of Purchasing Index.
The majority of the businesses the respondents worked for were located in Gauteng, with the Western Cape and Kwazulu-Natal coming in at a distant second and third, as shown in the following graph:
The data confirmed the view that the stature of the procurement function was steadily rising. According to Alan Low, “the following graph reinforces the growing importance of Procurement as a business strategy with 17% of procurement departments reporting directly to a Chief Executive, and a further 48% reporting to the Director Level. 8% of respondents report that their Head of Procurement sits on the Executive Board of their companies.”
Geographical Movement of Procurement Skills
Out of the 522 respondents, 149 (28.5%) said that they were planning to work overseas in the next two years. This included 28 out of 98 (29%) responding Purchasing Managers and 16 out of 63 (25%) CPOs.
81 (54%) of the 149 respondents who are thinking of working abroad have more than 10 years’ experience. In our opinion this would have a substantial effect on the skills base of what is a nascent profession. Not only would this affect the performance of the companies that these respondents work for, but the loss in terms of training and mentorship of the less experienced would also be significant. We would urge companies to ensure that they use counselling sessions and other relevant techniques to retain these skills, or, where the company has global operations, organisations should consid
er offering overseas transfers to retain these experienced members of staff within their organisations.
The graph below shows the salary increases (in bands) awarded to each group of procurement practitioners in the last 12 months. Most respondents received an increase between 5 and 10%. Depending on the timing of the increase this probably represents a 1-3% award above CPI inflation, suggesting that the profession is being recognised for its efforts and skills.
- Purchasing Managers – 15 (15%) of the 98 received increases between 10 and 12% and 11 (11%) received increases between 12 and 15%.
- CPOs – only 7 (11%) received increases between 10 and 12%.
- Strategic Sourcing / Commercial Specialists – 11 (16%) of the 68 received increases between 10 and 12%.
- Commodity Managers – 6 (25%) of the 24 received increases between 10 and 12%.
Current Remuneration Levels:
The graph below shows for each position the number of respondents for each cost to company band. For instance, for Buyers:
- 5 earn less than R99,000 p.a.
- 28 earn between R100,000 and R199,000 p.a.
- 16 earn between R200,000 and R299,000 p.a.
In analysing the above, the following points of interest should be highlighted:(Please note that in some cases, individuals responded according to title rather than role. In most cases the higher salary scale applies where individuals correctly chose the appropriate role as opposed to what their current title is)
- 10 (16%) of the 64 responding CPOs earn more than R1 million p.a. with one respondent earning more than R4 million p.a.
- Commodity Managers tended to be paid more than Strategic Sourcing / Commercial Specialists, and, perhaps surprisingly, Purchasing Managers with 17 (33%) out of 51 earning between R500,000 and R599,000 p.a. and 11 (22%) earning between R600,000 and R699,000 p.a.
- Purchasing Managers’ packages varied dramatically with the majority, 64 (66%) out of 96, earning between R300,000 and R599,000 p.a.
- Strategic Sourcing / Commercial Specialists’ packages mainly fell between R300,000 and R499,000 p.a.
Some of the above titles cover a wide variety of responsibilities within their organisations, i.e. Analyst, Procurement Consultant, etc. However, the spread of packages reflects that different organisations appear to reward their staff very differently:
- Analysts’ packages from R100,000 to R676,000 p.a. In some cases we felt that individuals were being incorrectly titled as analysts when they are essentially appointed as buyers. Where people are appropriately appointed as analysts the higher salary scale applies.
- Contracts Administrators’ packages from R150,000 to R796,000 p.a. There is a wide discrepancy between Contract Adminstrator salaries and this is driven by industry nuances. In the construction industry a contract administrator is considered to be a senior role whereas in the public sector and many private sector institutions it would be reflecting a more entry level responsibility.
- Business Improvement Specialists’ packages from R147,000 to R800,000 p.a. The higher salary scale reflects the more accurate package in this area.
- Procurement Consultants’ packages from R217,000 to R1,100,000 p.a. Here we need to differentiate again between title and role. Where an individual acts as a high level internal consultant or working for an external consultancy the higher scale will apply. In some organisations individuals playing the role of a buyer are called procurement consultants.
Priscilla Gibson from Specialist Supply Chain recruiter TechPro Personnel states that “Things have certainly moved on from a few years ago where Procurement was viewed predominantly as a transaction processor. Nowadays, with more organisations realising what their Procurement function can do for them, demand is rising for individuals with the appropriate skills. We see salary growth for more key procurement jobs continuing as demand outstrips supply.”
In the next issue, SmartProcurement will be dealing with the expectation of Salaries vs Savings.
For organisations wanting a more in depth analysis of the South African Procurement job market, SmartProcurement in conjunction with Purchasing Index and TechPro has compiled a comprehensive 72 page report that analyses the results in more detail and adds expert commentary on the results.
The paid for report can be a useful tool in establishing a remuneration / incentive structure for your or
ganisation, for planning procurement employee benefits as well as continued professional development. If you’d like to enquire about this please contact Erieka Santos at firstname.lastname@example.org or call her on +27 (861) 33-4326 and press option 2.