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Pay day: Results from the 2006 PMAC/ Purchasing b2b Salary Survey
Lisa Wichmann
There's an old joke that says the only way to get a significant pay raise is to leave your organization—and then come back. Apparently, it sends a powerful message to your employer that your skills and experience are valued elsewhere. When your old company wins you back, they might offer a more generous salary.
Other strategies are less dramatic: changing jobs within the same company; ensuring you draw attention to your achievements; and perhaps most importantly, chalking up professional accreditation and post-secondary courses.
But backing up a bit, there's a keystone question that must be answered: are purchasers satisfied with their salaries? A few years ago, the answer was likely yes. Everyone recalls the year gas prices dipped down to a baffling 45 cents per litre. Interest rates were at rock bottom, and in many urban centres, the price of a house was still reasonable.
Fast forward to 2006 and things look dramatically different. Gas prices keep hitting new records—well above $1.00 per litre. Home energy costs are spiking out, and housing prices, particularly in hot spots such as Calgary, are soaring. If ever there was a year of the squeeze, 2006 is it.
So it's safe to say purchasers have probably joined the ranks of those striving for a pay raise that actually covers the higher cost of living. Aside from the general desire to make more money, the topic of pay sparks other concerns.
If purchasing salaries start to erode or stagnate, the underlying message is dire. It can be interpreted either as a sign the profession is losing prestige, or is being transferred to less knowledgeable people for cheaper pay. On that point, supply chain practitioners can rest easy.
Compensation is up, according to the 2006 Purchasing b2b/ PMAC Salary Survey and Profile. The news is better for some than others, depending on your location, industry and other factors.
What the numbers say
In May 2006, nearly 2,000 Purchasing b2b readers were randomly selected from the magazine's circulation list. A salary survey was mailed to them by G. Bramm & Associates (Oakville, Ont.) The response rate was 11 per cent.
The results presented here don’t reflect actual salaries, but averages by job title, location, years of experience, etc. Use the results as a guide to determine how your salary ranks against the average in each category.
This year, supply chain practitioners are reporting an average salary of $66,357, compared to $63,663 cited for 2005. That's a 4.2 per cent increase, indicating regular, and just above modest, pay hikes.
Male purchasers are still earning more than their female counterparts—$70,089 versus $60,119. The 17 per cent difference repeats itself year after year. It's not widening, nor is it narrowing.
In terms of geography, Alberta is the star once again. As in previous years, Alberta purchasers top the scale—at $75,418 for 2006. The more lucrative industry seems to be retail and wholesale trade, where purchasers pull in $81,092; followed by natural resources at $80,709. As expected, average annual salaries rise with age and years of experience.
The average purchaser
According to the survey data, the average respondent is 42 years old and has 13.7 years of experience in the field of supply chain management. Typical company size is 4,599 employees, and the purchaser has a personal buying volume of $19.9 million. The department volume is $74.3 million.
Curiously, when we conducted the survey in 2005, the average age was 46 and years of experience came in at 18.5. The surveys were sent to different readers this year, which might explain the lower age and years of experience. But more likely, it's probably a result of the baby boomers retiring, and passing their portfolios on to younger workers.
A study by the Conference Board of Canada released last month reveals most companies will face labour shortages over the next few years. The survey, conducted in 2005, involved 137 corporate executives. The results show 23 per cent of respondents are already feeling the effects of an aging workforce, and four in five executives believe they'll be affected over the next several years.
According to Statistics Canada, the vanguard of the baby boomer generation turns 60 this year, and the "wave of retirement" will trigger institutional and cultural changes. The study, called New Frontiers of Research on Retirement indicates there are gender differences in retirement patterns.
"The behavior of baby boomer women will greatly influence what retirement in Canada looks like in the future. Women are much more likely than men to see retirement as involving more than just getting a pension or stopping paid work."
More women have accrued "substantial" pension benefits from their companies, which might provide them with even more encouragement to retire. Plus, once women start the transition to retirement, they tend to complete it much faster than men.
That's word to the wise for companies hoping to encourage older workers to stay on a few more years. Much of their efforts will have to focus on female employees. It will be interesting to see if those efforts narrow the persistent 17 per cent gap between male and female salaries.
And when retirement is on the agenda for the worker, it often takes more than a hefty pay raise to keep them interested, according to Graham Lowe, a workplace consultant based in Kelowna, BC, who wrote an article on the topic for Canadian HR Reporter (February 27, 2006).
In the article, Lowe writes "more than one in three workers with retirement plans are receptive to staying in the workforce for a few years after their planned retirement dates. But these decisions will be strongly influenced by job quality issues. In other words, such employees find the opportunity to do what they are really good at as incentive to keep working," Lowe said. Part-time work and flexible hours are also big bargaining chips.
The power of education
Why are older workers so coveted? Their vast experience is the obvious answer. But just as enticing is their level of education, which far surpasses that of other generations, according to Statistics Canada.
"The distinguishing characteristic of the boomer generation in the labour market has always been their higher level of education compared with previous generations. This greater education is reflected in the proportion of people aged 55 to 64 with some post-secondary education, which rose from about one quarter in 1990 to one half last year as boomers moved into this cohort en masse," states a Statistics Canada report.
It stands to reason, then, that salaries in the supply chain management field are healthy, largely because of the high education level of older workers. When the younger generation takes the reins, the experts seem to be split on their predictions. Some foresee younger workers taking over the duties of their retiring peers for just marginal pay increases.
For instance, an article in Canadian Business magazine (April 24, 2006) included comments from Marty Parker, managing director of Toronto-based executive search firm Waterstone Human Capital.
Parker's clients are trying to fill the void left by retiring workers, but they're focusing on candidates between the ages of 35 and 45 to fill senior vice-president positions—"a younger target group than five years ago. Companies clearly hope to get more energy and ambition for a little less money."
Clearly, younger workers in the purchasing field will have to insist on near-to-equal pay for taking over the responsibilities of departing workers. But they'll have to back up their claim with education and professional status—a pattern displayed in the 2006 salary survey.
Year after year, respondents who hold the Certified Professional Purchaser (C.P.P. designation) from the Purchasing Management Association of Canada (PMAC) report higher salaries than non-C.P.P.s.
C.P.P. holders make an average of $79,332; while non-C.P.P.s earn an average $61,209. The level of pay usually increases in accordance with the level of PMAC involvement.
In the past, education and professional memberships were often viewed as a nice-to-have, but not a prerequisite. As the level of accountability increases in public sector procurement; and publicly-traded companies grapple with legislation around financial control, supply chain management is quickly gaining representation at the corporate leadership level.
The field's increasing prestige—coupled with the requirement for younger workers to test their mettle against the legacy left by the boomers—will make post-secondary training and professional accreditation critical to advancement in the field.
We’ll check back next year to see if efforts on that front result in a bigger and better pay day for purchasers.
Lisa Wichmann, editor of Purchasing b2b, may be reached at lisa.wichmann@pb2b.rogers.com
A PDF of the article (with salary tables) may be viewed by clicking on the salary survey banner on our home page; then on the text link at the bottom of the calculator.
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