If 2020 was the year of pandemic doom and gloom, then 2021 is turning out to be the year of The Great Resignation. According to the Bureau of Labor Statistics, an historic number of workers have been leaving their jobs, while an equally historic number of jobs have remained open. There are plenty of articles out there that state what is happening from a data perspective, but they fail to dig a level deeper into why this is happening. This phenomenon has been a long time coming. In fact, we should have expected it. If you’re struggling with retention in your procurement organization, it’s important to keep in mind that your employees aren’t disappearing, they’re just leaving … for something better.
Right Idea, Wrong Execution
When we recently polled CPOs about 2022 priorities for the function, the No. 1 priority was talent. This was also the No. 1 priority last year. And this is likely to be No. 1 priority every year. But leaders are often seeking to solve the wrong challenges. Organizations usually only talk about talent in one of two ways: The War for Talent (hiring) or The Skill Gap (hiring and upskilling). These scenarios focus on either finding new employees or expecting more and more from current employees without increasing their wages, benefits and overall value propositions. This is a problem.
The Skill Gap or The Skill Arms Race?
We’ve all heard the jokes about entry-level jobs requiring five years of experience, an advanced degree and a wish list of skills that no individual (much less a new graduate) could possess. This provides the foundation for what is usually called The Skill Gap — the idea that there’s a disconnect between the skills an employee or candidate possesses, and what’s required for a job. And the issue isn’t that employees lack the necessary skill make-up. It’s that job requirements have become so burdensome that no employee could reasonably fill them.
Procurement’s own version of this has been driven by the transition from a transactional function (RFPs out, contracts for goods and services in) to a strategic one (broad value proposition around diversity, sustainability, greater risk management, etc.). While the core value proposition of the function has moved beyond just transactional sourcing and cost savings, there has been an overall decline in headcount but no proportional investments in technology or capabilities to augment human productivity. They’re just expecting more from their current employees or new hires and, when they aren’t getting it, calling it a skill gap. It’s actually a skill arms race — procurement leaders keep expanding their remit and, in turn, expect it be fulfilled through greater displays of skill and capability from employees. We’re expecting more and more from less and less.
How to de-escalate the Skill Arms Race?
Our most recent procurement research focused on this perceived skill “gap” and how to address it without burning out employees. Our overall advice for procurement leaders could be summarized as:
The amount of time you spend discussing hiring strategies should be equal to the amount of time you spend discussing retention strategies.
When interviewing clients for this research, we asked a lot about hiring and retention strategies in this new, largely hybrid, environment. When it came to hiring, clients had a lot to say about how they’re re-thinking recruitment. When we asked about retention strategies, however, the conversation tended to dry up. A retention strategy shouldn’t be something that kicks in when an employee turns in a two-week notice; it should be something that starts the first day on the job.
In this environment, procurement leaders need to be thinking less about the skills and value they’re extracting from employees (and how they can expect more), and more about why an employee should stay with them. Some key questions to ask include:
- Are we incentivizing our employees to deliver on all that we expect from them — transactionally and strategically?
- Did we consider employee interests and preferences when we designed our roles and responsibilities?
- Are our managers viewing their employees as people, or as component parts in a machine to churn out transactional sourcing (while layering on additional strategic work)?
If your organization is like most in this environment, the honest answers to these questions may result in some uncomfortable truths. But, as your employees have learned over the last two years, disruption is never easy. Our recent research on The Skill Gap Myth can make it less difficult.
Gartner Supply Chain
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