A recent study reports that 63.3% of organisations indicate that retaining employees presents a more significant challenge than hiring them.
As you ponder that revelation, here is another interesting fact; 71% of executives believe that employee engagement is critical to the company’s success. The findings from a separate study seem to support the previous figure in that organisations with a higher level of employee engagement are 21% more profitable than those whose employees are less engaged.
The above data raises one remarkably interesting question; if companies are having trouble keeping employees, are they in a position to compete for talent in what is an increasingly competitive job market?
Employer Brand
You are probably familiar with the old saying that a “bad workman blames his tools.”
“Are the continuing cutbacks in employee training investment a contributing factor in the apparent CPO non-confidence vote in their teams?”
In the context of the retention challenges that companies are facing, is it an employee issue, or is it a company issue? For example, late last year an article referred to a CPO survey in which the majority of those who responded said that they were not confident that their procurement teams possessed the required skill sets to deliver on their strategic goals. However, another study reports that organisational investment in employee training continues to decline year-over-year.
Is this a cause and effect scenario? Are the continuing cutbacks in employee training investment a contributing factor in the apparent CPO non-confidence vote in their teams?
Taking it out further, is a declining investment in employee development a symptom of a much larger issue – one than makes retention a problem?
An equally pressing question is what impact does it have on your company’s brand as an employer to which the answer takes on greater importance in a post-pandemic world.
A New and Uncertain World
Few would argue that the continuing impact of COVID-19 on all areas of our daily lives continues to cast an inescapable shadow over everything we do and plan.
According to a May 4th article in The Guardian, 6.3 million people in the UK alone were temporarily “laid off” or “furloughed” by 800,000 companies due to the pandemic. Globally the number is even more staggering.
While we do not have an exact figure on how many of those were procurement professionals, it is fair to say that there were more than a few. At least there were enough that one significant procurement association in another country established a workforce marketplace to provide laid-off professionals with free access to potential job opportunities.
Of course, what this means from a big picture standpoint is that there will be a great deal of movement as laid-off employees contemplate whether they should return to their existing company or test the job market waters.
In this new and uncertain world, rehiring current employees should be a top priority for organisations who, as previously stated, are already finding it challenging to keep the staff that are already in their employ.
The Positive Side of a Negative
While having to win back existing employees is by no means a slam-dunk exercise; it does provide an opportunity for companies to re-examine their internal policies and processes.
It is a positive in that they can identify the internal gaps that are contributing to issues with retention, or in this case, rehiring current employees. In addressing existing gaps, the company’s leadership can lay a new foundation to build a more robust employee engagement model that will both attract and retain the best and brightest from what will be a dynamically evolving talent pool.
From a procurement standpoint, better engagement begins with broadening the areas of involvement and influence, including the development of new skills to complement existing ones.
These new skills include relationship management, negotiation development (and not in the traditional sense), time management, strategic thinking, and change agility.
To understand the application of these newly acquired skills, let’s consider the role of strategic thinking in dealing with cash flow concerns resulting from the COVID-19 pandemic.
Self-Preservation Versus Collective Preservation
Speaking with many procurement executives since the imposition of social distancing measures globally brought commerce and with-it cash flow to a trickle, most organisations looked to preserve capital by extending payment terms with suppliers.
It seems like an obvious strategy. After all, when the inflow of revenue decreases, the outflow should be adjusted accordingly to reflect the new reality. However, is it the best way to deal with a cash flow problem, i.e., passing it on to your supply partners.
“…since the imposition of social distancing measures globally brought commerce and with-it cash flow to a trickle, most organisations looked to preserve capital by extending payment terms with suppliers”
It is in situations such as this that strategic thinking comes into play.
A handful of procurement executives did something “strategic” when they suggested that they could generate significant savings by proactively seeking early-pay discounts from suppliers.
In other words, rather than closing the tap off entirely, they changed the flow by negotiating with suppliers in certain situations where it made sense by offering to pay invoices immediately for a discount.
The premise here is that instead of shutting payments off and hunkering down to ride out the crisis only to emerge to find decimated supply chains, they could help to preserve the supply network.
Without going into the specifics of each initiative, what stood out was in recounting their involvement in taking such creative measures, the procurement executives and their teams were involved and energised. Some even felt proud to have facilitated an initiative that not only demonstrated strategic thinking but change agility as well. There was also a sense of pride in being able to help their suppliers through a tough period.
A Participant or Spectator Role
“Some [suppliers] even felt proud to have facilitated an initiative that not only demonstrated strategic thinking but change agility as well. There was also a sense of pride in being able to help their suppliers through a tough period”
Going back to the focus of this article and the importance of engagement to ensure retention, what is the likelihood that the procurement team who came up with the early pay discount plan will be motivated to stay with their company? Of even greater interest is how likely they are to become brand ambassadors for the organisation?
If you were to ask yourself that same question, what answer would you or the other members of your procurement team give?
