02/07/2012

Recent salary study: Buyers in Austria's energy industry are top earners

Düsseldorf/Vienna, February 7, 2012 – Buyers in Austria's energy industry earn an average of EUR 106,000 per year and thus leave other industries far behind. Buyers in the wood and paper industry earn an average of EUR 77,000. The car industry, the pharmaceutical industry and machine manufacturers pay their buyers EUR 65,000 on average. The service sector brings up the rear: Its buyers receive an average annual salary of EUR 47,000. That's the result of the first Austrian study on buyers' salaries, conducted by the personnel consultancy Penning Consulting, the purchasing experts of Kerkhoff Consulting and the Purchasing Forum of the Österreichische Produktivitäts-und Wirtschaftlichkeits-Zentrum (ÖPWZ – Austrian Productivity and Profitability Center). In 2011, a total of 175 Austrian enterprises of all industries and sizes were surveyed for the study.

"Until now, Austrian companies had no benchmark allowing them to classify their buyers in terms of salaries", says Bibiane Sibera from the Purchasing Forum of the ÖPWZ. "They did not know: Is the salary I pay in line with market requirements? Do I pay too much or too little? That's why the ÖPWZ, together with Penning Consulting and Kerkhoff Consulting, recorded the average salaries of Austrian buyers for the first time."

"The industry sector determines the earnings potential in purchasing", says Stephan Penning, Managing Partner of the personnel consultancy Penning Consulting and author of the book "Personal im Einkauf" (Wiley Publishers VCH 2010). "But the size of the company and the amount of purchase volume also crucially affect the compensation of buyers in Austria." The study shows: Heads of purchasing in large companies with sales of more than EUR 100 million annually receive significantly higher compensations. Their salaries are about 40 percent higher than that of their colleagues in companies with sales of under EUR 100 million. Last year, the average annual salary of purchasing managers in all sectors of the industry in Austria came to EUR 82,000. "Despite the clear correlation of company size and salary, however, the top salaries in surveyed companies are not paid exclusively by the largest companies", says Penning. "Due to flat hierarchies and the resulting possibility to assume executive responsibility rather fast, companies with 100 to 250 employees also pay top salaries." Moreover, in large and small companies, the salary gap is not as big for specialists or experienced employees in charge as for executive personnel. Thus, "strategic buyers" in large companies receive, on average, only 20 percent more salary.

Only one third of the buyers in Austria receive variable compensations in addition to their basic salaries. Even with regard to executive personnel – i.e. the purchasing managers – just every second of them has a bonus agreement. And it's even only 41 percent for purchasing managers of smaller companies. Their average bonus is about EUR 4,000. On average, purchasing managers of large companies with more than EUR 100 million annual sales receive four times the aforementioned bonus figure as their variable salary component. "Buyers are not sufficiently motivated to do an excellent job", says Stephan Penning. "Surprising is not only the low rate of heads of purchasing who get any variable salary at all, but also the small amount of bonuses. It's difficult to get high potentials interested in a purchasing career."

The bonus assessment basis also provides no incentive for top performance. Only one fourth of the bonus can be realized through individual objectives. Another 36 percent of the bonus will be due when corporate objectives are met; 27 percent when divisional objectives are reached and 12 percent for team objectives. "Currently, Austrian purchasing departments hardly have any differentiated compensation systems on the basis of specific control and measuring parameters", says Gundula Jäger, Managing Director of the Viennese office of the purchasing consultancy Kerkhoff Consulting. "But that's also due to the fact that Austrian companies still do not have any adequate ratio-supported systems available for performance measurements of purchasing departments. In this respect, companies urgently have a lot of catching up to do."

As opposed to their colleagues in sales, Austria's industrial buyers are not well motorized. Only 17 percent of those surveyed have a company car. Even purchasing manager frequently cannot hope to get a car from their employer. Only two out of five purchasing managers have a company car. Even other company benefits are available for only a few buyers: Barely one fifth of them obtains employer-financed pension provisions; eight percent have a private accident insurance from their employer and only four percent a supplementary health insurance. Especially parents in purchasing departments get little support: Only one percent of those surveyed obtains child care allowance.

"Even when taking into account the total package with bonuses and extra benefits, buyers frequently still earn comparatively significantly less than employees in other business areas", says personnel consultant Stephan Penning. "This can be explained such that, despite its huge impact on a company's operating results, purchasing had not been considered a serious management discipline for many years", says Gundula Jäger. "But recently, there has been a paradigm shift. Those at the helm of companies discovered just how important an optimally managed purchasing department actually is for their companies' earnings. They had to learn this especially in the 2009 economic crisis when sales suddenly plummeted and everybody was desperately looking for savings solutions."

Penning says: "In coming years, the greater strategic importance of purchasing will bring about increases in salaries. Today already, companies in Austria have a hard time finding recruits. On average, it takes eight months or more to fill vacancies." Moreover, 83 percent of the queried companies indicated that they have no successors for strategic key positions in purchasing. "It's now important for companies to correctly point the way ahead in incentive systems and get top young personnel on board so that such young talents can be developed to become responsible executives over the years."

About the study

In October 2011, the survey was electronically conducted by the personnel consultancy Penning Consulting, the purchasing consultancy Kerkhoff Consulting and the Purchasing Forum of the Österreichische Produktivitäts-und Wirtschaftlichkeits-Zentrum (ÖPWZ). A total of 175 Austrian companies from all sectors of the industry participated in the study. These companies provided the salary data of a total of 264 job positions. Further information about the study is available from Mr. Christian Pfeiffer, +49 211 62 180 61 148, c.pfeiffer@kerkhoff-consulting.com.