test
02/03/2012

Opportunities for buyers

Buyers do not yet get paid in accordance with their strategic responsibility. That will change – believe the initiators of the first domestic study on buyers' salaries.

 
 



Actually, it was an expedition into uncharted territory. "Until now, there was no benchmark in Austria to allow companies to classify their buyers in terms of salary. They did not know, do I pay too much or too little", says Bibiane Sibera from the Purchasing Forum of the Österreichische Produktivitäts- und Wirtschaftlichkeitszentrum (OPWZ – Austrian Productivity and Profitability Center). That dilemma no longer exists. Jointly with the Düsseldorf-based personnel consultancy Penning Consulting and the consultancy Kerkhoff Consulting specialized in purchasing and supply chain management, the ÖPWZ submitted the first comprehensive Austrian study on buyers' salaries for which 175 domestic businesses of all industries and sizes were surveyed end of last year.

"Purchasing managers as second-tier executives receive less compensation – as compared with other functions in the companies", the German personnel consultant Stephan Penning specialized in filling vacancies in purchasing is somewhat surprised about one of the results. On average, the annual basic salary of a purchasing manager in a large company comes to a little more than EUR 100,000. Altogether 40 percent of chief buyers range between EUR 72,000 and 90,000 in salary. More than one third of the purchasing managers in smaller and medium-sized companies are also in these salary spheres; however, on average, companies of that size pay their purchasing managers – with about EUR 63,000 – a significantly lower salary than large companies.

Few bonuses as motivation. The salary study not only lists the annual gross salaries according to job activities and hierarchy levels but also analyzes the influencing factors on the salary level. "In Austria, the industry sector determines the earnings potentials in purchasing", says Penning. Across all levels and positions, the purchasing specialists in the energy industry are paid the best with a gross annual salary of EUR 106,000. Most industrial sectors pay their buyers annual salaries of between EUR 60,000 and 70,000; in the tertiary sector, the salary level is in parts even significantly below that.

"Other relevant factors for the salary level are the total purchase volume, the volume a buyer is personally responsible for, the buyer's age and the manager-to-employee ratio. In contrast, the performance factor is less important", explains Penning. Only one third of the buyers in Austria receive variable compensations in addition to their basic salaries. Even with regard to purchasing managers, merely every second of them has a bonus agreement. "Buyers are not sufficiently motivated to do an excellent job. That's a paradox because especially the performance in purchasing is crucially important for corporate success", notes the expert.

"Austrian purchasing departments hardly have any differentiated compensation systems", confirms Gundula Jäger, Managing Director of the Viennese office of the purchasing consultancy Kerkhoff Consulting. "But that's also due to the fact that companies still don't have any adequate ratio systems available for performance measurements in purchasing", the consultant detects the need to catch up. "Even when taking into account bonuses and extra benefits, buyers earn significantly less than employees in other business areas", sums up the personnel expert Penning.

Salaries will increase. But he is also firmly convinced that this will change soon: "Depending on the industrial sector, the purchasing volume presents up to 80 percent of total costs. Paradoxically, those who are responsible for that volume are paid the least. In coming years, the greater strategic importance of purchasing will bring about increases in salaries!" According to the ÖPWZ purchasing expert Sibera, comparatively low salaries and few opportunities of getting performance-oriented bonuses have negative effects on the necessary recruitment of talented junior staff: "It's difficult to get high potentials interested in a purchasing career. There are anyway only few graduates who will see their career options and job potentials in purchasing."

Sought-after experts. Actually, Austrian companies already have a difficult time to fill vacancies in their purchasing departments. "On average, it takes eight months or more to fill a vacancy", Penning knows. Moreover, 83 percent of the queried companies indicated that they had no successors for strategic key positions in purchasing.
That will open up opportunities. "Those times are over when purchasing was the backwater for any career. In Germany, companies wake up and recognize the strategic importance. They already have their first chief procurement officers there", consultant Penning sees a paradigm shift which will soon spread to Austria as well. Kerkhoff consultant Jäger also tries to persuade junior management of the attractions in purchasing: "In any event, purchasing is much more international and communicative than many other areas."