Hiring freezes threaten to halt procurement’s expansion plans

Harry John

Notwithstanding economic uncertainty, Procurement Leaders members indicate teams will grow by an average of 8% in 2023

From the technology sector to banking and retail, soaring costs and persistent uncertainty have led companies to cut thousands of jobs in the second half of  2022.

US employers announced a total of 76,835 job cuts in November 2022 – a 127% increase on the October figures, according to a report from employment consultant Challenger, Gray & Christmas. Leading the way, the technology sector has cut one-quarter of all jobs this year, the report noted.

In Europe, too, companies are trimming headcount. Sweden-headquartered fast-fashion retailer H&M announced in November it would cut 1,500 jobs internationally as part of a cost-cutting drive driven by slowing sales and rising costs. Fashion retailers Asos and Joules, airlines Finnair and AirFrance, and Italian state-owned bank Monte dei Paschi di Siena are among other organisations in the region to have announced layoffs in 2022.

In contrast to such stories, procurement teams appear bullish on their 2023 hiring plans. Half of respondents to Procurement Leaders’ November 2022 Procurement Pulse said they planned to increase the size of their teams in 2023 when compared with the previous year (see Figure 1, below) – by an average of 8%. In comparison, just 14% of respondents said they planned to reduce the size of their procurement teams in 2023 when compared with 2022.

Half of CPOs plan to increase their function's headcount in 2023, 32% will maintain current staffing levels

Source: Procurement Leaders, November 2022

The above findings roughly correspond to data collected during August 2022 through Procurement Leaders’ CPO Compass 2023 survey. At that time, 44% of procurement chiefs said they expected a net increase in the size of their teams in 2023 when compared with 2022, while 6% said they expected their teams to shrink.

There are several reasons why the procurement function may be experiencing a growth spurt. For instance, many teams are investing in new roles and capabilities, emboldened by increasing levels of strategic exposure and a decline in the demand for generalist and administrative roles thanks to advances in automation.

Mirroring the findings outlined above, Procurement Leaders’ 2022 report, Functional capabilities: elevating procurement in an age of disruption, found that teams will grow by 9% between 2022 and 2025. Much of that growth will come from specialist sustainability, risk and enablement roles, according to the report.

Securing sufficient resources

Procurement managers’ bullish hiring plans could yet be upended, however, as the realities of surging inflation and economic uncertainty weigh on corporate finances.

Estelle Remise, CPO of Netherlands-headquartered global leader in HR services, Randstad, plans to hire two new roles in procurement 2023 – once a hiring freeze ends in March of the same year. She tells Procurement Leaders she needs more personnel to support the business in the shift towards centralisation.

“The rationale behind the increase in my team size is that the global procurement function was only established 18 months ago. We started with a greenfield in setting up the global function and now we need more resources centrally to support the company’s strategic initiatives and deliver value to our stakeholders” Remise explains.

Specifically, the CPO is recruiting a business analyst, to assist the procurement excellence team with performance reporting and thus demonstrating the function’s added value, in addition to a head of projects.

The head of projects will be responsible for a large portion of that added value, with oversight of third-party risk management, sustainability and supplier diversity. “Today we are working on those initiatives as a hobby on top of the business-as-usual, which is not sustainable. If we really want to deliver results in these areas, which are high on the company agenda, we need to dedicate time and effort,” says Remise.

The threat of a global recession next year leaves question marks over Remise’s budget and hiring plans, however, as she explains. “Risk, sustainability and diversity are company priorities, but if I cannot hire my head of projects… we can only do so much with the resources we have.”

Remise’s story highlights how the polycrisis has the potential to force procurement functions to take a step backwards. If leaders cannot secure sufficient resources, they may be unable to develop the kind of value-added capabilities to which Remise and other forward-thinking CPOs aspire for their teams.

Remise says she believes demonstrating value beyond savings represents her biggest opportunity in 2023. But she cannot meet that challenge without adding new roles to her team. “Savings is, of course, a key metric – but then it’s everything else we can deliver on top,” she says. “That’s why having the right team and competencies is so important.”

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