CWS 3.0: July 27, 2011 - Vol. 3.17

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Ask the Procurement Guy: Setting Performance Goals

It’s about time for my midyear review, and I need to set some goals for the future. I have been able to hit my goals for the last several quarters and feel that, I still wonder if I’m focusing on the right things. I know my role is more than capturing savings; what are other contingent workforce managers’ evaluated on?

Speed vs. quality, risk vs. reward, savings vs. added value. These are just some of the many trade-offs contingent workforce program managers experience as they try to balance individual goals with the marketplace.

The job of CW manager is like few others. The role didn’t even used to exist, but now, it’s become a strategic part of a company’s operation. According to results of our 2010 Buyer Survey, the role of CW manager is becoming a dedicated position in itself. Anecdotally, I can say that of the 30 to 40 buyers I interface with on a weekly basis, more than half have “contingent workforce” of some variation in their job title. According to our research, CW managers tend to be well compensated relative to other procurement roles. But as far as what success is based on, the results may be surprising.

Today, CW managers are in a great spot as we head into the new economy. Here’s why. As data from the U.S. Bureau of Labor Statistics show, most companies are hiring fewer full-time employees, instead using more temporary labor. So the role of the CW professional becomes vital. At the same time, the cost of employment is rising and devising strategies to reduce or eliminate these expenses will be core to companies’ long-term strategy.

But savings is not what it’s cracked up to be. As any procurement professional will tell you, the job is not entirely about savings. While I remember feeling a lot like a rat on a treadmill when it came time to review my team’s savings performance with senior management, it was truly not the only thing we were evaluated on. Despite what our suppliers thought, departmental and savings objectives never accounted for more than 35 percent of my team’s overall performance metric.

This is borne out in our Buyers Survey data as well. We asked 300 CW managers as part of our first-ever compensation and performance survey what they were paid and how they were evaluated. We found that savings accounted for only roughly 29 percent of respondents’ overall annual goals. So if savings is not the only objective, what are the other criteria and how are they weighted on average?

Adoption. You could have the best contract on the planet, strong performance metrics, a deep and motivated supplier base, best-in-class pricing and maybe even donuts and candy for users every Friday afternoon. But if no one uses the program you’ve developed, you have failed.

Adoption is another term for program compliance, and as any program manager can tell you, maximizing program compliance is a never-ending struggle. In fact, according to our survey, most programs have an average non-compliance rate of more than 18 percent. When it comes to evaluating CW program managers, the numbers support that. The single largest metric factored into survey participants’ performance goals is in the adoption category: program development and/or process improvement. Together, they accounted for an average 40 percent of job performance. Another 23 percent of job performance was based on customer satisfaction.

In all, adoption-based metrics account for 63 percent of a CW manager’s job performance rating. This is a really important point, because it speaks to the fundamental nature of the role. We are salespeople at the core of our role. This may be surprising to some, but as I’ve always said, sourcing is sales. It is the ability to sell that often separates the good from the bad when it comes to almost every major type of initiative in an organization. As a result the very basis for evaluating success or failure in a role is to remember that the role of being a change agent is a sales role at its core.

Bryan T. Peña is vice president of contingent workforce strategies and research at Staffing Industry Analysts. He can be reached at bpena@staffingindustry.com.

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