As an industry, we are not doing a great job of retaining purchasing talent. I know; I have trained a lot of people over the years, half of whom have used their newfound knowledge to leave the industry, seeking other opportunities. Like IT experts, purchasing professionals can work in any industry.
So why are so many choosing to leave the home building and building products sectors? There are several reasons, but the ones I hear most include lack of appreciation, too much rework, and limited opportunities for advancement.
What's It Take to Keep Your Purchasing Team? 3 Ingredients
1. Show Appreciation
Lack of appreciation can come in many forms. Sometimes it’s not having the authority to make decisions. If your company expects the purchasing team to bid out a project and then present their “recommendations” to the construction team or some other authority to make the final decision, the message being sent is that you don’t respect or appreciate the role of that person or team—and you certainly don’t appreciate what they go through day in and day out to help the organization succeed.
Purchasing is a difficult, complex job, but it’s especially challenging in the current supply-constrained market. A good purchasing professional must understand the construction process, local building codes, risk management, the enterprise resource planning system, schedules, the installing trades in a given market and the materials they use, alternative materials that could be used, their cost drivers, and so on—all while being an excellent negotiator. In short, it’s a critical role in our industry, and it needs to be treated that way.
Lack of appreciation also comes in the form of compensation. If your company pays its purchasing team members less than it pays their construction counterparts, then you really don’t understand or appreciate the value purchasing pros can provide.
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To be fair, you may have a paper processor instead of a true purchasing professional in that role ... in which case whatever you pay him or her is too much. Purchasing is not about how efficiently you can award new communities or process change orders. It’s about putting trades on the job who are capable of meeting the business requirements at the lowest total cost of ownership. Keep in mind that the majority of the money you will spend as a home builder will be in the cost of vertical construction. Never give an idiot your wallet; it’s the fastest way to go broke. If you have a good purchasing professional, it’s best to pay them competitively—before someone else does.
Furthermore, if your company fails to acknowledge when the purchasing folks have gone above and beyond their job description or scope, they’ll feel underappreciated and will be more likely to look elsewhere for work.
I remember early in my career in purchasing, during an inflationary environment, I actually managed to reduce the categories assigned to me by an average of 7.5%. My manager was very excited and pointed it out to the CFO during one of our quarterly meetings with the CEO. I will never forget the CFO’s response: He looked directly at me and said, “Isn’t that what we pay you to do?”
At the time, I had worked for the company for six years, but after that exchange, I knew there would not be a seventh. The next time a recruiter reached out to me, I took the call, and I left the company about six weeks after that meeting with the CEO.
The lesson: It costs nothing to thank someone for going the extra mile, but it can cost you everything you have invested in a person if you don’t. As I tell the leaders I mentor, “Catch someone doing something right and thank them for it.”
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2. Mitigate Chronic Rework
Rework is a real challenge in our profession. A project’s lead time is often consumed by the municipality, land development, architecture, or engineering. To try to open a community on schedule, some builders will provide information to their purchasing department “piecemeal.” As a result, purchasing professionals, trades, and suppliers are faced with inefficiencies and rework. A day at the front of the process is worth as much or more than a day at the end of the process.
To mitigate that issue, do all you can to set milestones and hold other departments accountable for their part of the process. Make sure purchasing has the information needed to do its job effectively and efficiently. Minimize unnecessary frustration everywhere you can and you’ll improve your chances of keeping top purchasing talent.
3. Provide Opportunities for Advancement
Lack of opportunities for advancement is a common lament from purchasing professionals who have quit an employer. To help retain talent, look for opportunities to grow your team members in areas outside of their core responsibilities.
For example, have purchasing professionals cross-train in construction, warranty, and land development. Not only will you get fresh ideas on how to improve those other key areas, you’ll also have a well-rounded purchasing team.
Also, try to promote from within wherever possible. I know there are challenges with that approach, but filling an open position with an internal candidate creates another open position—perhaps filled with an internal candidate, causing a third opening, and so on. It’s definitely more work, but it’s worth it to boost morale. (Don’t get me wrong, you should always put the best person you can afford into a role, but if you are mentoring your current team and developing your bench strength, shouldn’t they be the most qualified?)
You should also be open to promoting from other departments. If a purchasing professional at your company sees other purchasing pros promoted to key roles in other departments, they will be more interested in learning other functions and more likely to stay with your company.
Purchasing is a difficult, complex job, but it’s especially challenging in the current supply-constrained market.
It also helps retention to do all you can when screening job applicants. If they lack a passion for home building, it’s unlikely they will stay long-term. Better to hire people committed to (or at least truly interested in) our industry.
Also, look at an applicant’s track record; if they hop from job to job every year or two, what makes you think they won’t do the same thing to you? It takes a good six to 12 months to get an inexperienced person trained and fully productive. If they leave you once you get them trained, then you’ve wasted precious resources on the wrong candidate.
Turnover is disruptive and costly. Remaining team members are required to take on additional work assignments while you find a replacement. There are recruiter fees to consider, the cost of training new people, and the cost of the mistakes they make until they are proficient.
Do all you can to hold on to good people. Make sure they know they are given authority, paid fairly, and are recognized. Ensure they have the information and tools they need to do their jobs. Develop them and provide them with growth opportunities beyond the purchasing department.
That’s my recipe for retention. Let me know how it goes.