Justification for Increasing Procurement Headcount

By Soheila Lunney

March 15, 2012 at 7:54 AM

During the recent recession, many organizations put talent management strategies on the back burner, and hiring was out of the question. However, the newly released job reports, including an article in my hometown newspaper, the Pittsburgh Post-Gazette (http://www.post-gazette.com/pg/12070/1215830-84.stm#ixzz1oohMKXQ6), show that employers created 227,000 jobs in February. The unemployment rate held steady at 8.3% in the past three months, indicating that more Americans are looking for work as job growth takes hold. Now that business is rebounding, hiring new employees and talent management will once again become a priority across various industries, geographies and enterprise locations. 

Obtaining approval for increasing headcount is a big challenge for any department. For Procurement, it’s an even a bigger challenge since historically, Procurement and Supply Management functions have been viewed as overhead or a support organization as opposed to a profit center.

Make sure to begin the process of obtaining approval well in advance of your budget cycle. The first step is to prepare a thorough justification for any headcount increases. A robust justification needs to contain the following components:

  1. Why do you need additional headcount/a new position?
  2. What will this person be doing short-term and long-term? What’s the impact on your department’s strategic plan?
  3. Presently, are you paying overtime to existing staff?
  4. How much savings or added value will this new position/person be generating annually?  
  5. What is the total expense (salary, benefits, equipment, travel, computer, etc.) for adding a new person? What is the Return on Investment (ROI)?
  6. Would this position generate any revenue? 
  7. How will this person/position impact customer satisfaction?

After preparing the justification, I highly recommend that you take it to the right individuals within your organization. Start with your immediate supervisor. You may have to take it to higher level management, such as your CFO or Controller. If you need to go to a committee, I suggest that you do some one-on-one lobbying ahead of time before the meeting.  

Do not give up if you hear “No” and your justification gets rejected the first time. Try to find out what the concerns were, and address them for the second or third round of meetings. When decision makers see that you are persistent, that you strongly believe in the value that the added headcount can bring into the organization, and that you have done your homework, they will support you and approve the headcount increase.

   

 

 



Tags: Professional development Purchasing careers Strategic sourcing
Category: Blog Post

Soheila Lunney

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Dr. Soheila R. Lunney, is the President of Lunney Advisory Group LLC, and co-author of the book “The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals.” She has over 25 years of supply management, procurement, and business experience, involving both domestic and international (Far East, Europe and Russia) activities. She has extensive experience in consulting, coaching and training in supply management, procurement, reengineering the supply management process, the management of procurement function, sourcing of materials and services, reducing total cost of ownership, and negotiation of complex contracts. 

Prior to founding Lunney Advisory Group in 2007, Dr. Lunney joined Education Management Corporation (EDMC) as the Vice President of Procurement in January of 2004. Prior to joining EDMC, she was the Director/Deputy to the Chief Procurement Officer at Bayer Corporation. During her 17 years of service at Bayer, she held several positions with increasing responsibilities in Research and Development, Logistics, Customer Services, Materials Management, and Procurement.

Dr. Lunney obtained her Bachelor's Degree in Science from National University of Iran followed by M.S. and Ph.D. from University of East Anglia in Norwich, England. 

Dr. Lunney served as a member of the Board of Directors of Pittsburgh Institute for Supply Chain Management (ISM) from 2005 through 2011 and also on the Board of Directors of EDMC Foundation and Pittsburgh Regional Minority Purchasing Council. In addition, since 1999, she has been a member of the Advisory Board of Supply Chain Management at Duquesne University in Pittsburgh where she taught a course in Procurement/Supply Chain Management in the evenings.  Dr.. Lunney is a frequent speaker on different Supply Chain Management topics at professional organizations such as ISM (different affiliates), Lawson annual CUE Conference, Puridiom Conference, SPI annual Conference and is a sole holder of a U.S. Patent relevant to Polyurethane Technology and author of several publications.

Contact Dr. Lunney by email at soheila@lunneyadvisorygroup.com 


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