The Institute of Supply Management is out with its eleventh annual salary survey for procurement professionals for 2016 (based on 2015 data), and with a decent if not great economy and a reasonably tight job market in the supply management field, the numbers look pretty good.
Supply Chain Digest Says... |
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| It could be more talented and ambitious supply managers who would make more money than average generally are also more likely to get certifications. |
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As reported in ISM's Inside Supply Management magazine, the average compensation for all participating supply management professionals was $109,961 in 2015, an increase of 7.9%. compared to the average found for calendar year 2014 of $101,944.
The data set is sizable, so these numbers have some credibility. A random sample of names in the ISM database (including both members and non-members) was selected for the survey. As many as five email invites were sent to solicit participation.
In the end, about 3300 valid survey responses were achieved. SCDigest will note there might be some upward bias in the survey respondents, as it would seem a person might be more likely to participate if they felt good about their pay and recent changes in it versus those less happy with their situations.
That could bias the average compensation numbers up, but since the same mythology has been used each year, the numbers for changes in 2015 over 2014 shouldn't have much bias.
The report gets right to it, offering the chart below on average compensation by level in the organization, from CPOs and equivalent positions down to supply management newbies. (Note: in all the charts, the red bars are for men, the blue for women, and the orange for all respondents
As can be seen, CPOs averaged about $242,000 in salary compensation (bonuses are beyond that base salary). Interestingly, in a continuing trend over the several years, women CPOs earn somewhat more than men, although that only holds true at this most senior level. At all other levels, women earn a bit less than men.
Source: ISM
At the director level, the average salary was about $155,000. At the manager level, about $109,000, down to a still fairly healthy $75,000 for new procurement professionals.
64% of respondents received a bonus for 2015 (up from 60.7% in 2014). The average bonus was $21,513, or 20% of average base salary (down from 21% in 2014). So, if the 20% or so average bonus holds true at the CPO level, that would add another $48,000 to total compensation at that level, or a total of $290,000 between salary and bonus.
But that doesn't include the value of any stock options (which is not easy if even possible to measure when awarded). The survey found just 11.5% of respondents received stock options in 2015, with the average dollar value of stock options awarded coming in at $38,748. The median value of stock options awarded was $12,500. Of course, many privately held companies simply do not offer stock option programs.
As usual, life is always better at the top: the top 5 percentile of options granted was $364,344, up 68% compared to $216,533 in 2014.
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"The article also shows a strong correlation between achieving various certifications and average salary. Supply management professionals with no certifications had on average salaries of $102,000 in 2015, as shown in the chart below, those with ISM's Certified Professional in Supply Management (CPMS) certification average about 10% more, at $111,000.
Source: ISM
Those with the Certified Professional in Supplier Diversity (CPSD) averaged even more, at over $123,000.
Of course, association does not equal causation. It could be more talented and ambitious supply managers who would make more money than average generally are also more likely to get certifications. And/or, those same people are likely to have risen higher in the organization, where salaries are higher.
More details on the 2015 procurement salary study can be found at the ISM website.
SCDigest will note that this data conflicts with a report released in 2015 by CAPS Research, an arm of ISM, which found that on average total average compensation for CPOs was a whopping $464,756, consisting of $287,151 in salary and an average bonus of a nice $180,002. (See Just How Much to Chief Procurement Officers Make? A Lot.)
Those CAPS numbers are well above the compensation figures from the ISM survey.
Our only thought is that CAPS Research tends to focus mostly on large companies, where salaries and bonus would tend to be higher, versus perhaps a more broad base of large, medium and smaller companies in the ISM data.
Any reaction to these ISM compensation numbers? Do they seem accurate? Let us know your thoughts at the Feedback section below.
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