In being interviewed for a business publication, I was asked the question: What percentage of procurement professionals receive negotiation training?
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Now, without having access to the personal training records of the millions of procurement professionals on the planet, I had to make some assumptions.
But, I’m the type of guy that doesn’t like off-the-top-of-my-head answers, especially when it involves numbers. So, I took a look at summaries of the Next Level Purchasing Association’s records over the past 16 years. I compared the consumption of our negotiation training versus our training on other topics. I took into account our market share. I consider what I observe in procurement departments outside of NLPA business. In other words, I really put some thought and research into my answer.
And, my findings revealed a disturbing procurement statistic.
That procurement statistic is that only 55-65% of procurement professionals have received negotiation training. Now, that is not negotiation training this year. That is negotiation training ever.
I would say that’s kind of a problem, wouldn’t you?
I mean, after all, in many organizations, over half of all expenses can be attributed to the purchase of external products and services. That’s a lot of money to be spent by people who aren’t fully equipped to get the best value.
Why is this?
I think that there is a legacy perception of procurement that it is a function whose primary purpose is to save money. Therefore, dedicating money towards training is spending money, not saving it. But that’s not smart. Negotiation training is an investment, not an expense. The return that an organization can achieve by having a well-trained procurement staff far outweighs the outlay of cash for training them.
- Each procurement employee is responsible for spend of $30 million annually
- The current average savings as a percentage of spend is 2.6%
- Each procurement employee can be trained on procurement negotiation for $229
- That negotiation training would require 8 hours of the procurement employee’s time
- The hourly salary for a procurement employee is $26
That would mean that the investment for the above negotiation training is $437. To recoup that investment, each procurement employee would simply need to increase his or her savings from 2.6% to 2.6015% by applying what was learned in negotiation training.
Pretty safe bet, huh?
If procurement is going to continue to evolve into a profession on the level of accounting, law and medicine, this number needs to grow. You wouldn’t want only 55% of surgeons to have been trained how to use a scalpel or only 55% of attorneys to have been trained on how to interpret a contract or only 55% of accountants to be trained how to prepare a tax return.
So, as the procurement profession, we should not tolerate only 55% of procurement professionals being trained how to negotiate.
Here’s hoping that, in the not-too-distant future, this procurement statistic improves to a more respectable number. If you need ammunition for getting support for procurement negotiation training in your organization, perhaps this rant will give you the fuel you need to drive change.