If Streisand is correct in saying that “people who need people are the luckiest people in the world.” I want to go to Vegas with an entourage of Chief Procurement Officers, because CPOs need people.

Procurement’s greatest potential upside, people, is also its largest constraint. Of the dozens of CPOs I have been speaking with recently [for (1) a current research project: a report that will publish in January and (2) an upcoming “series” on CPO Rising], finding and retaining talented staff is a top challenge for almost all of them. While the hiring market is still an employer’s market, getting an open “job req.” approved remains a challenge for many leaders.

For those leaders without the budget to bring on new or more staff, some of the primary strategies to improve the current team (and the returns on your human capital) are (1) “trade up” in the marketplace (2) improve the current team’s capabilities and  (3) some blend of the first two. CPOs can “trade up” the skills of their current staff via staff turnover (forced or voluntary) and by getting more efficient in the tactical areas (outsourcing or near-shoring are two typical strategies that CPOs use) and investing those efficiency savings in hiring new/stronger resources that can focus on more strategic activities. Since it is not realistic to expect that a procurement department transform itself on a skills basis without a deliberate plan of action, training remains the primary lever for growing team skills. Budgets permitting, training should be pursued sooner rather than later. Depending on the size and structure of the organization, a Chief Procurement Officer may have complete control over the department’s training budget or may need to collaborate with some other internal group to ensure that the organization’s needs are addressed. Whatever your structure and process for training development, it is a very worthwhile endeavor. If procurement is truly a value-added function, investing in the people that drive that function should pay ample rewards.

Here’s an article on taking the team “Back to School” (i.e. training) and here’s what a few procurement leaders have done to improve their returns on human capital:

One Sourcing Leader in the energy industry whose team is heavily involved in both influencing and supporting large capital projects has hired both engineers and sourcing experts to staff his team. Over the past five or six years, this leader has found that the sourcing expertise is actually much more valuable to his organization and also much harder to find. He is focusing on finding and developing more sourcing expertise in 2011.

One newly, former CPO of a global consumer electronics manufacturer invested top dollar to find expertise in both sourcing and the product side, to build a fleet of what he called “procurement engineers” to support his company’s very wide-ranging and far-flung business operations. These balanced capabilities enabled his team to earn credibility with the company’s actual engineers and get involved at the start of the product lifecycle.

One CPO of a mid-sized, but very well-known financial services company has seen his staff grow from two to twenty in less than three years. One of his strategies for success is a classic way to strike it rich: “Buy Low.” When the sector was in free-fall, this leader went out on the market and snapped up some of the top talent from the falling giants, Lehman Brothers and Bear Stearns.

What is your organization doing to improve its return on human capital in 2011 and ensure that we’re better than “the way we were?”

Postscript: In retrospect, given its critical impact on success, our discussion of “Human Capital Management” has been light relative to other topics on the pages of CPO Rising this year; we can assure you that it will be a major topic for us in 2011.

Postscript II: Paradoxically, while I hang my head in shame for the double Streisand reference above, I cannot resist including this link to what one at least one person (not me) has called “the most electrically-charged moment in Grammy history.” We’re never afraid to go all in on a topic, even if that occasionally brings us over the top. Enjoy!

Tagged in: Case Study, Chief Procurement Officer, CPO, Human Capital Management, People, Return on Assets