Certification Update: The Costs and Benefits of Getting Certified

By Charles Dominick, SPSM

As the worst of the recent global financial meltdown and severe economic recession appears to be over, corporations will be looking to restock a workforce depleted by an unemployment rate that rose to a multiple-decade high of over 10 percent. Procurement departments will be no exception — they too will be seeking talent as the economy and their companies start to grow again and workload increases.

In terms of hiring procurement professionals, the emergence from this most recent recession will be much different than the recovery from the last recession in 2001. Since that time, a number of circumstances have altered the landscape of procurement employability. First, procurement continues to evolve, and expectations for more strategic performance have increased accordingly. Second, old certifications have been retired to "recertification only" status, while new certifications have been launched to reflect the higher standards for excellence in procurement. This second fact has left many procurement professionals — those seeking new jobs as well as those hiring for available positions — confused. The purpose of this article is to help both types of procurement professionals navigate this new era of procurement staffing.

At the end of the last recession in 2001, private-sector employers in the United States essentially had very few procurement certifications to be aware of. The most well-known at the time was the C.P.M. (Certified Purchasing Manager) from the National Association of Purchasing Management (now the Institute for Supply Management), which also offered the less-rigorous A.P.P. (Accredited Purchasing Practitioner). An older, but lesser known, certification — the CPP (Certified Purchasing Professional) — was also available from the American Purchasing Society.

Many Options Exist for Procurement Certification Today

While these certifications, in existence since the early 1970s, thoroughly covered the tactical activities commonly done by purchasing agents in decades past, those tactical activities were becoming less and less a part of the daily lives of procurement professionals in the 21st century. As a result, there arose a glaring need for a new body of knowledge upon which a modern procurement professional's skills could be certified. What followed was a barrage of activity in the procurement certification space.

In 2004, my company, private education specialist Next Level Purchasing, introduced the SPSM (Senior Professional in Supply Management) Certification. In 2005, the American Production and Inventory Control Society introduced its CSCP (Certified Supply Chain Professional) certification. In 2007, the Institute for Supply Management (ISM) discontinued accepting applications for new A.P.P. certifications and announced that December 31, 2009, would be the last day to take the exams for the C.P.M. certification, while it was working on launching a new qualification. That qualification, the CPSM (Certified Professional in Supply Management) was introduced in 2008. Though all these new certifications are more aligned with current procurement practices than the older certifications, they do differ in content and practicality.

Benefits of Procurement Certification for Individuals

What are the benefits of certification? There are many. For those that wish to earn a procurement certification, the most obvious benefit can be found in their paychecks.

Numerous studies show that individuals who have earned a procurement certification earn significantly more than their peers who have not. For example, in a recent survey of over 1,900 purchasing professionals, Next Level Purchasing found that procurement professionals who possess the SPSM Certification earn an average of $14,188 per year more than procurement professionals who have not earned that certification. Similarly, the Institute for Supply Management reports that those who have earned its CPSM designation earn 13 percent more than those without that designation.

In addition, more and more employers are preferring or requiring certification for the open procurement positions that they are trying to fill. A recent, random sampling of over 100 purchasing manager jobs posted on monster.com revealed that 20 percent of those jobs listed certification as a mandatory or desirable qualification. What is interesting about this fact is that independent research indicates that only about 10 percent of procurement professionals in the workforce actually possess a certification. Therefore, in addition to the ability to earn more money, having a certification can result in more job opportunities for procurement professionals.

Benefits of Certification for Companies

While those more-readily apparent advantages of certification seem to solely benefit the individual procurement professional, there are less apparent, but quite significant, benefits to organizations that have certified members of their procurement teams. For example, the aforementioned Next Level Purchasing survey also revealed that procurement professionals who have the SPSM Certification save their companies $220,206 more per year than procurement professionals who do not have that certification.

While the dramatic difference in cost savings potential is a "hard" benefit of certification for employers, the "soft" benefits are worth considering as well. Naturally, procurement departments that invest in the quality of their people and the service those people can provide to internal customers enhance their perception within the organization, oftentimes overcoming a legacy of earning little respect. In addition, individuals possessing these credentials and their attendant higher skill levels can garner more respect from the supply base, which results in more successful negotiations and more productive collaborations. And, finally, employers that commit to the certification of their procurement staffs can strengthen the team by standardizing strategies and terminology among employees, making work practices more efficient and building morale for greater performance and talent retention.

Challenges Associated with Certification

Of course, not every procurement professional is certified, nor does every employer invest in certification. Certain challenges exist that have somewhat polarized the procurement profession into the "haves" and the "have-nots."

The first challenge is keeping up with the changes in the procurement field. While leading companies routinely benchmark their procurement departments and strive for continuous procurement improvement, other companies lag behind. Some companies even lack awareness of how procurement has evolved into such a strategic function.

Without an awareness of the external environment, and in the absence of an unbiased assessment of how they compare to their best-in-class peers, lagging companies are often clueless about the type of strategic impact possible with a well-trained procurement department. As such, those companies do not require or even encourage their procurement staff to become certified.

The second challenge is continually reevaluating the organization's acceptance of procurement certifications. With three new certifications being introduced in the last six years, and two other certifications moving into "no longer attainable" status, it is easy to understand why there is confusion among employers who struggle to keep their procurement job descriptions current.

As hiring resumes, employers who have failed to keep up with the changes in the procurement certification space run the risk of experiencing unsatisfactory results with their recruiting. A cursory look at online job postings has revealed three potential problems:

Problem A:

Employers frequently specify requirements for certifications that are no longer attainable instead of the certifications that have replaced them. Thus, the quality of applicants that apply for their open positions is likely to be lower, and the time required to sift through the number of unqualified applicants is likely to be higher compared with employers who make the effort to keep their job descriptions current.

Problem B:

Employers limit the appeal of their procurement positions by specifying a single certification. Specifying just one certification is likely to undesirably exclude a large quantity of qualified candidates. For example, a job description that specifies the CPP certification could exclude thousands of qualified candidates who may possess the SPSM, the CPSM or the CSCP. Naming all certifications or even including a statement to the effect of "SPSM or similar certification preferred" is more likely to attract the optimal mix of talent.

Problem C:

The third challenge is cost. Cost has been an issue both for procurement managers who desire certification for their team members as well as individual procurement professionals who want certification for themselves. While, in years past, a business investment would be given serious consideration if it could pay for itself within a fiscal year, the economic environment of the past 18 months has been one where cash preservation is a top priority, regardless of payback period. For example, a company that was faced with deciding whether to (a) invest $1,000 in a project that would return $2,000 in a year or (b) holding on to the $1,000, is likely to have opted to hold onto the $1,000.

As the economy improves, however, and businesses and individuals realize that they must invest their capital in order to compete, the cost challenge will be more easily overcome with a solid business case.

Building a Certification Business Case

Whether you are an individual hoping to convince a spouse to authorize you to part with the money for your personal certification or a CPO trying to convince a board of directors to invest in the certification of your team, it is important to build a business case. Business cases essentially outline the amount of funding necessary to complete a project, the financial benefit of the project, the timeline for the project, how long it will take before the project's financial benefit will exceed the amount of the investment, and the total return on investment (ROI) over the period that financial benefits accrue.

For example, assume the following for an individual seeking a procurement certification:

  • Cost of certification (courses, materials, fees, etc.): $1,200
  • Begin certification study: July 1, 2010
  • Become certified: February 1, 2011
  • Obtain pay raise or higher paying opportunity: July 1, 2011
  • Increase in earnings: $1,200 per month





  • Number of team members: 10
  • Cost of certification: $12,000 ($1,200 per person times 10 individuals)
  • Begin certification study: July 1, 2010
  • Become certified: February 1, 2011
  • Begin accruing additional cost savings: July 1, 2011
  • Increase in cost savings: $180,000 per month ($18,000 per person times 10 individuals)





Summary



About the Author Charles Dominick www.nextlevelpurchasing.com

Loading