The 11th Annual Survey Of The Canadian Logistics Professional
Over the 11-year history of our survey, we have been able to note significant gains for supply chain managers. As the profession’s true contribution to the economic viability and operational competitiveness of Canadian corporations became better and more widely understood and appreciated, notable gains in pay packages followed. And it certainly didn’t hurt that the highlight on supply chain management was turned on at a time when the North America economy was booming.
Yet the recession that gripped Canada last year was deep and the rebound is expected to be slow, sluggish and uneven. Many companies have suffered, and are still suffering, drastic revenue drops and have responded with similarly massive cuts to their budgets and their staff. Was the new appreciation for the role of supply chain management enough to help logistics professionals avoid the cuts or at least reduce the severity of them?
That’s one of the most important questions we tried to resolve with our latest survey, followed by some guidance on what to expect for 2010.
Our many years in the field with this survey have helped us gather a great deal of trending information, providing valuable insights into how pay packages for the supply chain profession are evolving.
In the following pages, you will find a detailed analysis of pay and bonus packages. The various breakouts are presented and designed to provide a strong indication of how corporate/ industry factors (such as size of company or logistics budget) and personal factors (such as experience and education) affect pay packages. We hope the data will provide supply chain professionals with a clear indication of where they stand in terms of their total compensation package, which factors are the most important in determining pay levels, and what they can realistically expect for the coming year.
Although pay levels are critically important, they are not the only ingredient to job satisfaction. Our report is spread out over two issues so that we may bring you additional information our survey collects about the work life of the Canadian supply professional. In the next issue, we will provide benchmark data on such key areas as mobility, turnover, education, job function, projects implemented, gender differences and job satisfaction. Once again this year we will examine how difficult it is becoming to attract and retain talent -it may not be an issue right now, but it’s sure to be as the recovery takes hold.
As with all past years, we enlisted the help of professional research consultants G. Bramm & Associates to compile and analyze the data and to ensure the accuracy of the survey.
A survey of this size is a considerable undertaking and would not be possible without the continuing support and insights of our founding sponsor TSI Group, and our supporting partners, Supply Chain & Logistics Canada and Laurier Business & Economics. The incredible response we received this year, as well as in past years, has much to do with their involvement.
The greatest thanks goes out to the hundreds of supply chain professionals who take the time each year to fill out our comprehensive survey and also make sure to provide detailed comments to our open ended questions. We know how busy you are -so we are very grateful for your contributions every year.
We are confident our annual survey provides the most accurate and comprehensive reflection of the Canadian logistics profession available today. And we look forward to presenting and commenting on the results, as well as providing more detailed information than we have room to show in this issue, at industry gatherings throughout the year.
Lou Smyrlis Editorial Director It was too good to last. Supply chain professionals through much of the past decade had been reaping the benefits of greater executive-level appreciation of the impact of supply chain management on company performance and a vibrantly bullish market. Just two years ago, we even reported that supply chain professionals were doing well even in the face of possible economic adversity. But we warned that could soon change and the results from our survey last year showed that it had. Unfortunately, but certainly not surprisingly, the fortunes of supply chain professionals took yet another wallop in 2009.
The nation’s supply chain managers were under no illusions about what 2009 held in store for their careers. After suffering through the lowest average pay hike in the 11-year history of our survey, their expectations for 2009 pay increases were meager. To begin with, only 63% were optimistic about getting a raise in 2009 and they expected, on average, just a 3.5% pay hike. That was the most pessimistic our survey respondents had been on both counts.
Unfortunately things turned out even worse than they expected.
The 3.2% average pay hike reported for 2009 sets a new record low for our survey. And yet, those that got that increase can consider themselves fortunate. The reality for most supply chain professionals in 2009 was no increase at all. Only 39% of those responding to our survey could report taking more money home in 2009, which makes the 2009 pay hikes the least equally shared in the 11-year history of our survey by long shot. In comparison, last year’s report was lamenting the fact that only 65% of respondents reported receiving an increase in 2008. Compare the 2009 figure with 2008 and with the three-quarters that received pay increases in 2007 and 2006 and the 82% high mark set back in 2001 and the toll the economic downturn took on supply chain salaries is quite clear. (The years 2002 to 2005 marked consecutive declines in the number of supply chain professionals receiving an increase, but still far Consistent with previous surveys, the vast majority (77%) of the 727 supply chain management professionals included in our sample defined themselves as being in the management ranks of their organizations. The average age of respondents was 47 with 19 years of industry experience. One-fifth of respondents were women.
Respondents performed a variety of functions. The most frequently mentioned remained transportation with 76% having responsibilities in this discipline. Other functions mentioned by about half the sample included warehousing/inventory control, and purchasing.
The majority of respondents (45%) were employed by companies in the manufacturing sector. Another 15% were employed in the retail sector while those employed in the third-party logistics sector totalled 17% and those working for transportation providers totalled 19%.
Industry-wise, consumer products, food and kindred products, automotive, high tech, chemical and allied products, metals and textiles were the groups most highly represented by survey respondents.
More than half (55%) of respondents worked in Central Canada, while 23% worked in Western Canada, and 21% in Eastern Canada.
The respondents also represented a mix of small, medium and large enterprises.
larger percentages of supply chain professionals -68% in 2005; 72% in 2004; 73% in 2003; 76% in 2002 -received an increase in those years than in 2009).
Similar to previous years, the majority (55%) received an increase in the range of 2.1 to 4%. Another 12% did better than that with increases in the 4.1% to 6% range while 6% pulled off raises in the 6.1 to 10% range. Just 1% of our survey sample did very well in 2009 with pay increases above 10%. At the bottom end were the 26% who managed raises of less than 2%. This was a much larger group than in previous years.
Indicative of how much the recession stung and how deep a hole we have to climb out of, is the fact that as bad as 2009 was, most don’t expect it to get much better in 2010. Only 53% expect to get a raise in 2010, by far our lowest tally in a decade. And they expect on average no more than the dismal 3.
2% hike they received last year. As previously mentioned, a year ago 63% were expecting an increase the following year. Back in 2006, 82% reported they were hopeful about receiving a raise the next year, and 76% were similarly optimistic in 2007.
Also, similar to recent years, about half (44%) say their salary levels have not kept pace with their growing responsibilities over the past five years.
They report that their salaries have increased 15%, on average, over the past five years. Almost two-thirds, however, still rate their salary increases over the past five years as either good or fair, but 22% now rate their increases as poor. Only 6% rate their increases as excellent. On average, survey respondents rated their satisfaction with their pay package at 2.2 out of 4 on our satisfaction scale.
The average base salary for 2009 across all positions came in at $77,700. In comparison, when we first polled supply chain professionals about their salary levels back in 1999, the average base salary was $66,800.
In recent years, we also started taking bonuses into account. The average bonus in 2009 was $6,350. In combination, the average salary and average bonus make for an average total compensation package of $84,050, a couple of hundred dollars below the previous year’s total. However, that figure represents salaries averaged across all sectors and all levels of hierarchy. It’s far more accurate to consider compensation levels by position in the company.
When examined by position, those considered to be executive managers within their companies enjoyed an average total compensation package of $129,119. Senior managers had an average total compensation package of $95,248 while operations managers pulled in $72,015 on average. Supply chain professionals considered to have support or sales roles within their companies had an average total compensation package of $59,118.
What these figures also point out are the differences in pay levels attributed to a variety of factors such as the sector you work in, the region of the country in which you are based, the size of company for which you work, and how highly your company values the role of supply chain management within the corporate hierarchy.
Our survey takes into account 12 different factors as a way to provide as accurate a picture as possible about how they influence pay levels (see the accompanying charts). It is also the only survey in the Canadian supply chain market that includes a formula that helps explain how each of these factors relates to each other -in other words, which factors are most important and which least important in determining pay levels. The statistical procedure we employ is called coefficient of determination and measures the impact of factors such as experience, size of company and position in the organization on total compensation. It also allows us to measure the degree of importance of one factor over another in helping determine pay. (See the Top Factors Impacting Salary Level)
Examining the corporate factors first, the most important factor in determining a supply chain professional’s salary is always the person’s position in the organization. We’re not talking about the obvious here; that the higher you climb up the corporate ladder the more money you can expect to make. Rather, what this points to is the importance a company places on its supply chain management function – particularly during tough economic times – will most likely determine if supply chain management is considered an executive or senior level position within the company or an operational or support staff role. Understanding your company’s perspective when it comes to the value of supply chain management is critical. Basically every step up the management rung carries an increase of $20,000 or more.
However, all past surveys have found that those in the upper echelons of company management bear the brunt of company belt-tightening, particularly during economic slowdowns. In recent years, executive managers have found it considerably more difficult than supply chain professionals in lower management levels to secure a pay increase or bonus, and 2009 was no different. While 39% of those considered supervisors or operations managers secured a pay increase last year, as did 52% of those in senior management, and 39% of those in support or sales roles, only 21% of executive managers responding to our survey received a pay increase.
Executive managers are the least optimistic about a raise for 2010. Only 41% believe they will get a pay hike in 2010, which is the same as the previous year, but a considerable drop from the 65% who thought likewise in 2008 and also far below the percentage of senior managers (60%), of operations managers and supervisors (61%), and of those in support and sales roles (56%). But the commonality in all those numbers is that supply chain managers across the board are even less optimistic about pay raises in 2010 than they were during dismal 2009.
Size of logistics budget denotes responsibility and also plays a key role in determining pay scales. Only supply chain professionals working for companies with logistics budgets over $5 million earned above the average total compensation in 2009. As with past years, there were some significant jumps in pay the larger the budget got. For example, those at the top of the scale, with budgets of more than $20 million, are being paid $106,667 on average. That’s a drop from the previous year’s average, but still almost a $20,000 improvement over those with budgets in the $10-$20 million range. Those with budgets under $100K are pulling in $69,100 on average.
Company size makes a similar, albeit not quite as dramatic difference. Only supply chain professionals working for companies with more than $15 million in annual sales earned a total compensation package above the industry average. Traditionally, our research has found significant difference between large and small companies. Those differences have shrunk in the past year as large companies have been particularly hard hit by the recession, but the differences still do exist.
Geographic location is another influence on pay. Supply chain professionals working in Ontario are often the best off, their total pay buoyed by the pay in the Toronto market. They made $80,768 in 2009 in average, a drop of about $7,000 from last year. However, Ontario has not been able to keep up with booming Alberta in recent years in terms of pay levels and although Alberta’s economy has cooled, it once again posted the top average salary in 2009 at $84,155. But that too represents an $8,000 drop from the previous year. British Columbia and Quebec were the other provinces to post average pay levels above $80,000.
Of the 10 major metropolitan areas tracked by our survey, eight were paying above the survey average this year -Ottawa- Hull, Toronto, Montreal, Mississauga, Hamilton, Calgary, Edmonton and Vancouver. Calgary-based supply chain professionals once again posted the highest average pay package at $100,230.