CIPS Annual Report – a Mixed Bag

The Chartered Institute of Procurement and Supply (CIPS) annual report is out now for the year ending October 2023. I’m not sure exactly when it was published but it always takes a few months to emerge.

The report suggests it was another mixed year for the world’s leading procurement institute. Revenue was up 13% year on year, which is pretty impressive, driven largely by business from corporates in the UK and Middle East. The CIPS Corporate Award programme continues to bring in revenue as firms invest in professional development and capability, which is good news.

However, membership was down 4.5% which is less good news for what is supposedly a “membership organisation”.  That was mainly down to a drop in student numbers, with MCIPS-level numbers pretty static. Exam entries were also short of budget although recovered in the second half – that may be in part because of the well-publicised problems with the new system, which amongst other things, made exam booking tricky at times. And new student numbers were at their highest for ten years, so maybe the decline in student membership is just a “blip”.

Total income was £34.2 million, up 13% on the previous year but below budget. That led to an operating loss of around £400K, although the accounts are not easy to interpret given so many figures for pension valuations and adjustments, loans, and other one-off accounting issues. But the cash position actually improved, with group cash position standing at £5.2 million at year end. To be honest, I struggled to really understand how this increase came about given the loss in the year.   

Generally, CIPS still has the perennial problem that many students want to get their qualification but then don’t want to pay £200+ a year for ongoing membership. Whilst CIPS rightly says you can’t put MCIPS after your name if you are not a current member, I suspect many who pass the exams, and many employers, look at that qualification as more important than the ongoing membership. There are many other ways to demonstrate your continuous professional development these days that don’t cost a fortune.

It is also fascinating to see how CIPS continues to become much less of a UK-centred organisation. Australasia seems to have stabilised after some issues there.  CIPS MENA is not set up as a certified company, but by all accounts is doing very well in many middle-eastern countries, in terms of numbers and revenues, and the recent promotion of regional boss Sam Achampong to run half the world 80% of the world for CIPS indicates one reason why that has been the case in recent years.

Yet some problems continue in other regions. The US is an ongoing disaster really, losing money for CIPS year after year despite ambitious intentions. As Eddie and the Hot Rods once said, maybe it is time for CIPS to Get Out of Denver…

Looking at the numbers in detail, an analyst might worry about control of staff costs. There has been a 16% increase year on year in total cost, with staff numbers up only 4%, implying an almost 12% cost per person increase, well ahead of inflation. However, there is a major distortion.

Malcolm Harrison, the then-CEO, left rather suddenly in March 2023, yet the highest paid member of staff, presumably him, was in the £250-300K bracket for 2022-23 salary.  (Last year he was in the £200-250K bracket). That suggests he received in effect a full year’s package despite leaving just 5 months into the financial year. So his pay-off accounts for quite a chunk of that apparent staff cost hike, although the Trustees need to keep an eye on senior staff costs – there were 16 people earning over £100K in 2023, against 11 in 2022.

The new IT platform seems to have settled down somewhat now, so if that crisis is almost over, I’d suggest CIPS needs to focus on its membership proposition and numbers as the key strategic challenge, which raises some fundamental issues again about the whole nature of the Institute.  

It’s clear that getting rid of the President post has worked well in increasing the standing of the Institute (he said sarcastically…) although I do hear that the relatively new Membership Committee is doing some good work.  High profile individuals such as Sam Achampong and Savita Mace (membership committee) do a lot to keep CIPS in the public eye, but I feel that many of the Trustees (Board members) still need to do more to promote CIPS and the profession now the Presidential focal point has gone.  

But that is by no means the only reason why MCIPS numbers are in slow decline, even as P&SCM increases its importance globally. CIPS really needs to understand how to change that situation to improve its long-term prospects, or accept that it is now in effect a consulting, education and training business rather than one with a membership focus.