Procurement led recruitment
Why have so many HR functions and recruitment heads now relinquished purchasing of recruitment services to procurement? An article by Darren Wentworth, Partner, Frazer Jones.
We all love a bargain; we all really enjoy that feeling when you saved some money by getting a little bit more off the asking price. There is however a moment when you have to ask yourself, “why is it so cheap”, “why are they willing to go down to such a low price” and “is the product really what I think it is?”
Companies understand the best way to be successful in the long term is to hold on to and nurture talented individuals. The role of recruiters continues to evolve and change, but the requirement to find and retain the best talent will never go away, and the need to do that in the most cost effective way is obvious.
Over the years the recruitment landscape has changed, RPO’s have become more established and the services they offer, on the whole, have improved. Direct sourcing teams have blossomed in many organisations to deliver a steady stream of good quality hires to support business growth. At the same time good recruitment firms have grown significantly, broadening their offering and geographical coverage and refining both their contingent and search processes. For many clients, getting the right terms is paramount.
Agreeing the right fees within a framework that suits the business and at the same time engages valued suppliers can be a challenge; however, this is commercially very beneficial if managed in the right way.
HR leads the talent agenda. They work with recruitment teams to ensure that the “go to” market strategy is the right one to ensure identification of the best talent. So why have so many HR functions and recruitment heads now relinquished purchasing of recruitment services to procurement? Contracts for the supply of “widgets” are being used to procure people services, with reference to people as “goods” and “faulty goods” now used in many contracts coming out of the FTSE100.
The procurement issue
Over the last few years we have seen an increased use of online auctions, large consultancies charging huge fees to rationalise the recruitment supplier base and get the best price. The downside is that although the business will always get a good price in these auctions, there is always a supplier(s) who will undercut the market and secure first tier status but be unable to deliver, certainly in terms of quality. We have been through this process many times over the years and having been advised that we didn’t meet the target price of the auction, we are then contacted soon afterwards and asked to work at the rates we originally submitted. This raises the question: does this process offer any real value? I’m sure it is of great value to large corporates but a “one size fits all” approach is naive at best and commercially damaging at worst.
Procurement is not solely concerned with cost-per-unit evaluation but it probably trends in that direction. However, no two candidates are the same and business requirements are not consistent so a traditional procurement process needs to give way to more strategic thinking.
It is the responsibility of HR/recruitment leaders not procurement
Organisations will always want to drive down costs - that’s part and parcel of running a good business - but those leading the talent agenda need to make sure they are strong enough to push back on procurement processes. In my opinion too many heads of recruitment and HR Directors are passing over responsibility to procurement or have lost the influence they need to ensure service and capability are not sacrificed because of cost. This system is not concerned with the long term.
Rather than it being an industry-specific problem, it’s an HR leader problem. They are ultimately responsible for who comes into their business, and so the buck stops with them.
It is important that HR leaders and heads of recruitment influence where that talent comes from, as this is the only way to attract the best people now and in the future. The key to success, more than ever, is having the right people on board.
Finding exceptional talent is always the challenge and this process needs to be led by business need over purely a need to keep costs low.
It’s time for HR and recruitment leaders to own their talent agenda!