How To Build A Preferred Supplier List: A guide for Internal Recruiters and HR professionals
Recruitment plays a pivotal role in the growth and success of all organisations. Yet it is overlooked and generally is an afterthought in many organisations. The right talent acquisition strategy can significantly impact a company's performance, and building an effective Preferred Supplier List (PSL) is part of this process.
Building a streamlined and effective Preferred Supplier List is a vital step in the ongoing development of Internal Recruitment and Talent Acquisition efforts.
Before we start discussing PSL, many companies use the term PSL as a way of getting rid of Recruiters when they cold call, and only have a loose PSL. This article understands that Recruitment agencies form an important part of the talent mix.
Understanding Types of Providers
Before embarking on the journey of building a PSL, it's essential to differentiate between the two primary types of providers: Recruitment Agencies and Advertisers.
Recruitment Agencies: These entities specialize in identifying and attracting top talent for their clients. They are known for their expertise in candidate sourcing, screening, and placement services.
However, not all Recruitment Agencies are made equal. Some specialised deeply in a small field and others just hire 21-year-old graduates and give them one day's training. Being selective is important.
Candidate Advertisers: These are platforms or entities that facilitate job postings and candidate applications. They may include job boards, social media channels, and other online platforms.
There are thousands, if not millions of job boards and advertisers out there. Different roles will require different advertisers depending on the roles within the organisation.
Additionally, you may need to build up PSL lists for the following suppliers depending on your industry: training providers, online testing, certification and background checking.
Engage with Procurement
Your business or organisation might have a procurement team or officer, depending on its size or type. Reach out to the procurement team as there could be rules around how you decide which supplier you use. This can be especially important in public sector organisation or organisations that contract for the public sector
Understand The Role of Recruitment Agencies
Recruitment agencies often act as intermediaries, connecting companies with suitable candidates. It's crucial to understand their functions and benefits in the Recruitment process.
This role has been diminished since the rise of LinkedIn and has now changed into a role that fits more into the world of Brokerage than service provision, especially with highly specialist agencies.
However, what Recruitment Agencies are able to do better than an internal Recruiter is to specialise in clusters of skills and sectors.
For instance, you might be looking for a Head of Cybersecurity for a Financial Services provider. This is a niche role and the assistance of a Recruiter is going to add value as you are not going to be recruiting this role very often.
UK
Recruitment and Employment Confederation - https://www.rec.co.uk Association of Professional Search Consultants - https://www.apsco.org/
USA
American Staffing Association - https://americanstaffing.net/
Australia & New Zealand
Recruitment, Consulting & Staffing Association - https://www.rcsa.com.au/
Canada
Association of Canadian Search, Employment & Staffing Services - https://acsess.org/about-us/what-is-acsess
Explore the World of Headhunters
Headhunters, or executive search firms, focus on identifying and attracting highly qualified candidates for senior or specialized roles. While they are a valuable resource, they may require a different approach when building your PSL.
In some respects, they are just “posh” Recruiters. However, exploring sector-specific headhunters will help you to move quickly when executive roles come up.
Ideally, when researching executive headhunters you want to build up a small roster of Consultants who specialise in your sector. Please remember if you are using Executive Search Consultants for senior roles, you will have to pay a retainer.
You can find a reputable list of Executive Search Consultancies available at: the Association of Executive Search Consultants - https://www.aesc.org/
Defining Candidate Advertisers
Candidate advertisers primarily serve as platforms where you can post job listings and attract potential candidates. These platforms differ in reach, speciality, and audience, making it important to consider their role in your Recruitment strategy.
Understanding which advertisers you want to use will depend on the make-up of your organisation's talent needs.
Broad Advertisers: Indeed is the standard bearer for the broad advertiser. Almost every company or organisation could recruit via Indeed
Specialist Advertisers: For whatever job, sector and location there is a job board. Generally, they will have less traffic and applications, but the applications you receive should be closer to what you are. There is not enough space in this article to cover all of the potential advertising outlets that are available to an internal Recruiter.
Creating Comprehensive Lists
To effectively build your PSL, you must have a comprehensive list of all the departments and specialities within your organisation.
This will help you identify your Recruitment needs and potential areas where agencies and advertisers can be of assistance.
The place to start is the organisation chart.
Depending on the size of the company the org chart will be the first place to search the process of mapping the organisation. As a rule of thumb map out the staff members who have titles like Chief of, Head of, Director of, Vice President of etc
This list will give you an idea of the types of specialist Recruitment agencies and advertisers that you will need to find, research, engage and assess.
Geographical Considerations
Understanding the geographical spread of your organisation is vital. Different regions may require different Recruitment strategies and the inclusion of specific agencies or advertisers.
For instance, you might be working for an organisation that has offices in London and New York. A generalist Recruitment Agency based in Manchester is unlikely to be able to help you as effectively as one that has offices in New York and London.
Not every Agency or website needs to cover each geographical location. Some can be location-specific.
For Instance, when I worked in Aberdeen there was an Aberdeen Appointments Agency that specialized in the Aberdeen and Aberdeenshire job markets.
Tailoring Providers
With your organisational structure and geographical spread in mind, you can now select suitable agencies and advertisers that fit your requirements.
Understanding what your organisation needs from its Recruiters is important.
This can include what type of specialities are potentially going to be recruited (see the above). It can also include a mix of permanent to temporary staff. If your organisation has a large number of temporary staffing needs, looking at agencies with a stronger background in this area could help create a stronger PSL.
Setting Up Meetings
Once you've established your PSL, it's advisable to set up meetings with each supplier. These meetings help in aligning expectations, agreeing on terms, and establishing clear communication channels.
What you want to do is meet with each Agency twice (if possible).
Once via a video meeting and one face-to-face. During two meetings will help you evaluate how they interact with you and how they will
Determining Quantity
Deciding how many agencies or advertisers you need is crucial. The frequency of hiring within each department or speciality should guide your choices. A general rule is to maintain a balance between well-known agencies with broad capabilities and local or specialist providers who excel in specific roles.
Quality is a subjective manner until you begin briefing agencies.
Standardizing Terms
Now that you have a list of Preferred Supplier, now is the time to standardize the terms of business with all of the suppliers
The main terms of business to standardize are:
Fee for Recruiting: What is the percentage fee or fixed fee in financial terms? E.g. 15% for the first 3 placements per year then 12% for the remaining placements.
Guarantee Period: How long the candidate is guaranteed for and what the refund terms will be. E.g 12 week guarantee with a 1/12th sliding scale rebate.
Payment Terms: When will the invoice be sent, how many days until payment is required and payment and how will the bill be spread out? E.g. Invoice submitted on the first day of employment with a 30-day payment period.
Exclusivity period: How long a candidate is under “ownership” by the Agency. E.g. Candidates submitted to an open search are “owned” by the Agency for 180 days post submission.
Non-approach agreement: Agreement not to headhunt staff during an assignment.
These are the core areas of any Recruitment agreement that needs to be discussed. It is always important for a member of the organisations legal team to look over the terms for any other issues that might arise.
Evaluating Supplier Performance
Remember that it's your responsibility to evaluate and monitor the performance of your suppliers continually. Weed out agencies that underperform or fail to meet your expectations.
This is a process that will take a long time to follow.
When assessing Recruitment agencies the key metric to follow is roles briefed versus interviews generated.
When assessing advertisers focused on interviews generated per job advertised.
The above metrics are focusing on the important step in the Recruitment process, the interview. The reason for using this step as the benchmark is fairness, services that provide interviews, and provide Hiring Managers choices on who to recruit.
Conclusion
The modern talent acquisition Recruiter needs to have and manage a robust roster of suppliers to ensure that they can meet the staffing and talent needs of their organisation.
Taking a strategic and long-term approach with Recruitment agencies will ensure increased performance when you need to use Recruitment agencies.
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