Procuring People or Recruiting People. It’s not a matter of semantics.
Recruitment is all about finding and hiring candidates for a specific job.
Depending on the role, it’s typically an exercise lasting around 1-4 weeks. You start with a list of tick-box qualifications and experience requirements for the job, after which you qualify candidate suitability through interviews, background checks, and reference checks, then you pick the best one – cross your fingers, and hope it’s a good hire.
The issues with this come when you make the wrong decision. A bad hire. The key point to note here is that it isn’t “if” – but “when”.
One commissioned study reported 98% of hiring managers admitting to hiring the wrong candidate.
Of those bad hires, 35% of those resulted in termination of the employment contract (more recruitment costs). Astonishingly a further 46% tried to stick with it (sunk cost fallacy), opting to wrap a program of development and training around them to try and at least get them up to the required standard (more time and cost and potentially wasted effort).
Procurement is a Supply Chain Management term. At its core, it’s about building a complete body of data and information, data about needs, requirements, functionality, wants. It then qualifies and cross-qualifies the integrity of that data and information against solutions, services and products.
Procurement encompasses everything from the needs analysis phase, right through to delivery in time and in spec of the outcome – challenging and confirming that the output lines up with expectations.
This is all work done at the front end of the project.
Nothing is signed off until all qualifiers have been satisfied and accepted by both the Customer, and the Vendor.
It’s done in a spirit of due diligence and partnership.
One way to look at the differences is this – say you’re a widget distributor and seller, and you’re looking for a manufacturer to produce the cheapest widget, and you’re comparing two different supplier quotes.
One quote proposes to sell you for $2 per widget, another proposes $3.50 per widget.
Easy choice, you sign up with the $2 per widget supplier.
This, in a nutshell, is how recruitment works. Needs, checks, choose.
What you find out after inking contract however, is there’s actually a 6-month lead time to production, the minimum order quantities exceed your 12-month sales forecast. The production materials supply chain is fairly unstable so add another 2 months to the production schedule just in case, but now storage costs have increased, and the unstable supply chain has cost you in lost sales opportunities.
Furthermore, the widgets arrive with a high defective ratio, a poor returns policy, and no manufacturer or workmanship guarantee.
Your stock turn is shot. The additional costs incurred, including reworking the defective widgets and missed sales opportunities now far outstrip the rate-card price of the $3.50 widget supplier with the stable supply chain, no MoQ’s, 1 month lead time, and higher quality production outputs.
You wish you had just dug a little deeper up front and put in a bit more work qualifying, not just the tick-box rate card, but a system of checking and balancing quality and deliverables.
This, in a nutshell, is what procurement does. Front-loaded needs qualification, partner assessment, qualification and selection.
Your call to action: Disrupt the system.
We’d love to partner with you for your people needs. But even if you don’t, the system is primed for disruption. Whichever agency you use for your recruitment services, advocate for change.
Speak to your recruitment agency about reworking their offer to deliver a procurement service. We’re not just talking a try-before-you-buy approach, where “Oops got it wrong, we’ll recruit again lol”, we mean a strategic people management system which delivers trained, scalable resource to your operation as you need it, with fast and reliable succession capability.
Overhaul your fees structure. One of the biggest pains, and barriers to using agencies for businesses who need it are the high placement fees structure, excessive margins, and minimum contracts enforced.
There is no value being delivered to your business under the current structure, at best it may remove some fringe work around finding and hiring staff – at worst, it’s just a cost-centre to your business providing no true strategic value.
One final note.
Don’t take our word for it. We’re not HR Consultants. This isn’t advice gleaned from the latest issue of Recruitment Weekly, and we’re definitely not seasoned members of an international HR association.
Nor it this a dig at HR or Recruitment agencies either.
We’re advocating for change to re-align with current economy, and we're advocating for services and support options to be accessible to more businesses, through disruption via a sustainable, logical approach to People building.
Our advice and services are delivered by industry practitioners, your industry, with almost two decade’s experience procuring and developing their people across a number of sectors – and with organisations boasting some of the highest staff retention rates in their respective industries.
Get Procurement Support Services now by getting in touch about Zalense People:
We know what can work, because it’s working right now - and it will work for you.