June 2012.pdf - RCSA

BUSINESS MANAGEMENT ISSUES
Procurement pressure
Having the courage to say “no”
This last decade has seen
significant changes in
the recruitment process.
A fundamental shift has
swept across the industry,
writes Robert van Stokrom
FRCSA, RCSA Vice President
and CEO, DFP Recruitment.
In this article, he shares his
ideas for members’
consideration.
In days gone by recruitment was largely
a process involving a line manager who
dealt with the recruitment company (or
a short list panel). Input was provided when
needed by the line manager’s HR department.
As time went on and recruitment was
further outsourced, senior managers noticed
the increasing cost creeping into their P&Ls.
The expense incurred with outsourced
recruiting was being seen as a significant
cost that needed to be reduced.
Enter the procurement manager. Tasked with
centralised purchasing for an organisation,
the procurement officer/manager to a large
extent absorbed the role of recruiting. No
longer was the line manager able to freely
choose who to deal with for a steady supply
of staff.
Robert van Stokrom FRCSA,
RCSA Vice President
The inevitable result of centralised planning
has seen downward pressure on service fees.
Procurement managers will freely admit to
this. Their very existence is predicated upon
this notion. Procurement departments exist
to streamline and reduce cost.
There is nothing wrong with this, in fact
it should be a prime goal of all focused
businesses to keep one eye firmly on cost
and expenses. Procurement has a vital role
to play. Procurement by default has a primary
focus on price; secondary to the main focus
is quality.
Typically, a procurement manager will look
to keep downward pressure on price, constantly
looking to reduce and minimise. When this
occurs, the Business Development Manager
(BDM) needs to pose the question: Which
part of the service do you not want included
The BDM should look to begin dissecting the
deliverable components and ask which are to
be removed so that the desired price can be
met.
The procurement manager will of course
want all of the service components included.
This is the point where the BDM needs to
have the courage (and support from senior
management) to say “no, sorry that level of
service cannot be achieved at that price”.
This can often be a challenge for resultsorientated,
driven BDMs. However, attempting
to provide the desired level of service at the
unrealistic price ultimately is a disservice to
all parties involved.
At DFP our mission is to work with likeminded
clients who appreciate the value of
our service. This is the essence and reasoning
behind DFP supporting its BDMs in having
the courage to say no, should it be required.
Senior management need to be cognisant
of the downward pressure procurement
places on their BDMs. Competition and cost
constraint is healthy for all industry sectors;
however, it needs to be carefully balanced
with the resultant quality. This is where as an
industry we have an excellent opportunity
to educate our clients in how we can best
service their needs.
Procurement purchasing when the goods
and services in question are commoditybased
provides significant financial benefit to
the business. When it comes to recruitment,
this approach is not always desirable.
Recruitment, fundamentally, is not a
commodity business.
The many systems and processes built into
the industry help to streamline it and make
it more effective and efficient. They do not,
however, replace the relationship element.
This relationship element is perhaps the
most critical.
Recruitment is inherently a forwardlooking
process. Businesses seek to hire
new staff not for cost reduction today but
for increased profit tomorrow. Procurement
managers must ensure they make decisions
concerning the recruiting process with a
focus on today’s as well as tomorrow’s
bottom line.
Placing the right person in the right job
at a realistic price will ultimately be more
beneficial (read: cost effective and profit
producing) than simply placing any person
in the right job at the lowest cost.
Procurement without sufficient focus
on the relationship component may save a
cents today. However it may end up costing
dollars of profit tomorrow because the level
of service the cents purchased was not
ultimately the standard that was needed.
As an industry, we need to have the
courage to learn how to say “no”. When we
know we are unable to deliver the standard
of service desired at the stated price we must
be able to say no. Saying no benefits both
the recruitment company as well as the
client. Delivering substandard service (even
at a discounted price) benefits nobody.
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RCSA JOURNAL