June 2012.pdf - RCSA

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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. 30 RCSA JOURNAL
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