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Procurement Insight – Recruitment

03.08.20

Many organisations will manage recruitment internally but there are equally as many that will not possess the required resources and will, therefore, need the services of recruitment agencies for both temporary and permanent requirements.

If not managed correctly, needless and significant costs can be incurred and the business can be commercially and contractually exposed.

It must be made clear that when reviewing recruitment the rates of pay for the candidates, (temporary and permanent) are NOT part of the equation. The review focuses on the commercials of the agency service and also on what terms they are provided on.

Here are all the points that we would always look to cover when reviewing this area:

  • Obtain detailed descriptions of all temporary and permanent roles across the business
  • Have an understanding of the number of suppliers that you believe you will require. Some suppliers specialise in certain roles, markets, or industries. Make sure that they can meet your requirements and also have the appropriate geographical coverage.
  • Be clear on the payment terms you require. Many suppliers have standard terms of 7 days or even less.
  • Ensure that the costs for temporary personnel are broke down into the constituent elements, i.e. basic pay, holiday pay, pension, National Insurance, SSP, and the agency’s margin, etc.
  • Confirm the agency’s margin is only applied against the basic hourly rate of pay for temporary staff and the basic salary of a permanent recruit. Car, bonuses, etc. should not be included.
  • The margin rate should be fixed for all but executive positions. For temporary staff, some suppliers will look to increase it as the hourly basic rate of pay increases.
  • Obtain confirmation that there will be no temp to perm fees for any temporary candidate that you wish to take on after an initial qualifying period. Aim for 12 weeks max.
  • On permanent roles, should an appointment not work out ensure that you understand if you the option of a free replacement, a rebate of the fees, or ideally both. The level of the rebate will reduce over a period of time, which is often 12 weeks. Again, it is important to know the detail of this.
  • Ensure that you work with your agency to use their expertise and guidance on managing temporary staff that you retain for 12 weeks or more, as they are then entitled to the equivalent rates of pay and benefits as a permanent employee.
  • Go through the agency’s terms and conditions and compare them to what you have agreed to. Ensure any differences are agreed in writing from the agency and potential include them within an appendix.

Supplier consolidation can be a consideration for recruitment but it is not one of the most important factors in this instance. Having the necessary expertise and support on a clear cost structure and on agreed terms is crucial.

SIX REASONS YOUR OVERHEADS ARE SPIRALLING AND WHAT TO DO ABOUT IT

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As a procurement specialist for more than 30 years, I get the frustrations you face. Growing a business is complex and challenging, but don’t let high costs be your downfall.

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