The complete guide to maintaining a recruitment PSL.

The recruitment process is becoming more important than ever. Usually, when evaluating recruitment options, a company will look at improving quality and then reducing costs.

However, by using a preferred supplier list, you are ensured that agencies will provide a service-centric, high quality and value-driven recruitment model. This will lead to longer-term gains and enhanced service satisfaction for your business.

But what are PSLs? Why are they important? How can you implement a recruitment PSL for your business?

This guide will help you to improve the efficiency of a recruitment PSL, maximising the success for all involved. So, let’s take a look.

What Are PSLs?

PSLs or Preferred Supplier Lists are a tool used by non-profit organisations to help save money and time. They are a list of approved suppliers, all committed to an agreed rate and level of service.

Also known as a Preferred Supplier Agreement (PSA), they are becoming more and more popular. For any new vacancies, you would encourage your employees to these agencies exclusively.

Recruitment companies must meet a wide scope of requirements such as price, service and quality capabilities to achieve the preferred supplier status. Many charitable organisations use TPPs, referred to as preferred suppliers.

Why Should I Use A PSL?

PSLs are important for businesses across the world. We know how important recruitment is, however, more than 75% of HR professionals and business owners feel that recruitment agencies don’t provide value for money. So, why are PSL’s useful?

Save time	By having existing relationships with recruiters, your vacancies can be filled quicker.
Save money	Discounts are often offered for recruitment consultancies included in a PSL.
Better service	When working regularly with recruiters, your company values will be better understood, resulting in more suited candidates.
Less admin work	When there is an agreed rate, budgeting is simpler as well as having fewer invoices to process.
Guaranteed service	Expectations are agreed upon beforehand by both parties.

What Are The Steps For Recruitment PSL?

Before taking the leap, we recommend deciding which benefits of a PSL are most important to you. This will vary depending on the size of your organisation as you may decide to set up different PSLs for each department. Let’s now take a look at the steps involved.

Step 1 – Internal Due Diligence

Firstly, before you lower the number of suppliers you work with, you need to get all your numbers and figures ready. This should be your current processes and hiring background. Some key information to gather includes:

How many hires did you make over the last 24 months?
What agency fees were spent on those hires?
Which departments were hires made?
What was the location of those hires?
How many of the hires were through internal referrals or advertising campaigns?
How many agencies were used?
How long did the recruitment phase last?
How many new hires do you expect over the next 12 months?

After gathering the answers to these questions, as well as any other relevant background information, you should now analyse the recruitment agencies and how these hires were made.

A good way to do this is to survey the hiring managers to get feedback from those using the PSL. Some questions to ask on this survey include:

Did the agencies understand the core values of your business?
Did they understand the type of candidate you were looking for?
Were the selected candidates suitable?
Did the process take too long?
Did they provide a service that was good value for money?
Were they proactive?

By doing this early one, you can gain a clear understanding of any issues that have been met before, helping to then improve the current recruitment process. By engaging your hiring managers, they will be more likely to commit to using the PSL.

Step Two – Analysing

After gaining all the required information, you can now decide on the next steps for setting up your PSL. These will make up the key criteria and it will be important for your company.

Hiring managers will have given you answers to the surveys, in addition to any data from your recruiting history. Check to see if there are any common trends amongst your information and use it moving forwards.

You now have key drivers that will determine the way agencies are utilised to provide candidates. Before engaging with them you want to ensure you are clear about your company goals so that everyone is on the same page, leading to a plan that suits your needs.

Again, your hiring managers should be included in this process, neglecting their input can lead to difficulties down the line. An easy way to involve them would be to present the findings from the analysis, asking for any feedback they have.

Ensure that you have full transparency and good communication throughout the process to ensure that throughout the company there is a full buy-in. The main goal is to appoint agencies that will be able to support your business, providing high quality, relevant candidates in a timely and cost-efficient and timely manner.

Step 3 – Surveying The Market

Now that you have a clear picture, you can begin to decide what information the agencies require when selecting the appropriate suppliers for the future PSL. This will include how they view the PSL working in practice. This can include:

Would the location be a specific place or nationally?
How many agencies are for the panel?
Will hiring managers or HR control the recruitment process?

These questions will help when conducting a review of the agencies in the most efficient manner. It will be nearly impossible to analyse potential suppliers against any scoring matrix without a clear knowledge of what you are looking for.

If you have any corners about how the PSL will work, you could issue an initial survey of all recruitment agencies. This could be a Request for Information (‘RFI’) document or a Pre-Qualification Questionnaire (‘PQQ’).

Any agencies that do not meet the minimum levels of capability can be excluded, preventing a loss of time and resources. Your company can then implement a PSL with the agencies that are most suited to your recruitment needs.

Some of the criteria you find on the RFI or PQQ should include:

Do they have evidence of their understanding of your market?
Are there any obstacles to recruiting in your geographical location needs?
Will they be able to actively source relevant candidates from the wider market?
Will the agency be able to recruit the disciplines you want to hire?
Are there any limits, such as non-compete or ‘off-limit’ clauses?

You should worry about price proposals at this point, as this stage is to find the best list of agencies that can suit your recruitment goals. The next stage is where you start to filter agencies that have a suitable pricing structure.

Step 4 – Confirmation Of Requirements

Now that you have your shortlist of agencies, take some time to look over your company’s evaluation criteria. Consider reviewing your RFIs and PQQs if necessary.

At this time, you want to weigh up which factors are most important to your business, putting in place which criteria will stay. Now is the time to make any adjustments, as you don’t want to waste all this time and resources to end up with suppliers that don’t meet the needs of your business.

By requesting additional information, you can then incorporate these into the next stage of the process. This may include financial capabilities and other important aspects.

Other essential details such as having the right resources in place to tightly control the programme are important. For this process, it is advised to appoint a director or senior manager as an internal ‘sponsor’.

Step 5 – Compile Questions

With your evaluation criteria prepared, you can start to scrutinise the list of agencies. This is to reduce the numbers to only those you think can be beneficial to your company with the required services.

To do this, we recommend using a questionnaire. This will be sent to agencies and include either a:

Request for Proposal (‘RFP’)
Invitation to Tender (‘ITT’)

They should be more detailed than the RFI and PQQ that was used to create the previous long list of agencies. However, it is important to remember to have completed a thorough analysis of what information you can provide the agencies. This should include:

Location of previous hires
Number of hires made over the last 24 months
A detailed breakdown of these hires, such as location and business area
12-month forecast for the anticipated number of hires

Potential agencies should receive the evaluation criteria so that they can create a clear response that closely matches your requirements with the aims of being placed on the PSL. It works both ways, helping to receive a tailored response, not a generic one.

When creating the RFP, decide whether each section will facilitate the decision-making process. If they don’t, take them out to remove any information that has no impact on the process. You don’t want to be distracted by irrelevant data.

Again, to remove any useless data, ensure questions are relevant and on topic. Make these questions have the opportunity to demonstrate how excited they are to work with your company.

Step 6 – The Tender Request

You should separate your RFP into different sections that have the questions you want answered. This will help to create a clear document and separate information easier.

Agencies will know which questions they should respond to, making sure all the relevant information is provided. It is also important to include a time frame for the agencies to respond by.

You don’t want to be unrealistic and set this for a week, as this would make the agencies rush, not providing the best details. This information is key for your company’s decision-making, so don’t stress out the agencies and give them time to create a thorough reply.

Also, the format of the response should be decided. The review team should have a consistent format to ensure that when reviewing and creating comparisons, the process is made easier.

This could be a Word document or similar formats that are accessible for most agencies, not something that you use in-house that others don’t use. In addition, remember to specify how you want responses to be sent. Should it be an email, hard copy or through a portal?

Consider which method suits your company, as you may have a focus on protecting the environment, leading to email is the best option. Others may prefer everything to be done via hard copy. Whatever suits your needs.

Step 7 – The Shortlist

You should now have received your RFP responses. Give yourself enough time to go through and review them as it may take two weeks or longer to go through these.

This review process should be thought of as a project, with time set to review the responses against your evaluation criteria. This will help you to easily score each response.

If you decide to use a team to review the RFP responses, then it should be clear what each individual is doing. Each member of the team should have their own responsibilities to deal with. Take a look at these options and see which one suits you the best:

All members to review the responses, giving their own feedback
One person is responsible for one specific section
Two people working together on one area
Anonymous reviewing, with reviews collected at the end

Whatever you choose, you should be consistent, as there may be unfair judgement to agencies that may result in decisions being made that aren’t for the best of the company.

Once you have all agreed on the final shortlist, you can now begin individual discussions with your chosen agencies to decide if more presentations are needed, or you are ready to add them to the PSL.

This will all depend on the number of agencies selected on the shortlist, as you may have planned to have a maximum of 5 agencies on the PSL. If necessary, further questionnaires can be issued to the shortlisted agencies.

After the shortlist has been finalised, you should remember to keep any notes from the reviewing stage to then be given to agencies, even if they were not successful. After reviewing your PSL 24 months down the line, you may notice some ways that can be adjusted for the next time.

Step 8 – Fee Structure Negotiation

When deciding on your PSL fee structure, there are different options and considerations you need to make. These may include:

Across all salary bands a single percentage fee.
A flat fee amount per placement
Depending on the salary band, a slide scale percentage fee structure

From different sources, the fairest structure was found to be the sliding scale percentage fee structure, being the most cost-effective and allowing for various changes depending on the level of recruitment.

When it comes to single fee amount or single percentage fee structures, they must incorporate all recruitment levels, leading to higher prices for the lower-level recruitment bands. Here is an example of both:

Single percentage fee structure	All recruitment up to 75,000 to be charged one amount of 15,000, which equates to a 20% fee at 75,000 A role paying 50,000 charged at 15,000 will equate to a 30% fee
Sliding scale percentage fee structure	All recruitment up to 75,000 to be charged 20%, which will be a maximum cost of 15,000 A role paying 50,000 charged at 20%, will equate to a cost of 10,000

As you can see above, 5,000 will be saved on this recruitment piece by utilising the sliding scale fee model. Any agreed fees should utilise a discounted structure on the standard terms changed by each agency.

We recommend you to be careful when negotiating the fee structure too low in your favour. It should be mutually beneficial for both your company and the agencies. If not compensated appropriately, you won’t receive the service you want.

Also, when using your PSL and you find trouble locating the ideal candidate, you may have to search outside of that list for other agencies. Often, they were rejected due to higher fees. They could now charge more for your business, resulting in both time and resources being wasted.

Step 9 – Implementation

Now that the PSL is finalised, you must notify all hiring managers of any new processes before the recruitment campaign. This could be done through an email announcement.

You must ensure that the hiring managers understand the only ones to be utilised are the agencies on the PSL to have immediate benefits from the discounted fee structures.

The only time when they should go outside of the PSL for recruitment is the rare circumstance of when the PSL was unable to help or need additional authorisation from HR.

Step 10 – Maintain, Develop and Improve.

Now that the PSL is in place, with your hiring managers and agencies, you can start to conduct regular debriefing meetings. Here is a good opportunity to bring up any issues or anything that needs highlighting. It is a great way to improve as well as give recognition for any achievements.

Regularly, agencies should be offering management information reports over the mutually agreed time frame. These reports will show which areas the agency has been successful in.

For any additional projects or developments within the business that will lead to another increase in staff, these meetings will provide an opportunity to update the candidate sourcing and selection processes for your business.

By being open and sharing information post-implementation, you will make sure that your recruitment is done in an optimal, efficient manner and create the best environment for achieving your targets.