It’s not uncommon for HR and procurement departments to work more closely together these days as organisations attempt to become as cost-efficient as possible.
Nowhere is this more prevalent than in the public sector, where more and more procurement processes are moving online – including those for recruiting temporary and contract staff.
So does this mean HR will lose control over recruitment as staff become a commodity to be bought online?
Martin Scarfe, director of government body Local e-Gov, and chairman of the public sector National e-Procurement Project, believes that HR has no reason to be worried.
“Quite the opposite,” he says. “We can help HR control their budgets but we don’t know about things like employment law or statutory sick pay. These days, it is not unusual to have agency staff working for you for more than a year. We know there are HR implications to that, which is why it is important that HR and procurement work together.”
Put simply, e-procurement means buying and paying for services or goods online, often from an electronic marketplace. In the case of recruitment, such marketplaces are typically made up of several preferred recruitment agencies who respond to requests for staff with potential candidates and a cost quotation. All transactions are handled online and it means the HR or recruitment manager doesn’t have to spend time calling and faxing agencies for quotes.
Many of those working in recruitment and HR balk at the idea of buying people services using the same principles and methods as for stationery and office furniture.
Jeremy Tipper, managing director of recruitment outsourcer Capital Consulting, fears it will make recruitment too price-driven, especially as some markets work rather like a reverse auction with the lowest bid most likely to win the day. He echoes the thoughts of many HR professionals when he says that “people simply can’t be treated as a commodity”, especially with the premium now placed on knowledge.
“As we become even more service-based, knowledge and people become the biggest differentiators of capital advantage,” says Tipper. “Recruitment must be a high-touch process and can’t be done through automation.”
But potential time and cost savings will make it harder for HR to ignore such practices in the future, and pressure to adopt them is likely to come from the finance and procurement departments.
Little to fear
In reality though, e-procurement doesn’t have to be the faceless, price-driven process that HR fears. After all, HR professionals can still interview potential employees, and increasingly e-procurement is becoming a part of managed services deals with established recruitment suppliers.
London Borough of Newham, for example, used to spend £30m a year on temporary recruitment. Last May, the local authority entered into a managed service agreement with professional services recruitment company Badenoch & Clark – part of global managed services specialist, MPS Group.
The system in place, based on MPS Group’s Beeline ‘procure-to-pay’ software, was designed to offer a more HR-orientated service. As well as skills details and cost quotations, the system demands that agencies supply written references and legal information such as right-to-work documentation and Working Time Directive opt-outs.
Since the project began in 2005, Newham claims to have saved £3.1m as well as ridding itself of the chore of processing 40,000 paper invoices. It was previously using more than 200 agencies across its various service areas. Scarfe would like to see more local authorities integrating this support for HR with their procurement systems.
The big push towards e-government, and pressure since the Gershon review to make efficiency savings, has meant that more and more local authorities are using e-procurement and delivering major savings.
“Organisations need to define what that commodity is and use e-procurement as a tool for HR to ensure they are getting a better deal for the business,” says Malcolm Rosier, a sales and marketing director of Lloyds TSB, whose Vantage e-procurement system is used by many local authorities.
Among the latest to go live with Vantage is Nottinghamshire County Council Social Services, which is trialling the system at Wincroft Residential Home for people with learning disabilities.
Each year, Nottinghamshire spends £5m on temporary staff (other than supply teachers) and uses about 20 agencies.
Nottinghamshire’s first quotation delivered a saving of 20%, and there are plans to roll the system out to other residential homes in the next two years.
So like it or not, most HR professionals may have to get used to the idea of buying at least some people services online. And rather than standing back, HR professionals must stand their ground, says Tipper.
“Procurement’s involvement in the process can work but it depends on their role not being all-powerful,” he says. “There are a lot of stakeholders in the recruitment process – the HR team, the hiring managers and the candidate, whose view of your organisation will be determined by how they are treated during the process.”
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