Procurement and Human Resources – A Marriage Made in Heaven?

With the pressure increasing on finding and retaining the required skills and resources, Procurement and HR must form a vital partnership to ensure the enterprise succeeds.

In the past, Procurement and HR may have been viewed as too focused on process and not enough on successful outcomes. They have also worked fairly independently from one another. But the market (and talent coming into an organisation) today makes it vital for the business lines to work with these two critical enabling functions, and that they work together as efficiently as possible.

The skills shortage in today’s economy is well documented. In addressing their responsibilities, HR and procurement are responsible for 100% of the business costs spent on skills and obtaining the best talent in a given industry. While the proportion of these costs may vary according to the business and sector, the expenditures on permanent hires, contractors and consultants, and outsourcing partners remain. There are also a variety of customs and practices across the globe around which function controls these services. In some geographies, procurement owns contingent labour, while in others, it is HR. In others, HR owns a BPO service relationship while procurement owns the commercials. Whatever the arrangements, we can rest assured that the business only cares about the outcome; “Do we have access to the skills and expertise we need?”

This is also where it becomes critical to work closely with key stakeholders in IT, finance, legal, and each business line to ensure everyone is working towards a common goal.

Organisations with a clear strategy around the skills that are core to their purpose and those that can be procured by other means will likely succeed best.

It becomes less of a conversation around who will do the work (i.e., full-time, contractor, consulting firm) and more about the work and skills required to do the work. This conversation between HR, Procurement, and the business teams are critical to ensuring the success of all parties.

Both procurement and HR strive to improve engagement with candidates and suppliers. Businesses that can communicate their vision, culture, brand, and requirements with clarity will be able to achieve improved engagement with prospective employees and suppliers alike.

At a practical level, total talent solutions offered by organisations like WorkLLama support improved career paths for employees and bring clarity to deliver skills to achieve business objectives. They are also imperative for nurturing and engaging candidates. For such workforce planning solutions to work effectively, HR and Procurement must have agreed on their strategies to obtain each type of skill.

In the competition for skills, businesses that are attractive to both candidates and suppliers are the ones who will succeed. While it is easy to understand that attracting the right help is critical, too many businesses seem to rely on their brand or internal view of their reputation to attract both candidates and suppliers.

Procurement functions should strive to be true “customers of choice” to their key suppliers and their prospective talent. This is not simply about ensuring that you pay your suppliers on time or running efficient selection processes. Being clear about your organisations’ purpose in seeking support from the external market enables the Procurement function to select and work closely with their suppliers to achieve these goals. It also enables proper feedback to unsuccessful suppliers, and time spent addressing these conversations ensures greater competition when next going to the market. As I argued in this article, procurement today should have a broader remit, and it is in society’s interests that suppliers and businesses work together to solve environmental and sustainability problems since their success in doing so impacts the whole planet. Working closely with suppliers to address innovation and improvement requires a long-term commitment to the relationship.  

Likewise, today’s HR function should strive to understand the entire workplace landscape, not just full-time employees. Because people move in and out of organisations in various capacities (for example, a former full-time employee coming back to do consulting or an intern eventually taking a long-term contract role), it’s imperative to offer a consistent experience, no matter where they are coming from. To do this, there has to be partnership with all business lines (most specifically procurement) to deliver this at scale. 

Companies like WorkLLama help organisations leverage their own brand to create powerful candidate experiences. Existing talent channels are underperforming, and organisations are struggling to find quality talent for open roles, making workforce planning a challenge.

Direct sourcing (a much-needed) recruiting strategy in this market) through WorkLLama’s talent marketing and dynamic talent communities allow companies to maintain active communication with former employees, silver medalists, alumni, and passive candidates, decreasing their reliance on staffing agencies and saving time and money with one simple, unified platform to manage it all.

It’s also a seamless, automated way to nurture and engage talent, so they want to work for your brand.

In some organisations, HR and procurement have fought over the lines of demarcation between them, distracting both functions from addressing the real business opportunity. Even when the lines of ownership are agreed, there remains a risk that some skills and value may fall through the cracks. As an example, procurement is traditionally responsible for the commercial terms, while HR runs an RPO and appoints all the staff (whether permanent or contingent). This leaves HR focused on the skills (and often not the costs for outcomes) and procurement focused on the margin paid to recruitment consultants and RPOs. Taking a collective approach avoids this pure price focus and, instead, ensures a focus on the value of the solution to achieve a successful business outcome.  

Collaborating in this way puts the focus on finding, nurturing, and engaging talent and partners to become the employer of choice in the market. By combining forces and agreeing on the best approach to obtain the skills and talent the enterprise needs in order to stay competitive in a given industry, procurement and HR can deliver much improved services and relationships and, together, enhance the business’ success.

About the Author

Richard Powell BA (Hons) FCIPS Chartered, Director of Powell Procurement Services, is a senior Procurement practitioner who has been building, running, consulting, and transforming Procurement functions across multiple market sectors for over 25 years.