The PSL is dead, long live the PSL
November 1, 2011 8:42 AM written by Azmat Mohammed 
27 Comments
Are PSLs a Broken Practice?
OK, so this is not a new topic area but the effectiveness of Preferred Supplier Lists is always being discussed. They have been around for years providing a level of surety to companies and the agencies included on the lists. Using effective PSLs, HR managers can streamline their entire recruitment process, ensuring their talent acquisition programmes tick over nicely.
So we all agree, PSLs work really well then?
When we look at the core reason to go to the trouble of implementing and managing a PSL, we have complex arguments as to why employers need them, but simply put a PSL is just an employer saying, “We have a need to find talent, but we don’t want the entire world sending us unsolicited candidates. We want a highly efficient, cost effective, consistent and managed process with selected assessed agencies with whom we build close relationships. They get to know our business needs well, and within the PSL we have all our areas of talent requirements covered.” That sounds like a good argument for the PSL.
So why do we hear some recruiters disagreeing with the entire PSL practice?
Let’s look a little closer. There are so many views on PSLs and many different ways to implement them. Some companies have them set up informally (agencies they know), but with no real structure or management, basically making it up as they go along. Then you have the other end of the spectrum, highly managed, documents on performance, detailed candidate submission data, detailed role analysis, conversion rates, quality measures, regular detailed reviews etc.
Now, the doubters don’t like PSL’s for a lot of reasons. Is that just frustration as after all, it’s not so easy to get on a PSL with so much competition, or do they really have a serious and valid point?
We hear stories of PSLs being huge, 50, 100, 150 agencies, they sound like a nightmare to manage. Is there really a need for that many agencies on a PSL? Are these PSLs in the hands of over excited companies or do the HR managers know something the recruiters don’t? With over populated PSLs consultants often feel there are so many agencies working on a given role that their quality time is best spent elsewhere.
And when it comes to a recruiter being told a company has a PSL, well that’s just a red rag to a bull in some cases. Getting your candidate considered without being on the company’s PSL has been turned into a fine art by some recruiters, but then you can always argue your candidate should be given a chance as even Wimbledon has a wild card.
We know when a recruiter gets past a company’s PSL they get a pat on the back from their line manager, for demonstrating the client’s current PSL was not fit for purpose after all, and now they know it. I see articles on the web like ‘10 tips to get passed a PSL or gatekeeper’, as if it’s a huge game of cat and mouse.
The real argument from recruiters is the fact that hiring managers never speak to them to know what they can offer. They argue “how can HR teams recruit the best talent if they do not understand their companies technologies deeply enough?” I am not sure if that argument is way too general. Most HR managers I know are very aware of their company needs, they know their stuff. I accept that some will be less effective than others, but let’s be fair, that’s the same of any profession. Many recruiters go even further however, and want to see the recruitment process taken back from HR departments and given to senior hiring managers.
They may have a point in some cases, but I am not sure there is any one perfect solution.
@Azmat great article. Thought provoking. Especially having worked in large corps – now MD of #Pengarde a new start up #headhunter #recruiter
Good article Azmat, I am on the fence with PSL’s, some i have been on have worked very well indeed others a waste of time. One PSL had around 25 recruiters on, and the client could not understand why it was such a bad idea to give the same vacancy to all 25..!! on the other hand I am on a PSL right now that works well, is organised, communication still happens between all of us and vacancies get filled.
One bug bear I have is this, why have a PSL if you are going to search yourself first, why waste time posting jobs, contacting the market and then putting it out to your PSL…
If a PSL is run well it can be a very good product to have in place.
Helen – to respond to your bug bear:
As an internal recruiter I will always look to find people myself first. Simple common sense to do so, as we won’t have to apy a fee.
However, I’m also aware that my routes to market are not going to be as widespread as an agency – a job board is not a revenue generator as it is for an agency so we won’t have agreements with a multitude of sites. Also, an agency database will have far more people on it than I will have in-house.
So clearly there’s a possibility that an agency will have access to people that I may not have, and threfore I will go down that avenue if I’m not successful myself.
Marlon, I hear what you are saying, but why waste your time looking for a candidate if you know a consultancy has a better database, and a wider network, why not just brief a few consultancies give them a deadline and let them do what they are good at, leaving you to get on with your day. Appreciate you dont have to pay a fee if you do find someone but the cost in long run in man hours is higher.
The man hours argument only stacks up if your core role is not recruitment.
Ok let me put it this way – I give a role to an agency without looking myself. Agency submits Mr/Miss Good Candidate who is right for the role. We pay £000′s for a fee. I then find out I actually could have found that same individual myself and saved the business a lot of money – not a conversation I would want to have with my manager. After all while I have other parts to my role, my bread and butter is to fill the positions we have as effieciently and cost effectively as possible.
While my network and database may be smaller, I still have a network and database and the person we are looking for may well be within it.
The key is to know when to focus on direct routes to market and when to utilise the PSL.
Agreed look within your network first and database, but my real bug is when a client advertises the post, makes approaches and saturates the market then when all else fails uses us…
Very interesting article and I found myself nodding away to some of the reasons why recruiters aren’t in favour of PSLs. However, like Helen has mentioned, we are on a number of PSLs and some do work well but with others, we know the company has tried everything it can before passing on the vacancy to the dozens of agencies on the PSL who will be in a race to get to the small number of suitable candidates first.
It’s certainly not an ideal system and there are plenty of merits of working directly for Hiring Managers in smaller companies where (I feel) better relationships can be forged but PSLs won’t go away and it appears are on the increase – we therefore have to decide the best way to approach them and then perhaps pick and choose more carefully on the on the roles we are given to ensure we have the best chance of succeeding.
This subject stirs up a load of old emotions for me as I have been responsible for selecting companies to come on a PSL, won PSLs and worked within them, so I can confidently talk about this matter from all sides. I really do feel that PSLs are an ‘easy’ option for some major agency users.
1. It reduces the amount of incoming calls they receive which is good for the end user.
2. It should highlight the ‘better’ recruitment agencies out there.
3. It shows a commitment to quality and relatively easier paperwork and audits.
4. Master vendor and second & third tier arrangements allow the client to have one authoritative point of contact.
All good valid reasons for adopting PSLs; but what about those agencies that are as professional and have the ideal candidate for a particular role?
I feel that is an agency has a strong candidate but is not on the ‘PSL’ the client should perhaps look at the agency in question and consider their candidate. After all, the agencies on the PSL may not be able to fulfil that particular spec. It is all about working together, not being so bloody minded that when a new agency calls in, not just dismissing them if they are not on their sacred PSL, listen to them. The agency, if they have done their homework, will be calling with the client with a solution, not a problem.
As we all know PSLs have been around a long, long time. Is there a better way to work?
PSL are defintiely a good thing, if run properly and viewed in the long term.
As the Agency on the PSL you have less competition and a chance to do your job better. By seeing it as a long term relationship the agency can invest the time to learn the business better and that should lead to more hires.
As an internal recruiter you (should) waste less time on irrelvant calls and CV’s. It also gives you the chance to have a true partner and not feel worried that your agency will not poach your own staff.
It allows both sides to have measurable and accountable relationship.
If your agencies are not delivering then someone new gets a chance to join the PSL in the short term and build up their profile with your business. Focusing on the fact that you have a candidate now is only a short term fix… true partners that deliver consistently is the long term goal.
Win:Win if managed properly
A wild west of agencies is too hard to manage and will lead to bad practice… FACT!
So speaking from a Client’s perspective (and as an ex-Recruiter) I see no issue with a PSL – of course when a PSL has 25 or 100 on it then by definition I would argue there is very little “Preferred” about this Supplier List; it is now just an “SL”!!!
However the article does bring up a couple of interesting points:
• So why do we hear some recruiters disagreeing with the entire PSL practice?
I would argue it is because they are not on the PSLs they would want to be on. If you have an excellent working relationship with a client and they recognize you as one of 2 or 3 main first ports of call for their recruitment needs WHY would you disagree with this practice?
It is much more professional. It gives the Recruiter an opportunity to provide a better service since you know the client better, you spend more of your time on delivery rather than drumming up business and you can “sell” the company more assuredly to prospective candidates since you understand the company and their culture more thoroughly!
Admittedly this involves NOT having a PSL of 30+ and also the client company taking the time and making the effort to build a partnership relationship with their suppliers —- which by the way they can (in my opinion) ONLY do if they have a limited number of suppliers which they use on an on-going basis; rather than chopping and changing – apparently that’s called a “PSL”!!
The next point made is:
• The real argument from recruiters is the fact that hiring managers never speak to them to know what they can offer …… and want to see the recruitment process taken back from HR departments and given to senior hiring managers
So now I am confused is the point of the article about PSL or is the “main argument” that recruiters want to speak with hiring manager and not go via HR and Recruitment departments.
Irrespective …. One of reasons Recruiters would like to talk to Hiring Managers rather than HR or Recruitment Departments is because these same HR and Recruitment Departments are normally the “custodians” of PSL and these said recruiters want to by pass them, I can understand that.
At organizations I have worked at it is in fact the Recruiters on the PSL who are actually given access to the Hiring and Line Managers and we use the PSL to shield the business from “un-wanted” calls.
I know that there is also an argument that says: “We are not on the PSL BUT we have the “Perfect” candidate”; the “Wild Card” referred to by Azmat. You know the problem with that is every Recruiter believes they have that “Perfect Wild-Card” candidate does the Line Manager or HR or Recruitment Department have the time or inclination or man-power to deal with that I would argue not – what they do is use a PSL!!
Hi Ali,
My article is just presenting a few PSL viewpoints to give some current perspective.
From a personal point of view, I think the concept of the PSL is a good one. Businesses should have close and long standing relationships with recruiters as to be honest, for recruiters to be most effective they need to be a lot closer to the business than a one off relationship.
However, where it all falls down is when the PSL is in the hands of someone who does not have the right skills to run one. They have too many agencies, or chop and change too often. Some don’t know how to select agencies effectively or work with them etc.
In the wrong hands they can be a disaster to both the business and agencies on them, in the right hands they are a valuable business tool.
I think we all agree that if a PSL is a small selection of agencies then it can work well, I have to agree with that concept.
I have been involved with Preferred Suppliers Lists since I have started with the recruitment industry – Starting off in agency either being on or trying hard to get on these lists. After moving in-house I was instrumental with redefining the PSL completely to make it fit for purpose so I’m well aware of the variables at play.
If done correctly a structured and well managed PSL can add extensive value to the business and the agency – I feel that it is important to ensure there are not too many agencies against each business vertical otherwise their likelihood to place will be so low that the motivation to work on the role will not return the results required. It needs to be a mutual relationship in that respect – those agencies then build extensive knowledge on the company which is essential for gaining buy-in from those really hard to find candidates.
On the subject of cat and mouse game where agencies like going through the back door – from my agency days I can appreciate the “win” they feel – from the in-house perspective it is very frustrating. I appreciate that the agencies have a good network of people as this is what they do all day long, but when you are in-house you have so much demand on your time that finding out and agency has come directly to the manager at 30% is a sure-fire why of never getting on that PSL…
There is so much to discuss about this, but feel that the other articles have covered a lot of the arguments.
Azmat – great article
In the old (but not too old!) days, as the Client, I had a PSL of only 5 agencies and managed to recruit for all of the vacancies within the business within a 6 week period from going live.. I couldn’t have done that with 20/30/40 agencies as my whole time would have been taken up with managing the agency list, sifting through all of the CV’s sent (most of which were duplicates), fielding their calls every minute of the day, dealing with their emails etc.
I made my agencies jump through hoops to get onto the PSL, but it was time well spent… They did what I asked, added value to the process and generally made my life easier and that PSL stayed the same for the duration of my time there. (I was Head of Recruitment, not a hiring manager I hasten to add)
After 12 years in recruitment and training I still can’t see the value in large PSLs – Surely if a recruitment business is worth it’s salt, and can work along side the Client to identify the best talent for their business (by adding additional sourcing strategies, not duplicating the Client’s otherwise what is the point?) and help to support and manage the recruitment process through, then 3 of them would be light years better than 100 agencies that don’t listen to the client, don’t take a decent job spec and then complain that they their candidates get rejected; never meet the Client and just fling a handful of CV’s across every now and then? I’m sure everyone reading this will gasp at that description of the average recruitment business, but it’s a sad fact that in our industry there are more doing it wrong than doing it right.
If you are genuinely good at what you do, you will always look to work with Clients that will work with you in the way that you know will work for them (don’t say that after a Chardonnay!).
And if they don’t – then go and find the ones who will….
My recruitment career has always been very much focussed on educational recruitment – Helping the Client to become more successful by helping them to create a cost and time effective recruitment process and attracting top talent to their business. If I could persuade a Client who thought otherwise, then fantastic – I had just made both of our jobs better places to be. If not, then I would wish them well with their PSL of 100 and find someone who would appreciate by worth (*sob*)
Does anyone else feel the same way?
Do Clients expect this level of service any more or are they just happy receiving bucket loads of CV’s
I’d be really interested to hear any opinions on this!
Food for thought.
With the right IT the IOR could become the preferred supplier.
Just one contact for the client and the system connecting IOR members to deliver the services.
A little development combining two systems we have already delivered could achieve that.
With a single portal for access to thousands of recruiters, the proposition could be an attractive one for clients, the IOR and its members.
Tom.
Good article and vsome very valid points raised.
One issue not raised about PSL’s though is the handcuffs it can put on a business or a hiring manager. I think they are great for high volume or very generalist requirements. However where they really fall down is in scenarios such as the one I had a couple of weeks ago.
As a result of headhunting some people for a large advisory type company for a role in the Middle East, I came across an absolutely exceptional candidate (I know, before anyone says anything I’m biaised of course) who ticked every box imaginable and worked for a major competitor, but didn’t want to leave the UK. They explained to me that due to restructures within their current organisation their career trajectory (to Partner) had effectively been delayed by circa 2-3yrs. Something they were pretty disappointed about (understandably). I met them, had coffee and devised an action plan to try and secure them a role, open doors or at least initiate some discussions on an informal basis with a select group of organisations that would get their career back on track.
Okay so let’s just set the pciture here. Excellent Academics, Oxford Grad, Chartered Accountant 1st Times Pass, Worked in TS, M&A, and also had worked in international business strategy, spoke fluent French & German. Aged 34 (not that this should count of course) and looking for their first real career move.
I called all of the target companies and all of them slammed the door in my face with the explanation that @We have a PSl, if you aren’t on it, you can’t play…” of words to that effect.
This candidate was exclusive to me. He had never produced a CV, had never looked for a job, had no idea what a job baord was and had not registered with an agency since he was at University.
By using the PSL, the companies are losing competitive advantage, they are limiting their commercial and rational business capability to attain exceptional, passive, ‘Confidential’ Talent. When you are making strategic hires and or rain makers you add revenue generation streams to a business.
Basically what I was saying to my target audience (although of course being in HR they don’t grasp this element) was this:
“I have a candidate who can generate in excess of £1m per annum, they can bring business, they can add dimension and with the languages skills can open other revenue opportunities, they want to speak to YOU but this is very confidential..”
Who could say no to that proposition? 6 very dull HR professionals who trotted out the “We have a PSL in place” which translates to “We lack the necessary commercial prowess to understand what it is you are saying Mr Recruiter and have no requirement to consider adding £1m in revenue to our organisation…”!
PSL’s need exceptions, they need to be implemented and maintained correrctly but they also need to have loop holes in them for those ‘special situations’.
Darren – very sweeping generalisation to assume HR have no commercial awareness, however…
Your story actually highlights how blinkered consultants actually are sometimes (and so was I when I was a consultant). Your story focusses on the 1 candidate that YOU had. Now think about how many other agencies may have called those same 6 HR people that day with the one exceptional candidate that they each had – all of which would have benefitted their business in some way. Hopefully you get my point.
Let’s be hinest, there is always the possibility that you may miss out on a good candidate when you have a PSL – the only way to mitigate that risk is to use every single agency out there and see every potentially suitable candidate. Clearly that’s not realistic. A good recruiter who uses any direct methods AND a PSL properly will reduce the likleyhood of missing out on that person.
With regards to execptions to the PSL – where do you draw the line? If I make an exception for your good candidate, why don’t I make an exception for another? Doesn’t that dilute the whole point of having a PSL in the first place?
I actually think making exceptions is the main cause of companies having 20,30,40 odd agenices on a so called PSL – “that agency sent me a good CV once so I’ll continue to use them”.
Just some food for thought…
@ Alex. I think you have exactly captured the issue from the perspective of the client. And I know that is not necessarily the perspective of all Recruiters on this link but fundamentally we do have to listen to what the client says and wants — ultimately they pay the fees!!!
So you either have a well planned, well managed and relatively strict PSL policy or you deal with every agency regardless in case they may the one with the perfect candidate
I agree on this have a small and well managed PSL, build rapports and trust with the recruiters, allow them to do their job.
An excellent piece of work Azmat, a very thought provoking blog which will undoubtedly raise a number of viewpoints and opinions.
I think we can all agree that in general the idea of PSL’s if managed correctly can be affective, productive and help stabilise productivity in relation to a company’s Recruitment Process. Furthermore a good PSL Policy can help reduce time spent on the Recruitment Process whilst maximising results.
However, we have all undoubtedly seen what can happen when PSL’s are miss-managed or not utilised affectively. This can result in massive numbers involved in the PSL resulting in massive numbers of CV’s sent to the client and an overwhelming increase in time spent managing the Recruitment Process.
I personally feel that in general the PSL is a great scheme and helps both the Recruiter and End Employer manage the Recruitment Process affectively. However, I do think some End Employers do need to give the PSL Process some serious thought in the beginning to ensure that it will work for them and their business rather than merely moving their current process under the name of a PSL.
I also feel that there are a growing number of End Employers using the PSL as “get out” when they receive enquiries from Recruiters, believing this will put them off. When in reality of course, this often has the opposite affect and challenges the Recruiter to get on to their list. I think it would be better practise for End Employers to spend a little more time in the beginning to ensure that the Recruiters that they consider using are affective for their business and can deliver on their needs. A good PSL will have quarterly or bi-annual reviews built into it to ensure that the company is gaining from the PSL experience, rather than simply adding more and more Recruiters to the list.
Well this blog has certainly received a load of comments, obviously something very close to the hearts of many of us.. I have to say, and to a certain extent backing up Darren Ledger. I always focussed my efforts at the hiring manager. Reasons; because these people are the ones who the temp would be working with, they know what ‘type’ would fit, they know their team better than anyone in the organisation. Now please do not take this as my opinion, it is just an observation that the HR managers do not know their individual departments well, a good HR manager should. But, how many actually do?
I think that for a PSL to work well the hiring manager(s) should take control once this is set up properly by HR, after all, HR people are good when it comes to protocol and adherence as that is what they do. The hiring manager should then be supplied the list of appointed agencies and advised to run with them his/her way under a standard set of guidelines. If a non PSL agency could demonstrate that they do actually have a ‘perfect’ candidate for a role, they should be listened to. The caveat here though is the word ‘demonstrate’. If they cannot prove that they have a suitable candidate, it goes no further, nor does it give them appointed PSL status that has already been set by HR.
In conclusion, I admit that PSLs are great when you are on them, but it is really frustrating when, as a potential supplier, you know that you can and will provide a more efficient service, but can’t get on no matter what you do. Just some food for thought.
I think a PSL still holds some important advantages, though its imperative there is a structure to it that everyone adheres to. I have worked on PSL’s plenty of times where particular managers choose to work outside of this – completley contradicts what is trying to be achieved!
The other thing (as mentioned by Helen) is that a reasonable number of agencies should only be involved. It’s not going to benefit anyone (client included) if there are 20-30 agencies working on the same roles.
Certainly an interesting topic…
From a recruiter’s point of view I feel PSL are not really implemented properly in some businesses, there are a lot of businesses out there that have 10+ agencies on their PSL. I think this is just pointless and waste of time, the hiring managers get confused as well as the candidates and the hiring manager/recruitment manager ends up receiving a number of duplicate CV’s/applications for the same role.
If a business is going to have a PSL they should limit it to 3 agencies. However by having a PSL in place you may not get the best candidates in the market as the agencies will end up sending the best 3 CV’s over to you quickly to make sure they are the first to represent the candidates. Agencies will get comfortable and may not work as hard as they should to provide a good service and the best candidates for their clients. The business should be making sure all the agencies on the PSL are performing – even if you have to set them targets on how many roles they fill.
A good PSL can exist in a business but the hiring managers should always be open to CV’s that are sent from another agency, who may have a good candidate for them. If this happens – I guess it’s time to review your PSL, as the agencies that are on the PSL are clearly not the best for the business’s roles, if they were they would have had that CV to the hiring manager first.
I guess both side have negative and positives, but no matter how good your PSL is, it all depends on the candidates. It’s a candidate driven market at the moment and if you put a good candidate in front of the hiring manager – the likelihood is they will find a way to work with the agency regardless of them not being on the PSL.
@Rupy, I have to say that your post is very well balanced and articulately written. Superb. You are dead right, it’s all about the candidate. How can a client identify which agency attracts the best for their particular company? Do they go with the agency who has access to most job boards? Do they make a decision based on testimonials? The whole PSL thing needs radically looking at and a ‘fit for pupose’ standard implemented.
Well – what a lot of comments!! Seems the PSL is very thought provoking. I would just add that there is good and bad to either argument. I think it is a shame to loose contact with hiring managers, many complain that they would like to be more in control of the hiring. However, I would say that when dealing with a company that uses the PSL route, that provided that the HR and agency/recruitment people, show mutual respect, good manners and empathy, the whole experience is a pleasant and productive one.
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I realise this is an older post but it did engage some interesting responses and made for a very interesting read.
Over the years working as a recruiter PSL’s have been both my enemy and friend. What I notice in the responses and the article is the lack of fight from agencies over how their industry should be run.
In recent years the PSL argument has been less relevant, I believe this is due to the market being more candidate driven. But as an industry we should be telling the HR people how we work, not the other way round. Many companies with a healthy appetite for new staff have engaged a recruiter of their own, highlighting that it is a specialist role. This is usually either RPO or in-house. Both these subsets are quick to distance themselves from the agency recruiter but essentially they are doing the same job, the only difference is they are guaranteed the fee at the end of the work.
The scales of probability when on a PSL hang in favour of a recruiter not filling a role, it’s this risk that drives quality in the agency down and in turn volume has to go up to offset it. As an industry we should be adapting our model and pricing to reflect the shift towards in-house and RPO, if we don’t we will be extinct. As a recruiter I always tried to minimise the risk by offering big discounts for sole engagements or only working with a maximum of 2 others on the PSL.
Some say the recruitment industry is no different to any other, they all have preferred suppliers or bidders. The major difference though is recruitment is not a commoditised product, each assignment is different and each product is a unique person. The whole concept of social recruitment embraces strong networks and referrals, why on earth would a company want to limit those networks by insisting on a PSL. The really savvy companies have a close circle of suppliers agreed, but they also have an open channel for anyone not a supplier to show the strength of their network and produce an A grade candidate.
PSL’s are old hat now and we should push back at HR by refusing to work in that way..…. @UKtalentbroker (revolutionist recruiter)