preferred supplier list (PSL).

what is a preferred supplier list?

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A preferred supplier list (PSL) is a compiled selection of third parties that an organisation has approved to provide goods or services. In the context of recruiting, a PSL lists recruiters or recruiting agencies that a company prioritises when filling vacancies. 

The need for and structure of a preferred supplier list comes down to the organisation’s needs. For instance, a PSL may come in handy when an organisation wants to recruit in a new market.

When recruitment efforts are underway, organisations with PSLs prefer to work with the staffing service providers that meet the requirements to be included on the list. 

Typically, only approved suppliers are in a position to provide CVs through the hiring organisation’s candidate management system. 

However, if all options on the PSL have been exhausted and suitable candidates are yet to be found for a role, then the organisation might consider some alternatives.

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what are the benefits of having a preferred supplier list?

compliance

Depending on where you’re recruiting from, there may be specific legal frameworks at play based on the type of employment or location of potential candidates. With a PSL, trusted suppliers with the necessary expertise can take care of the fine print, helping you meet your HR needs without breaching regulations.

If you are not adhering to a PSL, it’s likely that you have a number of managers working for the company who engage with recruitment agencies without even reading the terms and conditions for each agency. The ideal situation would be for all of your agencies to operate under the same set of terms and conditions (the commercial details could differ, but the terms would be uniform). Hireful has hired a lawyer to create a template document that you can download, review, and edit before implementing it across all of your recruitment providers.  

Please note that since hireful are not a law firm, you should seek advice before using this document. 

efficiency

HR can be a time and resource intensive undertaking for any organisation. Having a preferred supplier list helps streamline the recruitment process to achieve greater business efficiency.

Approved suppliers handle the work of receiving and processing applications to find the best candidates. This frees up the HR department’s time and energy. 

In addition, all the terms and conditions of the working agreement need only be negotiated once.

better service-level commitments

Given that multiple suppliers are considered for the PSL, each of them is likely to offer the best possible terms, commitments, delivery times, and pricing to increase their chances of approval.

Suppliers are motivated by the relationship-oriented nature of maintaining their PSL placement.

dedicated account management

For suppliers on the preferred supplier list, the contracting organisation is treated as a client account. As a result, there are dedicated personnel available to address any issues that may arise while ensuring the organisation's needs are met.

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how to create a preferred supplier list.

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Once you’ve decided to make your preferred supplier list, there are a few steps you’ll need to take: 

internal due diligence

Before making the move to bring on board external recruitment suppliers, examine the organisation’s history. Look into the number of hires made over the last 18 to 24 months. This will help identify which functions would best be served by having a PSL.

confirmation of organisational requirements

Based on the organisation’s needs, outline the number of suppliers required. Will multiple suppliers be needed for each department? Will they fill all roles or specialised ones? Will they be used for temporary or permanent hires?

recruiter evaluations

Agencies can be evaluated on factors such as their expertise in your sector, ability to hire candidates in the disciplines relevant to your organisation, ability to draw candidates from desired locations, ability to source candidates from a diverse background and their level of flexibility based on non-compete clauses with their other clients.

request for proposals

Invite suppliers to fill out a formal questionnaire, e.g., an invitation to tender (ITT) or a request for proposal (RFP). This should capture the key supplier attributes to be evaluated.

shortlisting

Once you’ve received the suppliers’ responses, review them based on the internal needs assessment to narrow down the best prospects.

negotiation

Iron out your non-negotiable terms as well as the fee structure. Fees could be paid either in a fixed amount, a percentage based on salary bands, or a fixed percentage across all salaries.

implementation

Update all relevant internal stakeholders on the PSL coming into effect. Make any necessary internal reviews and updates before communicating to external stakeholders.

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how to update/review your preferred supplier list.

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While building a PSL is beneficial, it could also be a potential liability for your organisation. This could happen in cases where suppliers go against the original standards set out during approval.

Beyond putting in place initial vetting checks that ensure approved suppliers are above board, it’s important to conduct periodic evaluations. Reviewing supplier conduct on an ongoing basis helps to ensure continuous adherence to established operational guidelines. 

Here are some practical tips to help you review your preferred supplier list:

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• Arrange for regular debriefing sessions to ensure hiring agencies/recruiters are aligned with the organisation’s HR department.
• Conduct check-ins as desired, via pre-arranged meetings or a combination of both.
• Assess past performance based on indicators such as the number of resumes received, interviews conducted, and the number of hires made per quarter, bi-annually, and/or yearly. This will not only establish where there’s room for improvement but will also gauge achievements tied to respective suppliers.
• Review supplier achievements such as compliance certifications and adaptation to new developments like new/updated regulations or technologies.

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take the right approach with hireful.

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Whether you choose to delegate recruitment through a PSL or conduct it in-house, either approach requires the right system to manage applications. Hireful’s ATS comes with a powerful and flexible module where you can manage all your recruitment suppliers. 

To learn more, book a demo to experience our systems in action.