Vendor or Partner? The Difference And Why it Matters
Just like personal relationships, business relationships, including relationships with staffing providers, come in all different sizes, shapes, and packaging.
Being in the service industry all my life – I won’t say I’ve seen them all, but enough to know that some relationships work better than others – for both the client and their vendor or partner. But what is the difference and why does it matter?
The “relationship” language that most often gets used in the staffing world to describe the range of relationships we have with our customers, is that gradient where, at one end, the staffing provider is a vendor, selling a specific service with a targeted deliverable, and at the other end, the staffing provider is a partner, working collaboratively to find a solution to all kinds of staffing challenges. At PACE we typically have a few (often our newer) clients who work with us as a vendor and we compete with other vendors to provide them with the “just right candidate”. These clients get a certain level of service that often isn’t as consultative (i.e. helpful) as we like to be as we know for these clients, delivering the goods for a specific transaction is really all they care about. Fortunately for us, the majority of our clients view us as their “partners”, relying on us to be “good consultants”, offering ideas and a range of solutions for some of their more challenging staffing issues.
This blog is being written to describe the differences between a staffing vendor and a staffing partner and why if you’re a first time purchaser of third party staffing services, its important for you to know the difference!
Over the years, I’ve experienced the vendor/partner label get applied differently depending on the economic environment.
When the recruiting landscape is “good” and there is an abundance of candidates available to work, I often see companies electing to use their own resources to recruit and hire staff. They either create their own recruiting teams, or assign the recruiting responsibility to a specific team members who gather up a certain amount of expertise to get the job done. Occasionally you’ll see a company embrace a full blown outsourced solution when the market is rich with candidates, but that’s mostly a start up company who wants to focus its development resources elsewhere.
When the candidate landscape tightens and good candidates are harder to find, we see many companies start to beef up their internal resources while also turning to “outside” resources for specialized help. Many internal recruiting teams don’t always have the resources needed to be “state of the art” in all things staffing, particularly when state of the art technologies focused on the recruiting process are considered unaffordable. When recruiting gets tagged as a business critical process companies often turn to third party services to fill in the gaps that they can’t fill on their own which is why so many small to medium sized companies don’t spend the time or money to develop in house recruiting capabilities and will use third party staffing providers on an as needed basis.
This is often the conditions under which the vendor/partner distinction starts to become clear to those missioned to work with “outside resources”. Some of the agencies that get asked to “fill in the gap” are and will act as vendors – they have a specific job to fill and once that’s done they go away. Earning their fees on a contingency basis, internal recruiters are often viewed as their competitors not their partners.
Other agencies view these opportunities differently – a chance to really get to know and understand their client’s business and put themselves in a position to not just address here and now needs, but to anticipate needs of the future. Internal recruiters are their partners – helping them get to know their customers and the needs of specific hiring managers at a deeper level. They know how to connect the dots between a specific need and the client’s bigger picture, longer term needs for talent, and will work proactively to anticipate needs, not just respond. The benefits of a partnered relationship for both the recruiting agency and their customers starts to occur when the focus shifts from a specific transaction to the client’s bigger picture needs.
Of interest to those who study the relationships between staffing companies and their clients is that when the candidate market takes a couple of cranks upward making the right candidates really tough to find, the relationships between staffing companies and their clients get challenged. A staffing company’s clients, once loyal customers, often feel forced to expand their recruiting resources to include not only more internal resources but multiple vendors who are willing to compete with each other for the left overs. If the staffing agency who was once a partner, can’t find a solution to this issue, they can all of a sudden find themselves acting like just another vendor. A tight recruiting market always tests a staffing partnership….and if there are no solutions, the partnership struggles.
So what are those differences?
According to Webster, and in its simplest form, a vendor is an entity, a person or company, offering something for sale. The customer is the person or company who buys what’s for sale – or not. A staffing vendor is a company that brings their client a candidate which their client can purchase for an established fee.
A partner, on the other hand, is a different type of entity, a person or a company who works together with another entity, a person or a company, to achieve a common goal. They share the need to develop the strategies and the processes that delivers that shared goal. They share the risks and the rewards of their efforts and creativity. They are partners.
But these definitions are Webster’s and you are likely much more interested in how these two ends of the “relationship spectrum” play out in real life. How do companies develop strong partnerships with the staffing agencies they work with?
This blog attempts to answer what exactly is the difference between a vendor or partner and why it matters. We begin with what we think are the 8 traits most important to a partnered relationship. You can use this list as a way to evaluate whether your current relationship with your staffing provider is more like a vendor or a partner.
TRUST. The most important quality of any relationship, business or personal, is trust. And trust begins at the simplest of levels. When a vendor delivers as promised, trust begins. And if, over time, that trust grows to a place where a company can trust their vendor to act in their best interests, in addition to their own, you enter the world of partnering. What has your staffing provider done lately to show you that they understand your needs and will figure out a way to deliver them regardless of the impact to them?
APPLICATION OF EXPERTISE. A staffing agency vendor doesn’t need to understand every aspect of your business or even every aspect of the recruiting process to find you an employee. If your request is clear, most recruiters can screen candidate’s to your specific requirements. But what if your request isn’t clear? or your specifications out of sync with the candidate marketplace? What if a client believes that the only way to grow is to hire employees directly, when what they need is a more flexible staffing strategy? Does your staffing provider have the specialized expertise you need to understand and provide solutions for the real needs of your business? Or have new solutions to help you “win” in a fast moving marketplace? Do they know your business well enough to be good consultants – to offer up ideas or options you may not have thought about? The level of expertise a staffing agency can bring to the table, the number of ways they can help you solve a staffing need, determines whether they have the ability to be a vendor or a partner.
RESOLVING DIFFERENCES. Just like any healthy relationship, there may come a time in a business relationship where you and your staffing provider have different perspectives about some aspect of your preferred candidate profile, your hiring process, or how candidates are being recruited. Ignoring these differences, hoping they’ll go away typically doesn’t work…and can end up as sources of frustration for both the staffing provider and their client. If things aren’t going well, expectations not being met, can you count on a staffing agency to bring the challenge forward, to work with you openly and honestly to find a solution? To be honest, a staffing agency who just lets you do things your way, even if they aren’t working, is acting like a vendor. A partner will make sure the issue is out on the table, discussed and a solution found that works for both parties.
FLEXIBILITY. Almost by definition a PARTNERS build their relationship on a platform of flexibility. If something isn’t working, a partner will help you id it and find a solution. If you want to try something new, a vendor will tell you why it won’t work “in their system” while a partner will make the adjustments quickly and without red tape. Are you working with a vendor or partner? The difference and why it matters is that you’ll know when you ask them to do something new or different. .
SHARED GOALS. As Webster points out, one of the defining qualities of a partnered relationship is the opportunity it provides to work together on a shared goal. Although a vendor might appear to share the same goal, the defining moment of a vendor relationship is when they win – when they find the employee you want to hire or start into a contract role. And if it turns out that their win isn’t also a win for their client, so be it. For a partner, on the other hand, the only success happens when there is a win for both themselves and their client. One of the worst “norms” in recruiting industry is the big fees that can be earned (by a vendor) when they place a candidate into a role and the candidate leaves that job after only a short period – a big loss for the client. While the argument that the client is paying their vendor for the service not the candidate, might be true, when those services don’t deliver value to the business, it’s pretty hard to justify the fees paid without refund or recourse. To find out if you’re working with a partner or a vendor, ask your staffing provider to describe their “service guarantee”.
BLAME. When something goes wrong, its easy to blame a vendor. In some ways that’s what vendors are for – to be the reason why some misguided direction or process doesn’t work. A partner, on the other hand, will not just be quick to identify their role in an issue, but will escalate the problem to a level where it can be talked about, root issues identified, and solutions found. Reality is messy. Partners don’t go away when the going gets tough, but work together to not just clean up the mess, but to prevent them in the future.
INNOVATION and CREATIVITY. It goes without saying that vendors are happiest when they can do things their way and the customer just agrees to go along. Their services are cookie cutter. They have one pricing option and one or two service models. You either buy into their package or look for another vendor. Partners, on the other end are endlessly creative about how results can be delivered. Their solutions are anything but cookie cutter. They jump out of rather than into boxes. Partners use their expertise to lead the way for their customer/partners.
EFFORT – WHATEVER IT TAKES. It goes without saying that one of the most compelling qualities of a business partnership is the willingness of your business partner to go that extra mile – to do “whatever it takes” to deliver for you. A lot of vendors refuse the tough assignments or will simply walk away when the going get tough (“our service agreement doesn’t cover this type of work.”) A partner is there until the work is done, the goal achieved.
PACE Staffing Network is proud of the business relationships we have built over the years that have turned into valued partnerships using these 8 principles as our test of “where we are”.
We have built relationships not just with PACE clients, but also with members of our NETWORK who we call on from time to time to help us deliver on a particularly challenging project with one of our client partners. When recruiting gets tough, our clients rely on us to provide solutions and sometimes it has to come from working in partnership with other staffing agencies or independent recruiters.