Vendor or Partner? The Difference And Why it Matters
Just like a personal relationship, your business relationship with a staffing provider, can come in 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. Some relationships deliver a special level of value that goes far beyond an ROI for the customer while also fueling the passion drivers of the service provider.
The “relationship” dimension most often applied to staffing relationships 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 solutions to their clients most pressing staffing challenges. While we know “partner” language is easily thrown around as a marketing tag, at PACE we experience the difference in relationships first hand.
- We almost always have a few (often our newer) clients who view us as a vendor and ask us to compete with other vendors to find them that “just right candidate”. These clients get a certain level of service from us that “delivers the goods” – what this client really cares about.
- The majority of our clients, on the other hand, view us as their “partner”. They rely on us to offer ideas and solutions that will go far beyond the transaction, to make a difference to their business. We are their “staffing consultants”, contributing our expertise in ways that adds value to their business.
I’ll let you speculate as to which of these two types of business relationships gets our best.
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!
But first, a quick note about the impact of “context” on these relationship labels…..
Over the years, I’ve experienced the vendor/partner label can be applied differently depending on the economic environment.
When the recruiting landscape is “good”, for example, and there is an abundance of candidates available to work, companies often elect to use or develop their own resources to recruit and hire staff. They can create their own recruiting team, or assign the recruiting responsibility to a specific member of the team who gets “good at recruiting.” Occasionally you’ll see a company embrace a full blown outsourced solution even when the market is rich with candidates, but that’s mostly a solution used by a start up company who wants to focus its development resources elsewhere.
Its difficult, when candidates are abundant, for staffing company to even become a vendor, let alone a partner. And if they are asked to provide services, they often find themselves “competitive’ with their in house counterparts who need to justify the $$$ being spent to support their jobs and what they do.
As the landscape changes, and the candidate marketplace tightens, we see many companies turning to “outside” resources for that extra help that only an outside resource can provide. When recruiting gets tagged as a business critical process companies often turn to third party recruiting services to fill in the gaps that they are unable to fill on their own. This is that time when the vendor/partner distinction starts to make a difference. Some of the staffing providers 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. Other staffing providers view these opportunities differently – a chance to really get to know and understand their client’s business and put themselves in a position to anticipate their clients needs for talent in the future – to see the “bigger picture.” For these companies, their customers, even if they are internal recruiters, become their partners, helping them understand their client’s needs at a deeper level. They connect the dots between a specific need and the client’s bigger picture, longer term needs for talent, and turn that understanding into a service model where they deliver value to their clients outside of just being able to respond to here and now needs.
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 notice to those of us who study “relationships” it is when the candidate market takes a couple of cranks upward and the right candidates are really tough to find, that the relationships between staffing companies and their clients once again can 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 a staffing company who once was 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 tests the depth of a staffing partnership….and if there are no solutions, the partnership struggles.
So what are the differences between a vendor and a partner relationship and do they matter?
According to Webster, and in its simplest form, a vendor is an entity, a person or company, offering something for sale to a customer who has a need to buy. The customer decides to buy what a vendor has for sale – or not. A staffing vendor is a company that brings their client a candidate which their client can purchase (or hire) – or not.
A partner, on the other hand, is a person or a company who works together with personal or company, to achieve a common goal. The “partners” share the need to develop the strategies and processes that delivers their shared goal; they share the risks and the rewards of their shared efforts and creativity.
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.
To add to Webster….
We have identified 8 traits that we think provide those “defining moments” in the vendor to partner dimension. We think this is a list you can use to evaluate your current relationship with your staffing provider – are they a vendor or a partner? Does it matter to you?
Its a basic. All relationships start (and end) with TRUST. The most important quality of any relationship, business or personal, is always trust. And trust happens 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? Is that important to you?
Partnerships require 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? To create the right profile for the candidate you need to hire? Or have the innovative solutions you need to “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. Does that level of expertise matter to you?
How you address and RESOLVE DIFFERENCES matters! 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 or screened for hire. 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 your staffing provider to bring up the issue? To work with you openly and honestly to find a solution? To be honest, a staffing provider who just lets you do things your way, even if “your way” isn’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. Does the ability to explore differences in approach and perspective matter to you?
How FLEXIBLE are the foundations of your relationship? Almost by default a PARTNERSHIP is built 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? You’ll know when you ask your staffing provider to do something new or different. Does their answer matter to you?
Do you have SHARED GOALS? As Webster points out, one of the defining qualities of a partnered relationship is the opportunity it provides to work together for a common cause, 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 doesn’t actually create a win for their client (the employee quits or has to be terminated because they aren’t the right fit), 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 are those big fees that are considered 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”. Does their answer matter?
Who gets BLAMED when things go wrong? When something goes wrong, its so 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 only 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 gather up the people needed to clean up the mess and prevent more messes in the future. When something goes wrong, is it more important to you to have someone to blame, or do you just want a solution so it doesn’t happen again?
How is your staffing provider resourced to INNOVATE, do something CREATIVE? It goes without saying that vendors are happiest when they can do things their way and the customer just agrees to go along. Vendors make money when they can deliver a whole lot of services in a cookie cutter way. You either buy into their service model, their pricing agreement, 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 deliver the results their customer/partners need. Do you want someone to tell you “how to do it” or do you prefer to play a role in how its done?
Who does WHATEVER IT TAKES? One of the ways to know what kind of relationship you have with your staffing provider is tested when you have a business challenge and your staffing provider has to provide the solution. How willing are they to go that extra mile – to do “whatever it takes” to deliver for you. A lot of vendors refuse the tough recruits, the difficult to execute staffing challenges, or will 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. Is your staffing provider ready to deliver “whatever it takes” or are you ready and willing to fill in the gaps yourself?
PACE Staffing Network is proud of the business relationships we have built over the years. We have used these 8 principles as a “test of those relationships” and what we are bringing to every relationship we have. We know these are the ways we fulfill our mission – “to make a difference.”
How we build and support relationships extends to members of our NETWORK who our agency partners 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 our NETWORK becomes the solution our clients count on us to deliver.