Employer Branding Talent Acquisition

What is the Point of a Preferred Supplier List (PSL)?

Okay, you’ve got me. We operate a PSL (Preferred Supplier List) in our recruitment team. Only we like to say it’s more of an ‘L’ than a PSL, as at the last pass it was starting to resemble a novel by Tolkien. I’m exaggerating of course. Slightly.

I believe that a key mistake made by in-house recruitment teams is getting a little too precious and inflexible with their PSL. I’ve come across companies and recruiters that are really keen on them. They have tiers and levels, beauty parades and maximum percentages. Then there are set agencies for particular job types, or worse, one generic agency trying to fill everything.

A few benefits:

I’m not trying to say that there is no point in having a PSL at all.

They can help you reduce your costs, especially if you are currently taking the off the shelf rate. Using one or two suppliers can be really useful if you are in a high turnover environment, or you don’t have the need for specialist skills. A well-functioning PSL should also lead to solid relationships with your recruitment suppliers, plus they develop a good understanding of your business, which should in turn lead to better quality recruitment, time to hire and all the rest.

Your suppliers can become an extension of your in-house team and advocates for your employer brand. Finally, it puts some structure around your suppliers, through a regular review procedure. Measurement means that you should be able to easily identify which of your suppliers are not performing and take them off the list.

But….. I believe that with effective supplier management you can have a lot of these things without the restriction of a PSL.

Do something less structured instead:

You still need at the least a process for selecting which agencies you are working with. I’m just more of an advocate of flexibility. The first thing I recommend is having your own set of terms and conditions for agencies drawn up; don’t sign theirs. You determine the rebate period, the candidate ownership period, the SLA’s and anything else that that is important to your business. Follow that with a ways of working document.

Be clear to your recruitment suppliers how you want them to work, and be prepared to stop working with them if they don’t stick to it. Set consistent charge rates as much as possible, just to make it easy for yourself. And here comes the flexible bit – get anyone you want to use to sign up to it and use them, within reason of course.


A few reasons. Firstly, you are giving yourself total flexibility; you haven’t had to trade guaranteed business for cheaper rates. I also believe that PSLs also create tension between the recruitment team and hiring managers. Frankly, they simply don’t care about the same things we recruiters do, they just want their vacancy filled.

So if they get a spec call or CV from an agency that just happens to have the perfect candidate, annoying as we might find it, saying that the agency isn’t on the PSL won’t do you any favours. You don’t also have to limit yourself to a set review period – measure and review success as you go.

And finally, as I have said, with some good supplier management processes you can have all of the benefits of a PSL without the bureaucracy that sometimes comes with them.

Maybe it’s a bit much to say work with any agency, and obviously that has to be tempered with a little practicality. Clearly a longer list means more management for your recruitment team. I just don’t believe a strict PSL with an annual review point adds value to your recruitment activity.

Simply, you can’t expect just a few to meet your every need. You will either have to stick with it rigidly and annoy your hiring managers or go off script and work with other agencies anyway so why give yourself the headache?

We tell everyone that we have a PSL though, usually not being reviewed for at least a year. It cuts down the time of the sales calls.

Did I really just publish that?

RELATED: Time for a Change in Recruitment Sales?

By Gemma Reucroft

Gemma Reucroft is a HR professional specialising in recruitment and employee relations, with a passion for coaching. She tweets as @HR_Gem.