Supply Chain Talent Search – Direct Hire or Contingent Staffing: Two Powerful Weapons in Your Arsenal

March 17, 2014

Over the past year and a half, we’ve posted extensively about the benefits of the high-skillled Contingent workforce in Supply Chain, Procurement, Planning, Operations, Logistics/Transportation and Strategic Sourcing specifically. We’ve written about these advantages both for employees looking to put more money in their pockets and get better work/life balance and for companies looking to strategically ‘rent rather than hire’. There are tremendous benefits to staffing with Contingent workers in SCM. But for hiring managers, that doesn’t mean that Contingent is the right tool for every job. And, it certainly doesn’t mean that permanent staffing is going away any time soon.

Even though the global workforce is moving towards a contingent/consultant/freelance/project-based conception of the employee-employer relationship, the fact is that Permanent employees (or “direct hire” as it’s now fashionable to say) will always be crucial in building and sustaining Supply Chain business success. One way to think about it is that Permanent hires and Contingent roles are complementary. They are two weapons in a company’s arsenal, with different and unique strengths and times for deployment. Each type of hire is certainly good for different situations and one or the other opportunity will attract a different kind of talent to consider.

Permanent employment (direct hire) is as old as time. It used to be the de facto mode of hiring for every position, so it may seem like there’s nothing new to say on the subject. But, we wanted to write this post to re-identify the advantages of hiring permanently in the SCM space (which is Argentus’ recruitment specialty) in comparison with the rapidly growing Contingent phenomenon which we have seen so much growth in over the last two to three years. We want to show how hiring managers can use both high- skilled ‘Super Temps’ who bring fantastic strategic expertise to the table (for very specific implementation and project-focused work) in combination with the very important best-of-breed permanent staff in the Supply Chain field — where competition for talent is very high.

When Permanent is better to HIRE than Contingent:

1. Long-term people development.

Contingent workers in Supply Chain, Procurement and Strategic Sourcing for example can provide ‘boots-on-the-ground’ expertise with minimal training. Usually with high-level laser focused expertise, they bring the subject matter expertise to a team for a shorter time. And they might bring existing relationships with vendors or suppliers (which are ideal for smaller start-ups).

But sometimes your department needs someone who can come in and develop their skills long-term, an employee who can align that development with the ongoing needs of the business. For that type of hire, Permanent search will always be a better option. From an employee’s perspective, Direct Hire will attract the kind of great talent that’s interested in a career trajectory. They will be looking for the right cultural fit where they can grow professionally and be groomed and recognized for their potential. These are the people who want to stick around at a great company for a long time.  And these employees want and choose to take on more responsibility, which justifies that higher long-term investment. It’s like buying instead of renting; it’s an investment. You can’t get that from a Contingent worker.

2. Permanent Employees provide continuity to an organization’s culture and goals.

Contingent hires can come in and get buy-in for rapid change by acting as an outside consultant with none of those political ties, especially useful for functions in Strategic Sourcing, Contracts & Vendor Management and such (as we’ve written about here). However, Permanent employees provide long-term continuity to an organization. The relationship between a skilled contractor at the senior level and a company is and should be arms-length. They prefer a consultant/client relationship with their company to an employee/employer relationship. But a Permanent employee becomes a real part of the team and the organization’s identity. Their role is to build relationships with cross-functional teams and provide support and advice to their internal stakeholders/clients. They come to understand (and influence) the workplace culture and can act as a hands-on ambassador for the overall Supply Chain leadership in the long-term.

3. Permanent leaders are ideal for Coach/Mentorship Relationships.

As we just identified, high-skilled contingent workers operate at an arm’s length from the company that hires them and are mostly employed through a third party. While many Contingent workers in SCM are often seasoned and able to give the benefit of guidance to other employees, that isn’t what they are there for. It’s vital for any organisation to bring in fresh talent from the outside into a portion of those more senior roles in a Direct Hire capacity so as to not only bring fresh ideas to the team but to also offer the long-term mentorship and talent development that more junior and developing Permanent employees need.

4. The Passive Talent Pool for the Permanent Hire is always Bigger.

Even though Contingent Staffing is on the move and is growing rapidly because of organizational needs and because more skilled workers are drawn to the contract lifestyle, it’s a basic fact that the talent market for the permanent hire will be larger for the forseeable future.

Supply Chain is one those HOT areas of staffing that is in HIGH DEMAND and where the supply is always going to be lagging behind. Baby Boomers retiring in the next 7 to 13 years and companies demanding more talent – in Canada, over 75,000 SCM jobs are being created yearly and needing to be staffed. That means that companies and their Recruiters need to think of the best way to meet these talent requirements.

There will always be a much higher number of candidates who have a desire for long-term job security over high hourly pay rates and who will always be more attracted to opportunities in the Direct Hire Permanent space of Supply Chain Management. These people just won’t consider a contingent lifestyle. This is especially true of the “passive” market of candidates who aren’t ‘actually’ looking for jobs. In the world of the contingent workforce, there isn’t really such a thing as a passive candidate. Because of the quick turnaround times of high-paying skilled contracts, contractors are always on the lookout for their next opportunity. But in Permanent employment, where employees often stay at a job for 5+ years, people are less likely to be actively looking. The gems of the Hidden Candidate Market just are not looking for Contract and they need to be wooed into considering interesting permanent roles.

As recruitment specialists in Supply Chain, our biggest network of passive candidates by far will always be in Direct Hire/Permanent Search. It’s those long term relationships we build over time and the work we do every day to build our network within Supply Chain where we have tremendous depth and breadth. This offers companies the greatest value. We know and track people throughout their careers who are not really looking but who, if the role was just right, might be encouraged to the table. So  there’s more variety to choose from as a hiring manager. And, while there is a growing number of very excellent workers in Supply Chain in contingent space, there is still quite a ways to go to catch up to Engineering and IT. It’s an area that’s still in its infancy but building rapidly.

5. Final point: it’s not necessarily an either/or situation.

What we foresee is that the most strategic organizations will learn to use a combination of Contingent and Permanent staffing going forward in this space. This will allow organizations to remain nimble, but still have the continuity required for long-term success while staying globally competitive making their products and getting them to market.

For example, imagine a Procurement organization with a large backlog of RFP responses to process: it might be better to bring on skilled contractors who don’t need to be trained for three to six months, while ensuring the permanent team they are supporting is being shored up by finding the right Permanent talent to avoid the backlog in the future.  In fact, we’re seeing many organizations adopting this exact approach.  While we blog a lot about the exciting emerging model of Contingent staffing, we’re willing to plant our flag and assert that both Permanent and Contingent hiring will be highly relevant in the years to come and should coexist well.

As a final point, it’s worth mentioning that there’s a third model of staffing, which is “Contract to Direct Hire.” We’re seeing a number of organizations elect to bring on contractors with the expressed purpose of moving them into a Permanent role at some future point. So when it comes to Contingent and Direct Hire, it’s often not an either/or situation. They can be both flexible and powerful when used together.

It’s certainly food for thought.

Over and Out

Bronwen

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