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HCMWorks Insights

Why Procurement and HR Should Work Together

Posted by Julia Fournier on 5 Nov 2015

Human capital is your biggest asset as well as your biggest expense. But as companies begin to rely more on contingent workers, the hiring of these on-demand, non-permanent workers will be done largely by the procurement department. But as human capital is as much of a human resources issue as it is a procurement issue, these two departments have become more entwined than ever before. Not only do they have human capital in common, but other indirect products or services that are procured can also be HR-related, such as health insurance. And as such, these two functions should work together, strategize, and collaborate on this complex but critically important resource in order to get maximum value.

A Shift toward Strategy

In the past, procuring human capital and other products or services was largely just a source-and-pay type of process. But as companies start to get leaner and meaner in order to stay competitive, procuring and sourcing have become more strategic functions. As procuring human capital becomes more about value and less about cost, a strong, mutually respectful and beneficial relationship with HR can help procurement better identify and reduce risks, create more effective talent acquisition processes, and ultimately, get the best value for their dollar.

Splitting Up the Work

When you put two departments together that are used to working alone, you can expect some resistance, distrust, and a possible blame game. The best way to create a harmonious relationship is to split up the work and establish defined and specific roles and responsibilities in a way that best utilizes the departments’ skills, resources, and experience. Your procurement professionals, for example, should still be in charge of overseeing and managing vendors and contracting across the supply chain, and your HR specialist should be in charge of bringing policy guidance to the table and recruiting expertise to the process. Establishing specific roles will help both teams find success.

Communication and Respect Are Critical to Success

The relationship will not succeed without proper communication. The specialists in both departments will have their own language, using jargon that the other may not understand. They both need to make an effort to communicate clearly. If jargon is unavoidable, then both should make efforts to explain the terms or ask for an explanation when they’re not clear.

Just as important in the relationship is respect. Procurement and HR must engage in the partnership without trying to dominate the other team. The only way to find valuable solutions is to understand that they have a mutual goal in securing the right talent and services for the organization’s needs. Both teams need to respect each other’s expertise, be open to new recommendations and ideas, and have candid and honest dialogue—only then can goals be met successfully.

The Benefits of the Relationship

If both teams can collaborate and communicate effectively, you will see great results. Through the knowledge exchange, HR will have a better understanding of vendor management and market intelligence, and procurement will be able to better understand the needs of human resources and better support them through strategic sourcing of contingent workers. When they learn from each other, each department can improve the quality of their programs. Your company will also benefit from more streamlined invoicing, payment processing, onboarding, and departures. And you will also be able to better reduce your risks of using contingent workers.

Work Together for Better Results

To best manage your total workforce, including your permanent employees and your contingent workers, a strong partnership must be formed between your HR team and your procurement professionals. Such a relationship between the two departments can lead to best-practices approaches to procuring talent, more efficient processes, increased communication, and better adherence to company policy. Using a single, centralized strategy for your entire workforce will lead to better results and lower costs.

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