QUESTION: My question is in regards to preferred supplier lists, what would your strategy be for potential clients with a preferred supplier list (PSL)? Would you pursue them or just file them away? If so, what ways would you go about it? – Nathan
ANSWER: I am not even going to be vague with you on your first question, I hate preferred supplier lists. We worked at 30% retained with an incubator division within Nortel. Nortel was a multibillion dollar company in the telecom space. We had to get on the preferred supplier list, but our hiring manager walked us through the gauntlet. We did not sign up for their standard agreement, which was 20% with a 6 months replacement guarantee.
Occasionally you have to get on a preferred supplier list to do work with somebody, but I am going to do that with the assistance of the person that wants to work with me. I am not going to get on a preferred supplier list so maybe, someday, hopefully, I can work with them.
The big mistake I see most people make, mistake may be too harsh a word, but a mistake I see a lot of people make is they target Fortune 1000 corporations. Sure, they have a lot of openings, but most of them are not worth the fees we get from them.
My coaching to my clients in my private groups is to target clients with $250 million a year or less in revenue. In my recruiting firm, I had a huge amount of success, $200,000 to $300,000 a year in placement revenue, from companies between zero revenue and $70 million in revenue. Those are the companies without preferred supplier lists. They are companies on the smaller side, no HR infrastructure whatsoever, which is wonderful, and they need us the most because the ramifications of someone not being in a job in a $40 million company and a job not getting done are far more obvious to the success of the corporation than somebody not being present in a $10 billion company.
I am not good enough, nor did I ever have any interest figuring out how to navigate Fortune 1000 corporations. We did work with companies like Cisco, but we were brought in from the outside and escorted in through the moat, through the thick wall, brought in by the hand by somebody who wanted to work with us, who helped us negotiate very fair terms to work with inside that company.
Usually with a company like Cisco, which is a Fortune 100 corporation, I had no interest in working with the entire company. I had interest working within a group within a division. That is the type of thing you want to target.
A really good question. I just find that your life will be a lot more fun if you target companies that are smaller. Almost without exception when I get clients to switch that, their life becomes a lot more fun, their fees go up, and how they are treated is significantly improved.