Hiring for Services: Bias Continues to Be Huge Problem in IT Procurement

By Chris Preimesberger

Those closely involved with procurement decisions have been candid about there being a problem in their processes. More than 40 percent of survey respondents admitted they are biased by personal relationships when making procurement decisions and that it is rare for their company to partner with a service provider with whom it has had no previous relationship.

From World Series tickets to birthday gifts for spouses to trips to strip clubs, procurement decision-makers have seen it all, which is worrisome for those businesses that play by the rules during the pitch process. IT vendors are notorious for providing in-kind bribery in the form of lavish excursions and parties, expensive gifts, inside connections with show-business celebrities and other items.

Search engines typically are the No. 1 channel for consumers to find goods and services, but when it comes to finding good service partners for a company to hire, are they just as effective? The answer is an unequivocal yes. According to the survey, general search engines are the tool most used to find and interact with potential service providers.

Many procurement decision-makers admit that their procurement strategy is getting old, particularly those from larger companies with 250 employees or more. Times have changed, and practices like these need to be reviewed and updated, just as any other corporate policy needs review on a periodic basis.

One would expect a company to partner with only the best providers and replace those relationships with better ones the minute they realize they weren’t still up to par. This is not so; a majority of procurement decision-makers say there are better service providers than those with whom their company currently partners.

It’s not that procurement managers don’t know where to look. Finding truly relevant providers for their needs is what they see as their greatest challenge.

Most procurement professionals agree that keeping a long-term relationship with a service provider often results in that provider offering fewer creative solutions as time goes on. How long do they expect creativity to diminish? On average: 4.4 years, the research said.

The procurement team is not the only group that makes decisions about company partnerships. Nearly all (87 percent) say they would be likely to partner with a new service provider, but significantly fewer (71 percent) actually feel free to do so. This is likely because of personal relationships; most (56 percent) say relationships between individuals at their companies and potential service providers frequently affect their procurement decisions.

Procurement managers from large companies with 250 employees or more are more likely to admit that personal relationships influence their procurement decisions and that their procurement process needs a refresh. Despite the resources at their fingertips, they seem to be more likely than smaller companies of 50 to 150 employees to rely on relationships, rather than merit, for procurement decisions.

There are online marketplaces for personal relationships, so why not business relationships? More than half of procurement decision-makers agree that being able to sift through service provider submissions online and compare their merits virtually would be an effective way to make new partnerships.