HT5927 Supervising a device to prevent Activation Lock

What exactly does "Supervising" a device mean? Is it enough to just install a profile with a payload using the Config Untility?
If that's the case, I can't get it to work. I manage a Service Desk and I now need to make sure we can re-use iPhones for other employees after the original user of the phone leaves.
I have been testing an iPhone 5 with a basic profile installed via the Conig Utility, and the only payload is enforcing the passcode. The profile is set to never be removed by the user.
I then activate my Apple ID on the iPhone, then proceed to restore it. It still asks for my Apple ID, which is not the desired result.
Am i missing something here?
Any help appreciated here, i don't want to end up with bricks in our asset register.

So if I hadn't sign out my device, and my friend would have restored it, in that case Activation Lock would be required? right?! 

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    Again, irrelevant.  Perhaps the user doesn't know they can activate lost mode.  Perhaps they've already replaced the device and don't care about the lost/stolen one.  Perhaps they are dead.  Perhaps, perhaps, perhaps.
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    I wasn sure if any Apple reps trolled the boards or not. That is the exact message I sent to Feedback. If enough users send the same message, maybe they'll set something up.
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