MSP's Technology-Agnostic?

In my previous blog, I discussed the role of technology in a managed staffing environment. Certainly, in any arrangement, there should be a level of in-person support. However, as we have seen over the past few years in the commercial staffing industry, large service providers have begun to sell their service with the idea that they can work with any technology. Does that mean that the VMS and the MSP should be sold separately? No, I don't think so. Technology is a part of the solution. However, due to the VMS technologies having different capabilities, it is probably wise for the MSP provider to remain agnostic in its approach to the software side of the solution.

Reallistically, clients don't use the software enough to warrant a comprehensive VMS, but in the sales process, they think they do. Technology sells, and it is the service providers that are nimble and aware enough to recognize this that will have a competitive advantage in the marketplace.

The Role of VMS Technology

Happy New Year, everyone! (Although, I'm really talking to myself since I have yet to advertise my blog link.)

I want to talk a little bit about the role of technology within a managed staffing program. Having experienced working for a straight VMS provider and a few MSP's, I have officially formed an opinion! Well, really it's been formed for a while now.

Part of the client education or sales process is the famed technology demonstration, and boy can they really get fancy! Lots of bells, whistles, and sometimes, smoke and mirrors. Any vendor who underestimates this portion of the sales process or presentation can get burned. 'Cause let's face it: we all love technology. It's cool, it's fun, and definitely stimulates the mind. I usually refer to it as "sexy." However, what is interesting to me is what the client really understands when it comes to administering this technology. The question arises: what will the client be required to use, need to use, and what functionality truly needs to be present?

Having feet on the ground in a production environment, I can say getting user managers to use a new technology is not easy. Even after personal training and user guides, if an application is not a part of the manager's core responsibility or daily operation, it's "out of sight, out of mind." Reallistically, unless the client leadership delivers and enforces a directive that all managers that use contingent workforce must use the technology, the responsibility will fall upon the service provider. But, this brings me to my point... Isn't that the way it should be?

Technology serves the managed staffing client in a few basic but fundamental functions: the requisition-fulfillment process, contractor profiling, assignment management, timekeeping (when applicable), and reporting/business intelligence. If you are a partner in the process, what portions of the entire solution do you wish the client to manage? Well, the client really doesn't need to manage a single thing. The only real exceptions are those environments that require client approvals (requistions, timecards, assignments, rate changes, etc...) If that function is handled internally, as you will often find in Healthcare, then the service provider can, and should, administer the technology themselves. It is the staffing lifecycle, by the way; so, it is a bit silly to expect the client to take on our own responsibilities.

If these points are explained to clients before the technology demonstration, it certainly changes the perspective. "Hey, we have a great technology, but it really doesn't matter because you shouldn't be touching much anyway." One of the major value propositions in all of this is cost savings, and time is money, or should I say cost. Isn't it an additional value to take away every bit of administration possible? I think so... Does the client?

Talen Acquisition & Retention Thoughts

How many clients can honestly say that they hold the complete competitive advantage over their competition when it comes to finding and retaining the best talent on the market? Hopefully, none. The fact remains that most companies or hiring organizations face a never ending uphill battle trying to bring the best people in their organizations, then get them to stay. It costs far more to replace a high performer than to bring one on board; so, do we find that everyone has a sound retention or career planning program in place to make sure the intellectual capital doesn't walk right out the door? I wonder what percentage do, and how comprehensive it truly is.

What's interesting, is that if you put the best people in the right places, and give them a chance to succeed (an be justly rewarded for their success) the pressure on your recruiting engine dimminishes greatly. Networking or word of mouth hiring has the highest success rate when looking at the "Submission to Quality Hire" metric. Take the Mayo Clinic, for example. Highly reputable organization on the cutting edge of research, development, and treatment. How much supplemental clinical staffing do they use? Zero. Nada. Zilch. They have a line out the door to work there. Their reputation proceeds them.

Now, not everyone can be a leader in their respective field, but the point is a company is its people. If the people love working there, word gets out, a reputation is made, and then the respective recruiting organization takes the role of a buyer versus a seller. It all begins with retention... not the other way around, as we would so easily think!

Contingent Communism

Those of us who have spent a significant amount of time working in the staffing industry are well familiar with all of the changes in the manner we do business, especially over the last ten years. Arguably, with the invention of the Internet, no industry has seen a greater impact than ours. Access has completely changed: resumes via job boards, career profiles from LinkedIn, applicant tracking (pick a software application,) the list goes on and on. However, what may have been the greatest change over recent years is within the realm of enterprise outsourced solutions. Most of us know it as VMS, though it takes on many different shapes, sizes, and acronyms.

There are a number of different approaches to managed staffing, some more effective than others. Every client is different and has a different approach to workforce management; so, arguing that one methodology is more effective would be like trying to tell the Cookie Monster that brownies are much tastier and more satisfying than cookies. It’s too subjective of a platform (and I’m saving that topic for my next rant.) What I will argue against, is one of the principles some managed staffing solution providers parade on over and over: the importance of vendor neutrality.

It is easy to understand why such a notion would be appealing to any HR or Purchasing professional when he or she is looking to consolidate their supply base. It’s a noble idea: creating a fair and balanced environment for suppliers to do business, not giving one any advantage over the other.

It’s sweet. It’s heart-warming. …And, it’s not business-minded.

It truly is a Utopian approach to supply-base management. However, it has no place in any for-profit enterprise. Just the idea alone of treating and communicating with all of your staffing providers the same is an insult to the principles of capitalism (and even Darwinism – see “Survival of the Fittest.”) I would submit that if Adam Smith were alive today, he would probably argue that a trading environment that does not incent competing individuals or companies is fundamentally doomed to fail, or significantly disrupt productivity. Of course, Marx is probably already rolling over in his grave that we are even discussing labor as a commodity, but I digress…

If you break down staffing to its barest essentials, it is simply about getting the most qualified person at the best price, in the least amount of time. It isn’t rocket science. Some staffing companies do it better than others within certain modalities and within certain markets. Their relationship with the client AND service capabilities are built upon their respective competitive advantages, and the amount and quality of resources dedicated to the client is the subsequent output. In laymen’s terms, as a supplier performs, the client relationship grows, which in turn is rewarded with more opportunity, which is then responded to by the supplier dedicating more time and effort to the client. That is how business is done.

In a truly vendor-neutral supply base, all suppliers get orders at the same time, and there is no preferential treatment whatsoever. Realistically, and anyone who questions this next statement can pick up the phone and call any recruiter or account manager working a desk, within most operational “vendor neutral” managed staffing programs, there are instances where the candidate may have already been chosen per previous relationship with the client, or a supplier has an inside track to a position because of the hiring manager’s request, etc... The blatant truth is that these “neutral” programs are still administered by human beings. Relationships will be created, and there will always be times when the VMS administrator will turn to a single vendor for help – there could be a whole slew of reasons. One thing is certain, all of the participating vendors may never even see some of the requisitions, and it happens all the time within these programs. What is wrong with it? Absolutely nothing. It is in the client’s best interest to make decisions that will encourage the highest return on his or her investment. What IS fundamentally wrong, is managed staffing solution providers selling the principle of vendor neutrality when they themselves don’t fully live by their own rules, or more importantly, admit that vendor neutrality doesn’t really exist.

Within any managed staffing sales cycle, vendor-neutral providers will consistently refer to Managed Service Providers (those that offer staffing and consulting services along with the VMS technology) as the “fox in the henhouse”, self-serving and order-hoarding, putting their own profit above client support to the point of failure. Their argument will be that vendor neutrality will ensure no one has an advantage over the other, and no orders will be held to the point of critical mass. In other words, it is necessity that drives neutrality. I cannot say this doesn’t happen or isn’t a reality in some instances, but unfortunately for the naysayers, the remedy to the problem of greed does not lie solely in the comforting arms of the neutral-touting VMS provider. Such concern can easily be laid to rest by instituting Service Level Agreements (SLA’s), process transparency, and timelines on order release. All of these rules can be collaboratively and contractually established before implementation, and monitored through the respective program performance metrics. Besides, isn’t there a value in having a large recruiting engine dedicated to your enterprise talent acquisition strategy?

There is another important side-effect that needs to be addressed when digesting the impact of vendor neutrality. Earlier, I broke down staffing to its barest essentials: quality, price, and speed. These are also the fundamentals of sound operations management, throwing in “flexibility” for good measure. I also referenced client-dedicated supplier resources. This is a very serious matter that is often lost in translation during the managed staffing sales process. The two things that drive staffing suppliers are price and preference. If prices are fair and you are one of the few suppliers, if not the only one, to receive a requisition, then more resources and a greater sense of urgency will be given to the requisition. However, if a supplier knows that they are just one of many suppliers in a vendor community, neither too much time nor energy will be spent on any order that comes from that specific client. If a supplier isn’t given a real chance to succeed and differentiate themselves from their competition, at any client, then that supplier might as well not even be on the vendor list. Point being, preferential treatment is good for a client’s staffing program. Doing business with fewer and higher quality suppliers, based on qualitative performance data, will increase productivity and ensure vendor loyalty.

There is another reason vendor neutrality can be dangerous. Staffing programs like the MSP and VMS must operate within a mutually beneficial environment in order to succeed. Just as cost savings is one of the fundamental value propositions for the client when moving to a model such as this, financial viability is conversely an area of interest for the service provider. What history has taught us is that any client should be very careful when looking at a third-party VMS. Since 1999, only a select few have been able to succeed out of a very large pool. When a managed staffing provider bases its business model on the client’s volume of staffing spend, the fine line between cost of program administration and profit can begin to diminish quickly. When volume decreases, whether it is recession-based or a lull in productivity, something must give. The organizations that have a longer history and track record of financial stability have a better chance of sustaining economic downturns or job freezes, whatever the cause may be.

The intent here is not to bash VMS providers. There is some excellent software out there that has an absolute wealth of functionality, and can be coupled with an effective layer of administrative staff to bolster service support. It is those who choose to market their service upon the foundation of vendor neutrality I take issue with. Promising a maximized return on investment due to some fictional communal vendor harmony is not only a disservice to managed staffing as a whole, but to the clients who entrust us with such a tedious task. Truth be told, any contingent staffing management program that is fundamentally based and sold on the premise of vendor neutrality is inherently flawed, and will restrict the respective client from truly optimizing his or her supplemental workforce. Fair and balanced does not mean “neutral”. The free-market society in which I live and work, “fair and balanced” means letting the cream rise to the top.

So, vendors of the world unite! …and revolt against the idea of commonality.

Welcome to the Managed Staffing Blogspot!

Hello, everyone! Welcome to my blog on Managed Staffing. Being the outspoken and passionate managed staffing professional that I am, I figure I should at least put my perpectives out there for the staffing world to see, comment, and maybe rant against. I don't know if anyone will even read this thing, but you never know! I will try to put something out there as often as possible, but with business travel and a five month old running around my house, who knows how often I will be able to pontificate?

Anyway, I have an editorial I will be posting soon on the myth of vendor neutrality. I hope we can get some readers and comments going.

God bless,

Eric