On June 29, a fierce storm blew through much of the East Coast and touched down in my town, leaving us without power for six of the hottest days on record. Since then, I have been aggressively pursuing the purchase of a stand-by generator. For those who don’t know, these generators kick in once the power goes off and provide a seamless transition to propane powered current. This is important to me not only because of my distaste to disruptions in my normal life but I also do a fair amount of work from home. The only thing left to do was go shopping. Along the same time, I saw an ad: Stand-by Generators Starting at $4,995.
A couple weeks ago, I sat down for coffee with a contingent labor category manager (“Jim”) who was struggling feverishly with his company’s external MSP program. The issues ranged from failure to fill key positions, missing the time-to-fill SLA regularly, discontent among internal customers, lack of enrolled quality suppliers, and the list goes on. Probably the biggest issue from the MSP side was that it wasn’t making any money. Jim also shared with me that his company treated the relationship not as a partnership but rather a supplier/vendor engagement. Jim told me the MSP had submitted a proposal to amend the original agreement and asked me to take a look at it. After reviewing the proposal, I thought to myself “What did they expect?” — they being both the buyer and seller of the contingent solution.
On the MSP side, the original pricing model along with some very aggressive SLAs certainly set the stage for winning the business. On the buyer side, I wondered aloud who would take this deal without asking some serious questions. What were the motives on both sides to agree to this? As an MSP, I could be thinking let’s get the business, work to break even for a couple of years then go back with another proposal to get us where we should have been in the first place. As a buyer, I could take the position that the supplier had better deliver at those commitments or else. The trick here is the entrenchment of the program and the cost/effort to change it out may preclude any option to bid it back out.
My advice to Jim in this case was he first needed to get the stakeholders seriously engaged in the process and help them understand the climate and the implications of not doing so. He would also need a commitment to move the relationship from its current state to that of a partnering arrangement. I also suggested he seriously look at bidding out the program, regardless of the effort. This sends a message to both sides because of the work required. At the end of the day, I don’t see this organization switching things out but much can be gained from sitting at the table and developing a solution that works for all parties and getting serious about holding each other accountable through realistic expectations.
Back to the generator. I had the firm come out to do the analysis, looking for what that $4,995 would give me. However, the proposal to deliver what I was going to need was $9,000! Sure, I may have gotten through the next big outage by going with the low price, but the coverage and service agreement would have made it very challenging. I went with the latter proposal because in reality I want a working product and great service so I can deliver uninterrupted service to my customers.
Whether you are buying or selling a contingent workforce solution, you should be treating the arrangement in the same fashion. There has to be transparency, benefit and realistic expectations from both sides otherwise both will wind up in the dark.