Are Vendor-Neutral MSPs Making it Easier or Harder for Clients?

200378286-001I’m not sure exactly when it happened, but at some point the concept of vendor neutrality became the norm in contingent labor staffing within most large organizations. The concept is simple: You funnel your job through the MSP or VMS and it is instantly distributed to a number of preferred suppliers that will openly compete for your business resulting in the best candidate at the best price in the shortest amount of time. Now that is an attractive proposition. But is it reality?

PREMIUM RESEARCH: MSP Engagement Models Revisited

When it comes to vendor neutrality in staffing and the design of most MSP programs, some providers may be making it harder for clients to procure talent. Here are some of the reasons why:

  1. No one is giving you their best. You have a $100M staffing program so you think everyone wants to work with you, but you have 80 vendors in your program.  I promise you, every single one of those staffing agencies has clients they’d rather serve first. Clients where they have manager relationships, clients where they have market share, clients that are true partners. They’ll all participate in your program, but you’re not going to get their best service, their best recruiters, or their best candidates. There are exceptions where companies have pared their vendor list down to 5 -10 core vendors, but these MSP programs are few and far between.
  2. Most on-site MSPs are not staffing specialists. Why is this a problem?  Job order intake and rates. Even good on-sites aren’t knowledgeable in all job categories and using VMS technology, most programs just push out jobs via pre-loaded, generic templates. So managers using the self-service tool (when is someone going to realize that self-service is not a cost saver?) just click a button and no one performs a proper order intake session where the real job is discussed. This results in a poor job order, often with an unrealistic bill rate attached to it, that finally gets raised two weeks into the search. A tight vendor list that allows manager contact gives recruiting partners a clear picture from the start, so quality goes up and time-to-fill goes down.
  3. Lower cost savings. There may be volume discounts in the contract but how many suppliers are going to even sniff them? A customer will always get better pricing if they commit to a partnership and push significant volumes of business to their staffing suppliers. We all know that $100 million in spend means nothing if it is split 80 ways.
  4. Manager perception. Heard from managers: “No one is calling me to ask intelligent questions,” or “The first 10 resumes I’ve seen don’t have the specific skills I’m looking for,” or “I have no idea who I’m doing business with.” Now contrast this with this staffing account manager that’s been talking about how he can design a SOW for my department that will save me all this aggravation and that they specialize in this type of business. Any wonder why SOW business is growing so much? Contingent labor programs are failing because hiring managers perceive them to be of less value. This is particularly true in technical and professional staffing areas such as IT, pharmaceutical and clinical research staffing.
  5. MSPs become police, not partners. The number one goal of any MSP program should be to efficiently fill jobs with great talent. Too often the rules enforced around “neutrality” stand in the way of these goals. A good MSP should remove communication barriers; not implement them.

Despite what this article might imply, I am not anti-MSP/VMS.  In fact, I think that a well-run MSP/VMS adds tremendous value. Compliance with onboarding and screening requirements, tracking of supplier metrics, visibility into numbers of contingent workers and spend, time entry and approval, consolidated billing, and supplier management are all good things. Clients can benefit in these and many more areas by implementing a strong MSP/VMS program.

My point is that as a client you can make the MSP/VMS easier and more effective by not focusing so much on vendor neutrality. You can have a fair and transparent program and still allow managers to maintain a direct relationship with your suppliers. In addition, keeping the vendor list to a reasonable number can improve savings and help ensure your managers can manage the interaction.

By doing so, not everything will be neutral, but manager satisfaction will rise, time-to-fill will decrease and if you drive more volume to your core staffing suppliers you will get better service, better recruiters supporting you and ultimately, better talent. That’s what you wanted when you implemented an MSP/VMS in the first place, wasn’t it?

MORE: MSP Is a Strategic Talent Solution

Mike Gamble
Mike Gamble is the Vice President of Enterprise Solutions at Yoh, a leading provider of professional staffing solutions, and is also a regular contributor to Yoh’s blog The Seamless Workforce.

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Mike, great column! I agree wholeheartedly with your points: the near myth of volume discounts; the lack of true staffing knowledge in many onsite MSP managers (who, to be fair, are hired for their administrative skills not recruiting abilities); and the reason SOWs are growing in use (my firm specializes in IT, so I see this too). However you really hit the nail with the statements, “A good MSP should remove communication barriers; not implement them,” and “You can have a fair and transparent program and still allow managers to maintain a direct relationship with your suppliers.” I have said this many times in many different forums and I continue to believe it is one of the single biggest problems with MSP programs. It should not surprise anyone that point #4 is happening if your MSP prohibits communication between hiring managers and staffing suppliers.  Thanks for sharing your thoughts!

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