Yes, the title of this article is an actual MSP philosophy for a large staffing company. And, even if this is not a viable strategy, it’s often the sentiment with staffing companies who are forced to adapt to the changing landscape of talent acquisition, especially shifts in the contingent workforce management space. But not terribly unlike workers’ compensation and unemployment premiums, MSPs are not going away. They may (OK, they will) have to change the way they relate to suppliers, but this methodology for procuring and managing extended workers is not going to disappear.
So why such vitriol and angst among staffing suppliers? Candidly, these reactions are not unreasonable. In far too many cases an MSP has sold certain things to their client that just aren’t realistic (true?) in today’s labor market. And the staffing partners often suffer because of this.
No, I disagree with those who can guarantee that an MSP will bring a 10-15% hard cost savings to the client – some companies have already negotiated very competitive markups with their vendors. I would argue that using a VMS platform doesn’t always make it easier, or more appealing, to the staffing suppliers – in fact it’s often just the opposite. And, no, suddenly introducing supplier KPIs and scorecards isn’t going to immediately improve time-to-fill and assignment completion metrics – in some cases these will temporarily look worse.
And selling to incumbent suppliers that their potential additional revenue will ultimately offset the 4-5 markup points they had to eat in order to absorb the MSP fee – while actually guaranteeing them no increased volume – is (borderline) offensive. Is that any way to start a relationship? Let’s be honest, who today is crafting MSP solutions where the suppliers are the ones benefiting the most? OK, I know that might not be realistic, but do most of the punitive aspects of the program – decreased profits, increased compliance requirements, heightened liability exposure, and more convoluted communication channels – have to fall solely on the suppliers?
As you would expect, these are but a few of many potential examples.
Why does this appear to be a zero sum game with the vendors always getting the short end of the stick? And aren’t the incumbent staffing partners usually the last to know about the new program, often getting an email from an MSP they have never heard of or spoken with? That’s not a partnership, is it?
So what I would recommend is a healthy dose of realism, transparency and honest dialogue. I believe that unless we change the way we sell and configure MSPs there will eventually be a backlash – suppliers with limited resources and a shrinking pool of qualified candidates will either lose enthusiasm or move on to more profitable and simpler business. For example, as a potential supplier I have always rejected a high percentage of MSP programs because they just weren’t good business or created too much liability exposure (or both), but I am now terminating more existing agreements than ever before…and I only see that increasing.
As The Ōnin Group launched our CMBE vendor management offering, Excelsior MS3P, I demanded (OK, strongly suggested) that it be “The Un-MSP.” I am so convinced that this space, especially for smaller or mid-market companies who have had few good options in the past, needs something radically different and counter-cultural.
For a start, I believe that one of the first conversations we must have with our MSP clients is the critical role their staffing suppliers play in their success or failure. Let’s get real, building a program that alienates and disconnects the companies you are so dependent on for talent isn’t a recipe for long-term success. If the design isn’t appealing to them, they will have little appetite to send you their best candidates…and they will go elsewhere eventually. I’m convinced that any solution architecture that doesn’t heavily weight the effect on the suppliers is tragically misguided.
And I believe MSPs and client stakeholders should be having candid, open conversations with their key suppliers as well. Companies need their input desperately. MSP solution configuration without their feedback and/or their tacit blessing is laying the foundation for unrest and eventual service disruptions, later if not sooner. Now I’m not saying that suppliers should be the architects of your vendor management solution, but aren’t they providing the very service you are trying to manage? Why wouldn’t you engage them if your end goal is to find better talent, the very talent they source for you (see MSPs Primary Function)?
Again, what I am recommending is a healthy dose of realism, transparency, and honest dialogue with all critical parties and key stakeholders. Configuring the best possible staffing vendor management solution for your company requires a 360 degree view and a holistic approach that moves beyond the myopia that too often defines the process.
If the herd is going one way, it might be best to go the other.