When talking about smaller, highly transactional blue/pink collar MSPs, some of the ‘rules’ of the vendor neutrality myth don’t apply. I understand that the term ‘vendor neutral’ is quite nuanced – but sometimes it implies things that simply aren’t true. Yes, it could mean that the MSP isn’t a supplier in the program or it could mean – and this is my point of reference – that there is no preference given to participating suppliers. Here is my take (as well as the MSP that I manage) on how to approach to this seeming quandary of MSP vs. supplier.

Vendor neutrality doesn’t really exist.

You want to use your best vendors, right? Of course you do! Why do you scorecard? Do supplier optimizations/rationalizations matter if quality of service and KPI metrics don’t matter, which would be vendor neutrality in its purest form?

No, your company is decidedly partial to its best suppliers – and it should be. Your program should go to great lengths to measure supplier activity and results, and that’s not some silly, superficial exercise. Its purpose is to determine preferred vendors based on both performance and program-wide potential. You want your best staffing partners to have a larger percentage of your spend, and rightly so.

Another example of the vendor neutrality myth would be diversity spend carve outs – which is not goodwill, it’s good business. Excelsior MS³P, the MSP program that I lead, is part of Excelsior Staffing and is a Certified Minority Business Enterprise. As we all know, companies that make a huge difference offer further evidence that, sometimes, suppliers are chosen for reasons other than their low-priced RFP response or scorecard. Diversity carve outs are certainly not vendor neutral and yet they can create great value.

An MSP doesn’t have to be a staffing partner in your program.

But it might be best if they are – and I am unashamed about that. For example, if the program is looking for suppliers with a certain core competency (Light Industrial, IT, Healthcare, Engineering, etc.) and the MSP has a business unit or sister company that specializes in that area, why wouldn’t you introduce them?

In our situation, The Ōnin Group, which is the parent company of Excelsior MS³P, is an outstanding light industrial staffing provider and one of the largest in the U.S. And we are proud of that. If you need LI talent, we believe we are doing you a disservice if we don’t inform you of our capabilities in this space. If you prefer for Ōnin staffing companies not to participate as a supplier in an Excelsior MS³P program, we’re fine with that. But why deny yourself a quality supplier because of its name or affiliation?

Double dipping?

And now for the elephant in the room – being the MSP and a supplier in the program generates a double revenue stream. But why all of the awkwardness and sense of taboo, unless it’s the vendor neutrality myth again?

Excelsior MS³P openly admits that to be the MSP and a supplier is a form of double dipping, so we will give you a reduced fee if an Ōnin Group company is a supplier. We all know that as a supplier in your own MSP program you are generating additional gross margin from staffing revenue, and we prefer to acknowledge that by putting our money where our mouth is with hard cost savings on the MSP fee. However, this only works if there are consistent standards for all suppliers.

Different standards?

Any supplier affiliated with the MSP should be subject to the same quality metrics, service expectations, KPIs, compliance and audit requirements as any other provider. Almost every major MSP (KellyOCG, Pontoon, Allegis, Tapfin, Randstad SourceRight, etc.) is a supplier into their own programs and subject to the same scrutiny. I know it’s human nature to give a pass or a wink to a sister company who is underperforming, but the analytics and the scorecard should overrule these tendencies. Properly configured KPIs, honest collaboration with the client, and crystal clear dashboards should make these decisions rather obvious. When it comes to supplier performance, it should only be about what’s best for the client.

Transparency is needed.

MSPs need to be transparent – in smaller or mid-market programs, true vendor neutrality in practice is a myth. We should be forthright in that often our MSP program design should include using internal staffing partners, if it makes sense for the program and they prove themselves to be a worthy supplier.

Let’s deal with this issue openly – if there is proper competency alignment, unbiased performance metrics, and proper client transparency and collaboration, having the MSP’s staffing entity as a pillar supplier might be of great benefit to your staffing program, not ideas like vendor neutrality that don’t really work in your world. Especially if your program is of the smaller, highly transactional blue/pink collar type.

Want to learn more? Please contact Linden Wolfe, PHR, CCWP at lwolfe@excelsiorstaffing.com