I’ve been in and around the staffing MSP space for over a decade. I’ve been in well over 100 programs as a supplier (and evaluated and rejected hundreds more) and been on the other side of the table as the provider of MSP services, including our own product, Ōnin Optimum. I think that makes me a pretty astute evaluator of what is going on in the space, especially as it relates to the way that suppliers interact with MSPs.
After all, with no suppliers you have no MSP program, and with disengaged suppliers you have a dreadful MSP program. I’m confident in saying that today, with historic labor challenges and low unemployment, clients and their MSP programs need enthusiastic staffing suppliers more than ever.
So why do MSPs often behave in such shameful and arrogant ways? Although loudly promoting the partner-centric design in our offering, I know that I’m often embarrassed to say I lead an MSP product when I talk to other staffing companies. The eye-rolling nearly gives me motion sickness. Why? Here are some examples of the common complaints by me and so many others whose agency is critical in making these programs successful.
Fees, Silly Fees and Additional Fees
Every MSP must charge a fee for their services, but do you need 4 or 5 slid into the contract? The reason that people don’t want to keep pricing clear and simple is because they are hiding charges that usually constitute death by a thousand cuts. One ginormous MSP (part of a $20B+ corporation) charges a $500 program entry fee for every program each supplier participates in. When you are talking about suppliers – and I’ve seen this – whose total revenue is just a few million dollars, that’s immoral. The simple math is that if every one of their approved vendors is in just 1 program, they have generated more than $2M in additional revenue. I recently saw a PPE fee of $30 upon worker placement and a $10 PPE fee upon worker conversion. What? Hit coming in and going out, eh? I could go on about fees but nausea overtakes me.
Rebates, Discounts and Penalties
Let me see, there is a rebate that could potentially affect net markups by 4-6 points, depending on sales volume. I also see a tenure discount that makes it difficult to determine how much margin we actually make. The SLAs have financial penalties if we don’t have a 100% fill rate and a mere 1.2397% turnover annually based on some calculation that Einstein couldn’t decipher. Oh, yes, if they pay us “early” based on their determination of what early means, they take an additional 1.5% off the remittance (oh, yes, that’s about 2 more markup points). Now, how in the Hades is anyone going to figure out if they can even begin to make a sliver of gross margin?
An MSP contract is not the 10 Commandments and God will not smite thee if fair alterations are made to it. But again, what does fair have to do with it anyway – this is a zero-sum game? Please don’t send me a copy of the contract in Word if all redlines are going to be rejected out of hand (Recently my correction of a grammatical error – “a” instead of “an” – was rejected, which made me feel as if my Bachelor’s in English was a waste of money). Or why would you send it in a locked version of a Word document? Just send me the document as a PDF with a note indicating that to alter this Holy Writ puts all involved in danger of eternal torment.
Concealing the Details
What if someone offered you a contract for the purchase of a house yet refused to offer any details about the house? If you won’t offer me basic business information – in our case markups, onboarding costs, potential volume, serviceable locations, etc. – how do you expect anyone who doesn’t have crap for brains to get excited about the deal? Please, is allowing suppliers enough information to make an informed business decision such a bad thing? After all, you want them to sign up for your program, not just to have another supplier on the books but as a supplier who is going to enthusiastically participate and support your client. Don’t you?
Downright Dumfounding Deception
No, a 3% MSP fee isn’t the equivalent of 3 markup points – it’s a tic over 4. When the contract says a 72-hour guarantee with no explanation, that could be both 3 calendar days or 72 working hours…big difference. When you say the supplier must provide all equipment needed to do the job that could indeed include forklifts and pallet jacks, among many, many other things. Don’t tell me “all” means something else unless you’re speaking some odd version of Klingon…or Clintonese (“It depends on what the meaning of the word ‘is’ is.”). Client funded means that the rates the supplier sees are their net markups, right? “Oh, no, maybe it’s really not client funded.” As I told my ex-wife, deception is no way to start a relationship.
I could go on, but my therapist would now encourage me to lie down and take a Xanax.
Yes, I understand the concept of flow-down language and your client’s desires. But, as a consultant and an advisor, isn’t it your fiduciary responsibility to tell them such things are driving away those they desperately need to supply them talent? And aren’t you still ethically obligated to present information clearly and honestly?
Although I might be quickly and harshly ridiculed, and maybe even ostracized, for these comments, I’m compelled to cathart. Isn’t it time someone told it like it is? Our industry deserves better. Plus, I’m too close to retiring (OK, 10-12 years) and so prize my own peace of mind to sit idly by and left unsaid what many people are already thinking…and what I believe is right.
For those of you who run programs that respect your critical talent hunters – and yes, you are out there, and I hope great suppliers find and stick with you – thank you! What you may lose in a “deal” here and there will be rewarded with programs that are sustainable and clients who understand the value of the entire talent supply chain. That’s a win, win, win, my friends.