By Subadhra R. Sriram
For Cegedim Dendrite, having its contingent workforce program administered by a managed service provider has been a great pill to take. As a leading supplier of CRM, data and services, Cegedim was so impressed by the results of its temporary worker program under the aegis of a managed service provider, it decided to go one step further: the recruitment of the company's traditional workforce has been handed to its managed service provider (MSP), Allegis Group Services.
A world leader in pharmaceutical CRM, Cegedim is an early adopter of the idea that all workforce planning -- for its traditional employees as well as contingents -- should be developed by one source. Staffing Industry Analysts, the publisher of this magazine, however, does not see this as a trend. "I can see this making sense for specialized unique hiring where recruitment and sourcing is an issue and there's not a lot of volume of hires involved," says Dana Shaw, senior VP of strategy and solutions. "But when it comes to very large organizations with a range of skill sets, I don't see it happening near-term."
Shaw opines that Cegedim's story is more an indication of the sophistication and maturity of the contingent workforce market. The company's tale is one where an RPO (see box) followed the successful use of a MSP. Trends notwithstanding, Cegedim's expects its program will provide access to the best talent -- whether contingent or regular employee.
Around late 2005, Cegedim realized it did not have a clear picture of its temporary workforce. Its HR and procurement units started examining the challenges posed in acquiring these workers. At the time, the company was using more than a hundred suppliers. What it found was bill rates varied for the same skill sets. As usually happens in decentralized operations, business unit managers were making their own hiring decisions based on limited information and focused on their own department's immediate or midterm needs.
Existing systems and tools weren't used consistently across all groups, and there were billing irregularities as well. Administrative processes were messy, leaving procurement, HR, as well as hiring managers frustrated. "So we decided to reinvent the whole contingent worker process," says Phil Portantino, VP of human resources and real estate for the Americas.
It was time for a request for proposal. Cegedim sought out master suppliers as well as managed service providers to learn about their models. Numerous meetings later, Portantino and his team decided that the MSP value proposition worked for their company in 2006. "Trying to develop the expertise to manage a variety of vendors was not something that made sense to us at that point in time," says Sue Meyer, senior manager, global procurement for the Americas. "We saw the value that the MSP brought." The company also implemented a vendor management system, Fieldglass.
Why the MSP Works
The company relies on the flexibility and skills of its around 800 contingents to meet business objectives. Contingents are an integral part of the way Cegedim staffs its operations. Due to the nature of its clients' businesses, projects of varying duration are brought to Cegedim. These ventures require contingents on assignments of various length to meet deliverables.
The average tenure of Cegedim's CW is around three months. The company uses a variety of skill sets needed for software development, IT architecture and operations, technical help desk, hardware services, training, sales and marketing, human resources, legal, and finance and accounting. In 2009, 60 percent of its workers were recruited to one of three positions: customer service representatives, training coordinators and hardware technicians.
"Our strategy is to find and engage the best available contingents in a just-in-time manner to meet the changing and cyclical demands of the business as dictated by our clients," says Portantino. That's where the MSP -- Allegis -- comes in. Its job is to keep abreast of trends in the staffing marketplace and provide market intelligence with regard to particular skills sets, job functions and the competition.
Allegis is also on-site, answering questions and meeting all of Cegedim's unique needs and contingent requirements. Allegis manages vendors and does not provide any workers in what is commonly referred to as a vendor-neutral model. Over time, Allegis has developed an intimate knowledge of the suppliers that provide workers to Cegedim. It has a handle on rates and ensures that only good-quality contingents enter the door.
Here's how. "My team is involved in the interview process with the candidates. We help screen and interview them to make sure that the right decisions are being made," says Steve Culmone, program director with Allegis Group Services. But Culmone's involvement starts long before the interview process. He and his team get a solid understanding of what the managers' hiring requirements are and then communicate that to the suppliers. Once the worker comes on board, Allegis works with the supplier in conducting any performance reviews, coaching and training.
As a result, Meyer says, "We have an improved, standardized and scalable recruitment process across the enterprise." The company's vendor pool has been trimmed to around 30 from 100. Savings on bill rates have been around 10 percent to 15 percent. Additionally, Cegedim's direct HR recruiting costs were cut in half with the introduction of the MSP.
The company has visibility not just into the spend but into the skills sets that the various managers need. Service-level agreements and various key performance indicators further help Cegedim ensure that it is getting quality candidates. "We can now make better decisions that impact our business and how we perform for our clients, says Meyer.
Confident in the MSP model, Meyer in 2009 turned to Allegis to discuss recruiting traditional employees. "It was clear that it was becoming more and more difficult to maintain a professional high performing recruiting function internally in a rapidly-changing business environment," says Portantino.
Cegedim was growing, with more products and services coming to market. At the same time, its clients were coming up with new and different projects that required a range of skill sets. Scalability was becoming an issue. Meyer came up with the idea of turning to Allegis for a solution.
She heard about RPO from a couple of vendors at the 2008 CWS Summit, an annual conference for contingent workforce managers hosted by Staffing Industry Analysts. Upon further research, Meyer found that there was a lot of redundancy and overlap in Cegedim's recruitment processes. "[We spent] a lot of time drawing a clear line between the recruitment process associated with contingents and that of employees," she says.
Based on Cegedim's success on the contingent worker side, and in order to maintain the ability to negotiate costs and pricing, Meyer invited Allegis to discuss RPO solutions.
The Total Talent solution came into existence in August 2009. Allegis' on-site RPO team manages the recruitment lifecycle for all traditional employee roles -- sourcing, screening, scheduling, interviewing, offer management and on-boarding of all candidates. "Regardless of how the candidate is positioning himself out there we want to have one arm, one process that finds this talent and brings it to us," says Portantino.
The RPO's goal is to locate and bring aboard the best talent. It is immaterial to Cegedim whether the worker comes in as a contingent or an employee. The belief is that Allegis' RPO expertise can mitigate any misclassification risks.
With regard to contingents, definition of an assignment and its length are carefully considered. The VMS enables the company to examine not just the assignment but the reason for the assignment and the way the worker's going to be engaged. If a manager moves a contingent into a long-term, undefined engagement, then Cegedim usually converts the person as required to mitigate any misclassification risk.
Traditional employees are tracked through an internal application tracking system, while the Fieldglass VMS does the same for contingents.
Currently, Culmone has two separate teams: one to manage the contingent worker side and the other on the RPO. The MSP is cross-training both sides so that ultimately it will evolve into one team that works to build relationships with business units and hiring managers. Then it will go to fill every requirement a particular unit has."
"We are looking for the best-in-class for Cegedim and this process allows my team to really focus more on individual job descriptions and looking at resumes and performance of an individual rather than [traditional] versus contingent," Says Culmone.
On the RPO side, Cegedim pays Allegis based on the number of positions filled. And on the MSP side, the program is supplier-funded. This essentially refers to a model where a supplier has built in contingent worker costs in the bill rate, even though the customer does not perceive it that way.
Stringent SLAs and key performance metrics reviewed on a quarterly basis help Cegedim ensure that it stays compliant as far as both the MSP and the RPO are concerned. The company's legal arm does get involved in the contract agreement stages, assessing and reviewing risks. Then the legal is team is available on a case by case basis.
Though the RPO is still relatively new to the company, responses within the company so far have been positive, and Dendrite does not foresee having too many issues. Hiring managers' responses have been enthusiastic and encouraging. A hiring manager in Canada says that she has seen a large increase in quality candidates for a particular position. Another call center manager has been raving about the kind of model people he's been getting.
Culmone asserts that establishing an MSP model contributed to the initial success of the RPO. As Allegis had already built and established strong relationships with the hiring managers, it did not take much to sell the same supervisors on the RPO. It was the same story with the executive team. Regardless, Portantino and his team still made sure they talked about the changes to the leaders of the individual organizations and hiring managers within the company. "It was communicate, communicate to the hiring managers and then we instituted the new processes," says Portantino.
"At the end of a year, the success of the RPO will be determined by the quality of candidates and ultimate hires as seen by their productivity in the first year of engagement, and the ability to adjust to changes in volume at the original cost projections," says Portantino.
Once the dust settles, Cegedim hopes to expand this model to Central and South America, first with the MSP and then with the RPO. Of course, much of this expansion depends on how it all plays out. Experts claim in the case of Cegedim, the RPO is a testimonial to the sales and marketing tactics of the staffing industry, rather than the inherent power of the model. The RPO also does little for the much-touted vendor neutrality of MSPs. "An MSP that does all your recruitment?" asks Shaw. "I think this just about kills neutrality."
Gil Smith, senior VP of Allegis RPO, disagrees. "There are [walls] built to ensure that the recruitment from the MSP side is separate from the RPO, so we maintain integrity -- especially with our MSP supplier base." He thinks that Cegedim is an enlightened client. "They see the value of total talent management where hiring managers not only can enjoy one point of contact but the firm can look holistically at their human capital demands and make better decisions in terms of the type of labor that best fits the need," Smith says.
Skeptics, however, believe that Dendrite is still is the honeymoon phase of the RPO. Time will prove who is right.
It's a bird, it's a plane, it's an RPO...
An RPO acts as a company's internal recruiting arm for all or a portion of its jobs. The service manages the entire recruiting/hiring process from job profiling, interviewing, salary negotiations, through the on-boarding of the new hire. Some companies start off by handing over a project to a RPO vendor. Say, for example, that Wal-Mart is opening a new store and needs to hire 300 emplyees for the new location. The outsourcing of that initial hiring would be a one-time RPO venture. The point is that the RPO vendor owns those requisitions: it's not working against other vendors or Wal-Mart's internal recruiters.
Once an RPO deal is signed, the vendor will assign a set number of recruiters to the client. An RPO contract is like any other outsourcing contract, with service-level agreements. These are usually multi-year engagements, with risks as well as rewards tied to the deliverables. In addition to the initial fixed implementation cost, there is a variable component tied to the number of hires made.
The fee structure is also dependent on the type of positions and jobs going through the RPO. For example, an organization is willing to pay more for an IT programmer or a manager than for an hourly factory worker. IT workers come with a higher cost per hire but in lower volumes than lower-wage positions.
Subadhra R. Sriram is managing editor of Contingent Workforce Strategies magazine. She can be reached at email@example.com