SI Review: June 2012

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A Strange, New Land

Managed service providers can offer opportunities worth exploring

By Stacie Habegger

In business as in life, new developments constantly arise that challenge our application of tried-and-true strategies and force us to adapt. The rise of the managed service provider as a powerhouse in the contingent workforce world has proven to be such a game changer. Our responsiveness to this type of monumental change tests our preparedness and versatility, but like Dorothy taking the first steps on the Yellow Brick Road, we stand a much better chance of success if we know where we are going.

The roots and causes of the MSP phenomenon will probably be fodder for business course discussions in the years to come. But right now, we are still dealing with a continually evolving reality. There can be no doubt that business leaders on a path to a prosperous future must formulate a comprehensive strategy for their organization’s MSP engagements.

Unlike Dorothy, who is immediately greeted as a hero when she steps out into the Technicolor land of Oz, it’s not that simple for the MSP. The MSP model has been greeted with suspicion and even outrage. At first, the MSP model was a radical departure, and some staffing organizations saw it as just another obstacle in their relationships with clients. Even today, staffing firms’ perceptions of their MSPs continue to be poor, according to research from Staffing Industry Analysts, publisher of this magazine. Staffing firms gave their MSPs a net promoter score of -40 percent in Staffing Industry Analysts’ 2011 VMS/MSP Competitive Landscape survey. Regardless of those opinions, staffing firms cannot afford to ignore the seismic shift in the business climate that has led The Global 2000 to overwhelmingly signal their need for MSPs.

Friend or Foe?

It may be time to reevaluate our perception of MSPs. Sometimes, what we immediately identify as an obstacle may, in fact, be something altogether different. When Dorothy, the Scarecrow and the Tin Man meet the Lion for the first time, they are terrified, yet he turns out to be an indispensable ally.

So, what is the true nature of this MSP beast? It is important to remember that an MSP is only as good as its ability to leverage its supply base and to provide its client with the most qualified applicants. Without superior suppliers, the MSP does not have a business model. As such, the MSP should treat its supply base with the best possible care. There are thousands of MSP engagements across the globe and a solid staffing provider has its choice when it comes to participation. It is in the best interest of the MSP to recognize this fact and to develop and maintain strong relationships with reliable suppliers. Mutual respect is the key to a strong partnership, and solid communication fosters mutual respect.

The marketplace itself is driving the need for MSPs. Any organization that ignores this demand does so at its own peril. After all, what is happening in the contingent staffing landscape when client companies demand MSPs? They are asking for MORE communication, they are asking for MORE data, and they are looking for MORE help. A staffing organization that smoothly and efficiently interacts with the MSP signals a real willingness to meet the needs of the client company.

Long-Term Goals

So the staffing organization that is developing a plan for collective advancement must set goals for both the short and long terms. In order to meet her long-term goal of returning to Kansas, Dorothy must commit to the short-term goal of reaching the Emerald City. Likewise, the long-term goal of having a successful partnership with the MSP and thus the client must be reached through a series of smaller goals.

Honest Self-Assessment

A critical first step is learning to facilitate communication between your staffing team and the MSP, which will enable a sharp executive to infer a great deal about how the MSP side is receiving and processing the information they gather from the client side. Growth and development necessarily involve challenging ourselves to set and achieve goals; to venture beyond our comfort level into the “unknown” of progress.

It’s a simple truth: we are in business to meet our clients’ needs. In order to meet those needs in the most efficient way, a staffing company should openly and honestly assess its own core strengths, giving the MSP a clear and concise picture of its recruiting capabilities. Trying to manipulate the MSP relationship with half-truths or self-inflating bluster will not work in the long run. Smoke and mirrors do not a true Wizard make. Because the MSP is likely required to track supplier fulfillment metrics, if a staffing provider participates in a labor category where it does not excel, its entire scorecard will reflect that shortcoming and its overall business can be placed in jeopardy. Honest communication will result in the staffing firm being directed to labor categories where it does excel. A staffing company should engage the MSP with the same courtesy and professionalism that it would show to any other customer who places orders with it and pays its invoices.

Compliance Matters

One of the central reasons clients move to an MSP model is to ensure adherence to hiring policies, so both the MSP and the staffing providers need to commit to contract compliance in order for the relationship to be productive. This is of particular importance when it comes to drug screening, background checks and employment verification. A responsible MSP will audit its suppliers and will be held accountable to ensure that their supply base performs within the service-level agreement. All of the other pieces of the relationship between both parties can be there, but if the supplier is not abiding by the terms, the MSP will have no choice but to disengage them.

Respond Fast

A staffing provider needs to understand that speed and accuracy to requisition submittal helps the MSP determine how to effectively utilize its supply base. A staffing supplier becomes less valuable if the MSP servicing team has to keep after it to submit in a timely fashion. Conversely, the MSP holds the responsibility of ensuring its suppliers have the right information to be successful. Specific requirements pertaining to each job requisition should be provided to each program participant and the servicing teams should be prepared to obtain further information from their hiring sources should that become necessary. The MSP should offer insight on cultural fit within the ordering department, hiring manager preferences regarding background and experience, and anything else that will help the staffing companies hit the mark with their first submittals. If the staffing supplier is not performing to expectations, the MSP should be able to provide constructive feedback.

The way forward for meeting our clients’ needs is by providing the best MSP interface on the market. We need to nurture that part of our staffing business with intense scrutiny to detail. What are the current expectations in the marketplace for a top-level MSP? How can we refine our organization’s approach, while at the same time nurturing a vast network of communication channels for clear, concise data sharing, which can only strengthen the bond between client and provider?

Home Team

Building a team for your MSP business requires putting together a group that can complement your existing core of staffing professionals. When Dorothy returns home from her enlightening journey, she is able to recognize the special attributes in her “home team,” and is better able to assess her friend’s best abilities. The three farmhands have always displayed the defining characteristics of their Oz counterparts, but now Dorothy has developed the ability to see them — brains, heart and courage. New insights into how your organization deploys its own resources in creative ways may just be the most exciting aspect of the staffing industry’s remarkable evolution in the 21st century. MSP engagements, and our commitment to them, will certainly define a large portion of our business as we navigate the strange, new land of our rapidly changing industry.

The way business is conducted today, an MSP is an essential tool for the staffing provider as well as the buyer. Staffing companies that are still resisting this fact of life are missing out on an opportunity to develop a new facet of business that can fundamentally benefit their whole operation. Failure to invest in early development of a unique spin on this model will keep a company running at the back of the pack.

Stacie Habegger is the chief sales officer of The Act•1 Group, the parent company to AppleOne Employment Solutions and Agile•1. She can be reached at shabegger@ain1.com.

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