SI Review: July/August 2014

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What’s Your Secret? How to compete in a world of MSP programs

By Ben Thakur

The most important part of any contingent work- force program is the quality of suppliers supporting the business, because they are key to getting good quality workers. But superior workers command more money, so the supplier needs to keep an eye on its costs in order to be competitive.

A supplier’s competitive advantage can be on price, but if its workers are not being paid right, the supplier will lose access to that pool of high-quality workers. At the end of the day, compromising on pay rates means losing out on the quality talent that is a client’s competitive advantage.

“A supplier should take into consideration the duration of client assignments into the pay rate equation,” says Ed Osowski, strategic sourcing manager, indirect global procurement, Mead Johnson Nutrition. “Instead of impacting the worker’s pay, there is a possibility that the margin can be adjusted downward based on the assignment’s duration.”

Lose the talent and you could end up losing the client as well. In an age of increased emphasis on managed service programs, vendor neutrality, competitive bidding and rate transparency, suppliers have their work cut out for them.

But there are ways to deliver quality talent in an MSP program at efficient pricing. Here are some tips on how to structure your firm in order to work with an MSP so that you, the worker, the MSP and end-client all are satisfied.

What MSP-Friendly Companies Do

So much is said about how to be an MSP-friendly organization, but we often over- look certain fundamentals. What follows is not rocket science, just some basic business rules.

Client rst. Do your homework so that you understand the client environment. This requires both time and the right attitude. Build a program-centric recruiting team with a single point of contact. Focus on the program metrics with an ultimate goal of increasing worker quality and reducing overall contingent worker risks. Do not use the back door to try to work around program office regulations. Instead, respect and play by the program rules.

At eTeam for instance, we demonstrate investment in our clients with a scalable recruiting team and one point of contact. This individual is quality and risk conscious and helps instill and build client confidence.

Another simple thing that affects a client’s perception of the supplier is whether they abide by the rules of engagement in an MSP-run program, says Maria Khan, global supply chain manager with Hess Corp. “When a supplier’s recruiting team works hand- in-hand with the MSP to provide quality talent and fill positions, the client sees the benefit being provided by both entities together. If a supplier insists on skirting the program and reaching out directly to the client, there are downstream consequences in the onboarding, payment and managing of the contractor that cause pain to all parties involved.”

Smart infrastructure. With the MSP program, you do not need to invest in a sophisticated sales chain. Instead, teach your existing team the mantra: In your service is the next sale. Make sure they don’t just pay lip service to it. Then, explore lower-cost recruiting models (think offshore) that can scale. With an efficient offshore model, you can significantly provide scale to your MSP clients and reduce your recruiting cost by at least 50 percent.

But still be mindful of quality, Osowski notes, “as offshore recruiters may not be as familiar with U.S.-based firms and project experience depth that is shown on résumés.”

Spend time and money ensuring your recruiters understand your clients, their environments and culture better. This pays off in droves. Hire and invest in account managers who are engaged and committed to program success. Invest in educating HR experts and onboarding teams on risks associated with contract labor. You needn’t go crazy with staying current on tech trends, but make sure you are using relevant technologies that automate already streamlined processes.

Subject-matter expertise can help as well, Osowski notes. For example, account managers serving tech clients often have an edge if they have an information technology background. “They can interact at the technical level with the client managers, interpret needs for recruiters, and serve as a third-level quality check on résumés being presented,” He notes. “It makes navigating through the issues more efficient.”

Stay engaged. Talk to your MSP coordinators on a daily basis. Go the extra mile and work on jobs that would make the MSP look good. Ask for feedback on your quality and speed of response. Have the MSP’s executive management participate in periodic performance reviews. Use the feedback to make changes so that your service is even better.

And if you receive negative feed- back, be sure not to become defensive, Osowski advises.

Instead take actions like inviting MSP clients to view your operations/training. This helps build the confidence of both the MSP and its customers.

And you can take it a step further. MSPs and clients are also interested in seeing or hearing what tools are being used for technical screening of candidates (technical interviews or technical tests), for example. If you have excellent test scores from a third-party technical evaluation tool, put them on the candi- date’s résumé.

Get rates right. Controlling costs is obviously a very important metric for the MSP. Build trust with your MSP and client by keeping your rates and margins transparent. In the case of highly paid workers with niche skills, a rate card model works best as suppliers can attract quality talent by having the ability to pay more and recovering margins on other transactions. Utilize a standard pay scale for lower paid workers. If a project has simple requirements, don’t use a complicated pricing model. Help the MSP demonstrate savings by staying below the rate cards.

Be the eyes, ears of the MSP. Suppliers should provide incremental value beyond just good workers at competitive rates. You need to share best practices and trends with the MSP. Keep the providers informed on additional rate intelligence that will help their organizations better understand the marketplace. Ditto with new technologies that their client’s competitors are using. Know the CWM landscape well so you take back to your MSP how other programs are better leveraging reporting and vendor score carding. Your MSP should start looking to you to report the trends.

“My team is often approached to price a problem position,” says Ron Hetrick, director of labor market analytics, Allegis Global Solutions, “and we’ll turn to the suppliers in the program for their input. Is it a rate issue, a supply issue, a client perception issue?” Supplier feedback can be a powerful step toward convincing a client that changes are needed, he asserts.

Competing in structured MSP-run programs takes energy and a certain attitude. It’s not for everyone. But if you decide to enter this world, these tips will help you be a strategic player in a fast-growing space.

Ben Thakur is president and CEO of eTeam. He can be reached at bthakur@eteaminc.com.

[SIDEBAR]

Below Market Rates Leaves the Ecosystem Unhappy

Don’t forget the workers. Offering below-market pay rates to make your bill rates competitive brings up issues that challenge the integrity of the project on hand, affecting not just the contingent worker but your firm and the end-client as well.

  • Workers are less engaged, particularly if they learn their peers who are doing the same work are being paid more.
  • Workers leave projects ahead of time in favor of higher paying opportunities, after hiring managers have invested resources in onboarding and training.
  • Workers openly complain, particularly as they get comfortable with their peers. This affects productivity, even of those who are getting better pay rates or have a greater commitment to the project and the mission of the company.
  • Workers are inclined to work longer hours and challenge overtime rules — despite not being productive — just to compensate for lower pay rates.

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