SI Review: March/April 2014

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Straight Talk From the Customer: Managing Your Margins

Why rate cards allow suppliers to compete on a level playing field

By Ed Osowski

Efficient contingent workforce programs happen when the MSP is allowed to do its job and the suppliers are given room to find the best candidates at economical prices. A tool that helps with this process is the rate card. I do believe in giving the MSP freedom to run the program. At the same time, I have great faith in the efficacy of the rate card that I have my MSP utilize. Staffing suppliers should like the rate card as well. Here’s why.

Flexibility. Suppliers like the idea of the rate card, as it enables them to find the best candidates for the positions without being held back by a specific markup. Buyers like me appreciate the rate card because we get quality candidates at competitive prices. I have used it for higher skill categories, IT, engineering workers, clinical or scientific workers just to name a few. In addition, the rate card also provides us with flexibility. That’s where the rate range comes in for each skill set.

Let’s take the hypothetical example of a certain position that needs to be filled and has a rate card range of $30 to $40 per hour. This range allows some suppliers to come in at the low end of the range because they really want our business. Perhaps it’s a new vendor or a vendor trying to prove themselves and wants to get on our radar. On the other hand, if a vendor has a particularly highly skilled candidate, there is the option to bring him/her on the higher end of the rate spectrum. This gives us candidates with a range of abilities from which to choose. This is especially true for hot skills and it allows the suppliers to maintain healthy margins. Either way, the use of the rate card promotes healthy competition among the suppliers. We often give our rate card to suppliers that cold call us. If they are able to work within our rate card, we can use their positive responses as counterbalance or benchmark to Tier I vendors’ requests for increases.

Level Playing Field. Then there is the fact that the rate card helps standardize the process for suppliers. They are comforted in the knowledge that there is one standard bill rate for the position they are trying to fill. It’s a level playing field. No one supplier has an advantage over the others, as the CW program is structured fairly. But suppliers also know that we don’t just rely on the rate card. We support the MSP and show this by attending the quarterly business reviews when it’s time for the MSP to talk to the supplier community.

Our presence at the QBRs apart, when possible we work with the MSP to give suppliers insight into the pipeline of positions coming to them over the next year or two. This helps the suppliers get ready and “profile” candidates ahead of time. We also try to work with our hiring managers so they don’t indulge in having suppliers try to fill job requisitions for positions that get cancelled.

It seems obvious to state that the process of getting temporary workers on board works when all parties do their part. But it’s easier said than done. Managers should want to embrace the program because it is simple to use and they get a great temp worker. The MSP on its part is communicative and works seamlessly with the program office and the suppliers. At their end, suppliers are working within the rate card structure, sending qualified folks at competitive rates.

Ed Osowski is a contingent workforce program manager.

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Project One

Gary Zander 04/02/2014 11:21 pm

Ed - your spot-on with your focus on BILLING RATE cards.

Assuming the $ are market competitive, a reasonable range for each skill set allows a supplier to provide you with a selection of candidates from lesser to more experience.
This approach maximizes the quality of candidates a supplier will present you with.

This contrasts with programs that focus on MARKUPS.

Markup restrictions always produce lower quality candidates.
Why? Because it limits the gross profit (spread) that suppliers need to spend on recruiting top talent.

Recruiting top talent is harder and more costly than recruiting "low-hanging fruit."

Top talent is always working (passive candidates), don't post resumes on job boards, use their personal referral networks and go F-A-S-T!
Low-hanging fruit is easy to find because they're on job boards with resumes loaded with buzzwords for easy keyword searching.

Also, it takes an experienced Recruiter to identify, attract, evaluate and secure top talent. On the other hand, only juniors are needed to find & submit low-hanging fruit.

So the reality is... unless your markup restriction is sufficiently high (which it most likely is not), you'll never get the quality of top talent you would using a BILLING RATE CARD approach.

Unfortunately, many companies don't realize this because they don't know what they're missing.
They're focus tends to be on cost-per-hire and time-to-fill.

True they may be saving a few dollars in cost - but it's at the great expense of quality.
And if you believe as 8 of 10 CEO's do that "people are our most important asset" then everything should be done to maximize the quality and ROI of your people versus focusing on the cost.


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