SI Review: November 2013

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Later, Alligator

How companies can succeed without serving VMS accounts

By Sharon Thomas

Twenty-five years ago, the world of contingent labor was a very different one. For starters, the VMS as we know it did not exist. The recruiting model did not involve recruiters pumping résumés or just placing bodies. It was about offering a high-touch, high-value service.

Gary Zander’s firm, Project One, is a good example of that. When Zander started, he built his New York-based consulting company serving pharmaceutical, finance as well as manufacturing firms. And companies were willing to pay for the value Project One provided sans VMS, Zander says.

Then there was a shift. Over the years, as procurement started to enter the marketplace, clients became more bureaucratic and started to squeeze margins. “They started to dictate terms prohibiting us from dealing directly with the hiring managers and we really felt we worked too hard to make too little,” Zander explains.

But Zander wasn’t willing to let his service devolve. “Our DNA from the get-go was very consultative. We took pride in understanding our clients’ business and providing services, not just placing bodies but also providing information, industry information. We had round tables where we would introduce clients with one another.”

Crossroads

As the trend of giving volume without paying much grew, Zander realized the company was at a crossroads. In order to cater to companies via VMS, Project One would have had to reengineer its whole model, because its staff were very experienced recruiters and account managers. “We invested a lot in training them and keeping current with the industry so we can provide the value.” he explains. “So we made a decision as this trend was occurring to move our cheese.” Rather than try to assemble a large body of recruiters who could pump résumés out the door very quickly, Project One stuck with its roots of providing high-value, high-touch service.

As such, Zander decided to identify markets that held promise and would value that level of service. One such market was technology digital media. “Everything is being digitized,” he says. “We started to get familiar with the applications that were unique in that space. We started to look for opportunities, to FInd clients that wanted the value that we had and would pay for.”

So Project One migrated its business model into that sector and continues to provide those services. “They are not cheap. They are not generic skill sets. We work hard.”

Another company that operates some of its business lines without a VMS is AccruePartners. Amy Pack co-founded AcrruePartners in 2002 with three lines of practice: accounting and FInance, human resources and corporate support; it has since expanded to include IT and engineering. While its financial services line of business does operate through a VMS, it is operated separately and differently from the rest of the firm’s business lines.

“Our value has been to work with our clients in multiple lines of business to help bring high value to them and to help them in each of those lines,” she explains. “We are always looking at our business to see where we can be cross-selling to our clients.” Companies like Zander and Pack’s, though not the norm, are not unique either.

Providing Value

So clearly, there are clients that are willing to pay for the value high-touch firms like Zander and Pack’s provide. These companies are able to spend more for individualized attention and a higher quality product. Others’ needs are different. Jim Lanzalotto, founder and CEO of Scanion.Louis, likens the distinction to the retail industry. If you need to buy a suit, you have several options, each offering a different level of service — and a price tag to match. A suit off the rack will cost much less than one custom-made for you at a specialty shop. Why? Service, quality and fit.

Both are valid models that have their place in the business world. But you have to make sure your business is structured so that you can make the most out of whichever model you are serving. If you accept VMS accounts, your business needs to be set up accordingly.

Different Strokes

You don’t want to have your most experienced people working those accounts, Lanzalotto explains. Pack, whose finance services division does serve VMS accounts, concurs. Most VMS accounts want to see the number of submittals versus the number of recruiters servicing the account, she explains. In a VMS, you throw in the résumé of the first available person who has the right skills, because you’re racing against many other firms to make that placement, Zander adds.

“It is a shift in mentality. The activity is measured differently,” Pack says. “You are looking at it from a different set of lenses.” And the talent that you bring in to the organization is not the same talent that you would tout as a subject-matter expert. “You have to treat that as a different business mode.”

If approached by a client that is adopting a VMS model, you have to consider carefully whether you can accept that shift for your own business, Zander warns. It might be tempting to accept the shift from the client, but unless you adjust your business model accordingly, you’ll be on the losing side of the equation. You don’t want to hand it to your existing recruiter staff. There are a number of less costly recruiting models to choose from to work with a VMS. You can use interns, recent college grads or even send your recruiting function offshore, Lanzalotto advises. But don’t ask your existing, seasoned recruiters to work it. “No disrespect to recruiters, but they are going to do what pays them the most money. They are going to put their best candidates where the best opportunities are,” he says.

If you decide not to accept the shift toward VMS with a client, “stick to your guns,” says Zander, who will work with a VMS, but makes it a point to walk away if a client institutes a no-contact policy. But make sure you have a way to replace that business, because you can’t count on the client deciding they’d rather not lose you as a supplier. “Truth be told, when we have these conversations, we are never successful in getting the client to change its policies and procedures just for us,” Zander says. “But they will respect what we are telling them because nine out of 10 firms just sign anything to get on a list.”

Instead, Zander is willing to accept the occasional order that the VMS is unable to fill adequately. “That is fine with us, because if they give us reqs one or two at a time — you never know, down the road, it may become a more frequent opportunity for us.”

But to make this approach work, you have to be the subject-matter expert customers expect. You can’t be too specialized, Lanzalotto asserts. The more specialized you are, the deeper you go into a market, the more successful you will be. And that starts with your talent.

Who Fits?

With buyers becoming more sophisticated, they may expect the staffing professionals they work with to be a bit more strategic. With that, you are looking for a different type of talent than maybe you would have five or eight years ago, says Diana Gabriel, Staffing Industry Analysts’ vice president of strategic solutions.

AccruePartners, for instance, has a rigorous interview process, Pack explains. “It is probably six or seven steps. We can move that as fast as we need to or as slow as we need to.” Its business model is not account management-based. “It is a lot bigger. It is fast-paced. It is high touch.” The company has a profile it adheres to and if a candidate or someone scores below its threshold, “that is not a conversation that we can continue on,” Pack says.

Zander’s approach involves looking for people with some business savvy; it is not just about looking for buzzwords on a résumé and asking a couple of simple questions about Java or Oracle. “We seek out people both on the recruiting side and on the sales side. Individuals who have inquisitiveness about business and are interested in learning about what clients do and how they make money,” he explains. Project One will take people with maybe two to three years’ experience and some maturity and provide them with the opportunities to learn about their target industries.

The bottom line is the type of talent you hire matters when you’re taking a consultative approach to selling, and that’s the approach necessary when servicing non-VMS accounts. And how you structure your company influences that.

Building Relationships

A lot of companies, even those that want to be high-touch, want to give recruiters a target of 30 potential clients. Because you often have to go three to four people deep in each potential client, that can be really overwhelming, says Pack. So AccruePartners takes a full-desk approach, with the people in the organization focusing on three to four prospects each, enabling them to build closer relationships and expertise.

Meanwhile, Project One’s salespeople or account managers have defined markets, defined territories with about 10 target accounts, Zander says. The account manager thoroughly researches each target so the company can make an informed decision whether it is worth pursuing, and then it’s the account manager’s responsibility to build relationships, and to call on the account, and to look for opportunities where the firms can be of service.

The Bottom Line

At the end of the day, it’s not about whether you service VMS accounts or not. It comes down to sticking to what you’re good at, say seasoned staffing executives.

If you are capable of building the right kind of business model to support a VMS business, opportunities abound. On the other hand, there are plenty of opportunities to be very successful without working through a VMS.

“If you acquire the expertise, there are companies that want that and are looking for it,” Zander says. It will allow you to have a successful, profitable staffing business in a nice niche and not have to compete with the nationals that have a lot larger economies and skills.”

Sharon Thomas is associate editor at Staffing Industry Analysts. She can be reached at smthomas@staffingindustry.com

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