SI Review: May 2014

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Straight Talk From the Customer: Costly Resistance

The benefits of working through the program

By Maria Khan

A well-run contingent labor program is like a well-oiled machine — it has many moving parts working together seamlessly and in perfect harmony. The largest components are the managed service program, the vendor management system, the business partners (engagement managers) and the suppliers. While every program has its strengths and weaknesses, when the suppliers and MSP work in synch, there are very few weaknesses to be found.

As a manager of the contingent labor program at an oil and gas company, I find (like in other programs) the suppliers that partner best with the MSP to meet the demands of the business perform most effectively. In many respects, the oil and gas industry is not on the cutting edge of contingent labor, unlike banking/ finance and IT. Many business partners have cultivated relationships with certain suppliers. And both parties are hesitant to commit fully to a program that forces them to have a fundamental shift in the way they think. Suppliers feel like they are losing touch with their customers and business partners feel like they are getting candidates that will not measure up to par with the contenders they received by word of mouth or through their own connections.

However, in both cases, the assumptions are incorrect and the fears are unfounded. From the supplier’s perspective, participating in a contingent labor program vastly increases the visibility and exposure they have to job requisitions. Whereas before they were in touch with one or two business partners, now they have access to potentially as many job postings as  fit their service offerings, including those from business partners with whom they did not have an established relationship. Had they not been part of the program, they would never have been able to see that need for a resource.

Similarly, a business partner may feel like a direct relationship with a supplier has been affected — for the worse. They feel as if their need is being submitted into a black hole. However, just as the pool is becoming wider for suppliers with respect to job postings, the pool is also increasing for hiring managers with respect to access to talent. Before they were limited to the talent their contacts knew of; now they have access to cutting- edge talent from multiple suppliers — all of whom are vying to provide the best candidates at the most competitive rates.

Cost of Program Evasion

When suppliers and/or hiring managers try to work outside the program, they most often end up hurting themselves due to an increase in inefficiencies and lack of visibility — not to mention frustration when needs are not met. When the hiring manager reaches out directly to a supplier for a need, or the supplier forwards a candidate directly to a hiring manager who did go through the program, there is potential for multiple failure points with respect to onboarding, such as:

  • The failure to complete drug and background checks as required by the standards of the organization.
  • Lack of proper security access and equipment required on the first day because the appropriate steps for onboarding were not followed. This results in hours of lost productivity.
  • Time or expense access is not set up, delaying payment and invoicing.

All of these failure points can be easily mitigated if the hiring manager and supplier submit their needs and candidates through the program in the front-end of the process.

The underlying effects of these failures are decreased productivity, lost cost savings and a hiring manager and worker who are frustrated and unable to focus wholly on their core operational responsibilities.

Thus, when suppliers commit to participating in a contingent labor program, they must commit fully, not only for the sake of their success but for the success of their client organization. When all the moving parts of the program work together, the value added to the whole is greater than the sum of its parts.

Maria Khan is program manager at Hess Corp.