CWS 3.0: August 31, 2011 - Vol. 3.22

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Feature: The Link between Quality and Price

Eighteen months ago, Teresa Butson announced an ambitious goal: she wanted to improve the quality of her firm’s contingent workforce and pay fair market rates. But the director of specialized shared services at RBC (Royal Bank of Canada) quickly realized that she needed data and benchmarks to pinpoint the nexus between price and quality.

“You need a program,” advises Butson. “Because you have to define quality, measure manager satisfaction after every assignment and collect pricing data in order to put that first stake in the ground.”

CW experts say it’s not easy for companies to qualify as best-in-class. Those that do qualify do so by achieving high average quality ratings while reducing total contingent labor expenditures.

Cost & Quality

Butson captures the bill rates for each assignment and calculates supplier averages by position and location while taking note when a firm’s bill rates fall below the category maximum. (While it’s important to know typical ranges, she recommends excluding them from contingent requisitions, because it stymies competition and encourages suppliers to automatically charge the maximum without considering the contingent worker’s experience or skills.)

While it’s time consuming to create numerous rate cards, the granular data helps program managers quickly lower bill rates as wages decline or preserve quality by raising rate ceilings when qualified workers are hard to find.

“Having location-specific rate cards makes it easy to respond to changing market conditions,” says Butson. “For example, I can immediately increase bill rates when it’s hard to secure IT architects in New York City, without raising the total cost of contract labor by increasing rates for the entire category.”

It took a collaborative effort by RBC’s management team to settle on a universal quality definition and scoring methodology. , This has helped Butson streamline the process. She now asks managers just six questions via an electronic survey to gauge their satisfaction after each assignment. The survey evaluates quantitative and subjective criteria. , Then Butson factors-in contingent assignment completion and longevity before awarding each supplier a total score up to a maximum of 100 percent.

Audit and Compare

“Eye opening,” is how Shannon Bradley describes the process of comparing staffing supplier rates and quality. Here’s why. According to the Aerojet recruiting specialist, some agencies’ bill rates exceed the agreed-upon maximum and sometimes there’s no correlation between an agency’s pricing and the quality of their contingents.

“Some of the smaller agencies provide the best candidates,” says Bradley. “The audit and comparison process helps you identify those firms so you can award them additional business and negotiate the best possible prices.”

Butson shares the results of price and quality audits with suppliers each quarter, as the transparency sparks competition and evokes new best practices that align with her goals.

Now that Butson can pinpoint the nexus between price and quality, RBC’s average quality score has increased from 85 percent to 93 percent while bill rates have decreased by about 5 percent.

“Now that we have a program in place, we can track our improvements by taking snapshots and comparing them to our 2010 baseline,” she said.

 Leslie Stevens-Huffman is a freelance writer in Southern California who has 20 years' experience in the staffing industry. She can be reached at lesliestevens@cox.net.

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