CWS 3.0: September 30, 2015

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Too attractive an account for suppliers? You are paying too much

Getting the highest quality contingent workforce program while not overpaying is something contingent workforce managers must constantly strive to get right. But how do you do it?

For this week’s topic, we asked Edward Ronan, global category manager-HR benefits and services at BD (Becton Dickinson), a medical supply company, for his thoughts on getting the right balance between cost and quality in a contingent workforce program.

One rule of thumb: “If we’re the most attractive account to a supplier, we’re probably paying too much,” Ronan said. “And if we can’t get the attention of the supply base, we’re not paying enough.”

Getting the equation right as far as quality workers and fair price is a balancing act.

One piece: “With the contingent worker, we want to make sure we have a pay rate that attracts them along with our social practices that they want to come here,” Ronan said. That includes employer branding and getting the message out about the good things BD does under its goal of “Helping all people live healthy lives.” If you have workers who are enthusiastic about working for you, that means a more motivated workforce.

Another piece: Make staffing suppliers want to send you quality people. To that end, Ronan said BD looks for suppliers who will be long-term partners. “We’re not able to be the highest paid account, we need to be competitive and lean, so we look for partners that can perhaps leverage the larger spend of the company.” That includes $100 million in contingent workforce program spend in the US and Puerto Rico.

Ronan said there is also work to balance fill times, retention rates and conversions against the bill rates.

Not every role is permanent. However, if a worker is not converted to full-time, the question needs to be asked why? Conversions can reduce the cost of hire; staffing suppliers often waive conversion fees after 90 days or six months, Ronan said. That avoids potential direct-hire or search fees of between $10,000 and $20,000.

With retention, the question that needs to be asked are whether workers are staying through the end of their term or leaving for better opportunities?

Ronan also cautions the situation is dynamic with pay rates and attractiveness of account varying by area of the country and job classifications. And contingent workforce managers need to use information from the VMS to stay on top of what is happening as well as remain in contact with individual suppliers.

“I think you need to be close to the supply base too,” he said. “The supply base is out there with their feet on the street, and they can share with you what’s going on out there — before information shows up in metrics.”