The Two Sides of MBO Partners: Things May Not Always Be What They Seem

For a variety of reasons this past year, I have begun to look differently at MBO Partners.

Part of the reason is that I tend to be curious about “contingent workforce intermediation businesses” in general, and especially those that don’t seem to conform to the norm. Ironically, a big part of MBO’s business is about ensuring compliance with the laws and regulations (and a good twist of irony will also pepper my interest).

According to a recent SIA study, based on managed spend, MBO is the largest provider within the ICEC (Independent Contractor Compliance and Evaluation) category. By this measure MBO would place quite a ways above the median staffing firm in SIA’s Largest 100 US Staffing Firms List. But MBO is not a staffing firm, it’s something else, according to the classifications of SIA and Aberdeen Group. MBO Partners is a top-of-the-line ICEC service provider, serving many large enterprises that wish to use ICs and mitigate the risk of doing so.

An IC risk mitigation processor that serves corporate enterprises and other full-scale organizations: that is certainly one side of MBO (but hardly the whole picture).

On the other side, MBO is (and has been since its inception) about independence and independent workers. As such, MBO has also been a service provider that caters to the needs of skilled-professional ICs, independent workers, and micro-entrepreneurs. Originally formed as My Business Office (later shortened to MBO), the company not only serves the risk abatement needs of full-scale enterprises, it also serves the needs of ICs who are trying “to do what they do best” (while having to cope with the complex and substantial legal, regulatory, and administrative requirements ICs face today).

According to one authoritative source (disclosure: I conveniently used Wikipedia),

MBO Partners offers a business operating platform designed to support the solo-practitioner or a multi-person consulting practice (whether as an incorporated business or unincorporated group). By operating as a business within the MBO Partners corporate entity, professional consultants are able to provide their services without the need to start a new corporate entity, obtain authorization to do business state by state, hire legal and accounting professionals, or deal with administrative tasks including billing, cash collections, expense management, accounting and contract administration.

In fact, MBO offers independents the following different service package levels (for a reasonable fee, tied to contractors’ billings):

  • MBO Staff: a payrolling service for contract-based workers who are new to working as an independent contractor
  • MBO Sub: direct access for small qualified consulting firms to work with their enterprise clients by documenting regulatory criteria so payments can be maintained through their own legal entities.
  • MBO Exec: for consultants/independent professionals, an alternative to self-incorporation, providing services for invoicing, collections, reporting, billable and non-billable expense reimbursement, business and medical insurances, financial management, tax withholding, payroll and contract review and negotiation.

Clearly, then, there is another side to MBO, one that supports the rapidly growing independent workforce of highly skilled professional consultants and micro-entrepreneurs. It does this by not only offering transactional services, but also by offering a community of interest and a business operations platform that encourages and supports them as independent professionals.

Another not-so-well-known dimension of MBO is its focus on information technology. Though seldom emphasized in its marketing, information technology is at the core of all of MBO services and is looked at as one of the crucial drivers of the future business. I recently had a conversation on this topic with CEO Gene Zaino and CTO Jonathan Lochhaas and was impressed to hear about the critical, integral role of technology in the MBO business and how it was viewed going forward. Like the trend of enterprises toward more flexible workforces and the trend of many workers toward professional independence, information technology is viewed as the other driving trend — the one that actually enables the flexible, independent work arrangements of the future.

The more one starts to really look into what is going on in MBO, one starts to realize there is a vision at work that is larger than just being a “contingent workforce supply chain service provider” that is only assisting enterprises to process and mitigate their IC risk. From all that I am observing, that vision is to be one of a new breed of “technology-based work arrangement intermediation platforms” that facilitates the working together of enterprises and independent professional talent.

Here’s how MBO puts it:

Who Are We?

We make it easy for independent consultants and their clients to work together. For over a quarter century, MBO has pushed boundaries and overcome barriers. We’ve changed the way consultants think about their careers and the way businesses think about using independent talent.

Now we’re leading the charge into the Project Economy, and we want you to join us.

And from what I am seeing, the company seems to be on track, not taking an easy road (short-term perspective) of only addressing the market as it is today, but also trying to move with the whole economy toward a 21st century information technology-driven future of work arrangements that will be quite a bit different from what prevailed across the industrial-driven 20th century.

As enterprises’ requirements for flexible talent continue to evolve and workforce preferences and realities tend toward independence, it becomes harder and harder to place MBO Partners in a limited category like ICEC (astride Payrolling service providers).  More and more, MBO starts to look much more like a technology-based two-sided, end-to-end “work arrangement intermediation platform,” more akin to emerging Online Staffing platform players like Elance and oDesk than to more limited payroll/ employer-of-record service suppliers embedded in the traditional contingent workforce, extended supply chain.

In this area of emerging technology-based two-sided, end-to-end “work arrangement intermediation platforms” (one of the areas in staffing that interests me more than anything — as is known from my research), I have noted that there is a broad diversity of such models arising —many different types. Clearly, MBO Partners is on its way along its own evolutionary path — one which I will be very excited to see unfold.

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