Part of what makes a Managed Staffing Provider program so successful are the suppliers responsible for sourcing talent into your organization. Think of suppliers as the veins pumping talent into the body of the organization. But when this relationship is managed exclusively by the Managed Service Provider, how do they objectively evaluate talent supply chains?
Organizations have the option to either self-manage their contingent workforce (CW) program or outsource it to a Managed Service Provider (MSP). For companies who chose to engage a MSP, the initial benefits of centralizing this robust hiring process typical serve two main purposes:
- HR will typically push for a MSP program when there is an exceedingly high number of or difficult-to-fill positions exclusively for contingent workers, a lack of resources to meet hiring demand or a combination of the two.
- Procurement views the MSP as a means to control cost by effectively managing their staffing suppliers.
Once the decision is made to bring on a MSP, it’s understood that they will be responsible for the total management of the CW program. From supplier management to talent supply chains to the overall reporting of the program, the MSP acts as the central nervous system of the organization’s contingent workforce population.
When it comes down to it, it's the supplier who the MSP calls on to ultimately be responsible for filling positions at your organization. In essence, you are only as good as your Managed Services Provider, but keep in mind, your MSP is only as good as their supplier base.
Staffing Supply Chain Management
There is a best practice emerging for organizations that utilize an MSP program or are considering engaging in one, and it comes down to one question. That vital question to ask the MSP provider is not about its track record sourcing and filling talent demands, but who on their preferred vendor list is filling the most positions in your specific industry. That key data will help you understand your MSP's supplier base, therefore proving how effective your MSP will truly be.
A Shift in Talent Supply & Demand
In the MSP and staffing supplier relationship, there is a growing shift in governance. Previously operating in silos, today’s most successful MSP programs stem from a reciprocating line of communication.
As a national supplier of talent, Yoh provides top talent to both our own MSP programs as well as third-party MSP providers. While it may seem counterintuitive for one staffing agency to partner with another, the reality is, there are only so many good candidates out there. When both the supplier and the MSP provider are acting in the best interest of the client, it isn’t necessarily important as to where the candidate came from.
While we’d like to think this revelation was the act of good business, there are two words that can summarize the shift in the MSP and supplier relationship: Big Data. Suppliers are responsible for providing the MSP (and in turn, the client) with critical HR insights and analytics, such as fill ratio and submittal to hire. However, many suppliers are operating blind when it comes to benchmarking their performance over other suppliers. As a result, the weakest suppliers are slowly starting to dwindle off of the MSP account, and those who produce time-and-time again, are the last suppliers standing.
A New MSP Model
The MSP model used to look something like this. Multiple suppliers of varying sizes all competing to get their talent into the hands of the MSP. Based on a number of factors, including hire rate, feedback, and candidate qualifications, the MSP chooses the candidate best suited for the position.
While not common practice, we are starting to see a shift in the number of suppliers brought in by the MSP provider. With the advent of data-based metrics, suppliers are quickly realizing the margin of error for selecting the wrong candidate isn’t going unnoticed. Sophisticated suppliers are showing their value by reporting on an increased number of complex metrics. While time-to-fill and hire ratio are standard metrics, new indexes such as score card ratings, a unique rating based on candidate feedback, and job order prioritization are evolving into day-to-day conversation. As a result, the MSP supply management model is beginning to shrink.
Now, you must think about vendor neutrality while we are on the topic of managed staffing solutions. The notion of vendor neutrality was once a hot topic. While many HR and procurement professionals have made peace with it, there are some critics that continue to argue against it.
If the MSP is the program manager and a supplier, then why wouldn’t it unfairly weight its candidates to benefit its own bottom-line? While unethical, that philosophy might have held true in the past, but this new principle of evidence-based data is sure to weed out poorly performing suppliers. Therefore, whether that supplier is your MSP or not, the proof is in pudding. And only the strongest will survive.