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Human Resources (HR), Procurement and Vendor Management Organizations (VMOs) are increasingly involved in IT staffing vendor management. This is especially true for large organizations, as these companies often adopt more formalized and structured processes to manage their IT services spend.
TEKsystems, the leading provider of IT staffing and services, recognizes that complexity increases as more parties are involved in staffing vendor management. To understand each stakeholder’s desires and frustrations when engaging IT staffing providers, TEKsystems conducted a series of discussions with leaders from HR, Procurement and VMOs. Each customer group convened for three separate, four-hour focus groups facilitated by an independent moderator.
The following analysis is based on findings discovered through these focus group sessions and other customer research conducted by TEKsystems.
Investing in your strugglers appears shrewd, yet the most effective managers do the opposite… They spend the most time with their most productive employees. They invest in their best.1
Most IT staffing buyers don’t want to commit — at least not to any one provider. Of course, buyers recognize that people are at the heart of every project’s outcome. Consequently, an organization’s contingent labor decisions are critical drivers of a project’s success. But what is a buyer to do when all IT staffing providers sound the same? Is the perfect buyer-supplier relationship possible? The majority of buyers do not believe so. To fully address their staffing needs, they feel obligated to play the field, investing time, effort and finances to manage multiple vendors, sometimes even hundreds of them.
According to buyers, the ideal IT staffing vendor provides: The right candidates, at the right time, for the right price and within the appropriate guidelines.
The “right” candidates, times and prices depend on a variety of factors, including the hiring manager’s work style, the organization’s IT culture, project deadlines and fair market values for certain skill sets. The ideal provider knows all of these factors and responds accordingly as it conducts sourcing, screening and hiring activities.
The “appropriate” guidelines mitigate risk for the using organization by limiting co-employment possibilities, driving diversity among staff and ensuring the correct HR protocol is followed throughout the contingent worker’s lifecycle. They also serve to optimize competition among vendors, so the buying organization gets the best deal possible.
Despite knowing the type of vendor they want, and notwithstanding the thousands of fish in the sea. (There are about 7,000 firms that have been in business a year or more. These companies operate approximately 21,400 offices.)2 Many IT staffing buyers feel that finding the perfect provider is a hopeless endeavor.
Typically through a request for proposal (RFP) or similar type of vetting process, buyers identify which vendors are worthy of consideration. Some providers are ruled out of the ideal category because they do not even possess the tablestakes to support a buyer’s organization. They lack the geographic reach to scale with customer needs. They are not financially strong enough to promise long-term stability. They are not specialized enough to deliver key skill sets. Their internal infrastructure is too weak to consistently deliver desired results.
Dismissing vendors that lack the basic capabilities is relatively straightforward: How many placements of X skill set do you make annually in Y region? How many offices do you have? Provide your financial statements for the last three years. Determining the best providers of those that possess potential is another story.
Why? No amount of due diligence can truly assess how a vendor will ultimately perform for every open requisition, in every location, for every hiring manager. Vendor performance is something that must be experienced to be evaluated. All vendors may say they conduct two, detailed reference checks for every candidate submitted. They may claim they source their candidates from referrals rather than brokering resumes from job boards. In recognizing that true service extends beyond placing qualified professionals, some vendors may even share their formal processes to retain their consultants post-placement. But, as the saying goes, talk is cheap. To ultimately know if vendors can deliver the “right” results and abide by the “appropriate” guidelines, buyers take calculated risks. Upon conducting thorough research, they cross their fingers and give select providers the opportunity to prove their value.
When engaging vendors, many buying organizations set clear expectations. Specifically, they establish formal management systems to define and capture vendor performance metrics. Common performance indicators include: the number of vendor responses to requisitions, time to submit, submittal-to-interview ratio, interview-to-hire ratio, consultant rate information and consultant attrition.
In an effort to sway the odds and encourage higher levels of performance against these metrics, buyers also institute “vendor neutral” management processes. Operating on the basis of “blind competition” for every open requisition, a vendor neutral environment ignores the vendors involved in candidate submissions and focuses solely on the results. Whichever vendor submits the “right” candidate, at the “right” time, for the “right” price and within the “appropriate” guidelines, wins.
To keep a vendor’s chance of earning business competitive, most vendor neutral models exhibit the following attributes:
So, in tandem with an initial vetting process, is vendor neutrality the staffing buyer’s best bet? Weaklings are removed from the get-go, the playing field stays even and the high-potential vendors are forced to compete for business. It may not be love, but it sounds like a decent deal.
Despite the model’s allure, deeper analysis of a vendor neutral operation reveals a few significant issues. Consider the attributes defining the model:
Candidate submissions are standardized — i.e. they all must look the same.
More often than not, buyers require candidate submissions to consist of the resume and the resume alone. While this requirement may allow for more uniform candidate comparisons, buyers gain zero insight into how thoroughly vendors screened their candidates prior to submission. Additional research indicates that 64 percent of IT professionals say many IT resumes include buzzwords that are irrelevant to the candidate’s true experience and 39 percent of IT professionals believe that many IT resumes include outright lies.3
Thus, by limiting submissions to pure resumes, buyers thwart their ability to receive only the most-qualified candidates for the job — those that can prove technical ability via a technical assessment, those that demonstrate the right cultural fit via a behavioral interview and those with validated work performance via detailed supervisory reference checks. Some vendors perform these screening steps and some only claim to do so, sacrificing quality for speedy submissions based on resume buzz words. The only way to know which candidates are truly qualified is to allow vendors to “prove” screening results upon submission.
Candidates are not associated to the vendors submitting them.
Some vendors win over IT hiring managers by wooing them with elaborate social activities or just because their account manager is more likeable. They do not win because they actually perform better relative to the necessary criteria. Thus, when it comes to the hiring decisions for contingent labor, buyers seek to squash the unproductive pull of vendor favoritism; candidates are not to be associated with the vendors submitting them.
While this requirement may accomplish its anti-favoritism goal, it does so at the expense of some helpful vendor profiling. A resume submission alone does not reveal the past success of the vendor submitting it. Some vendors may possess deeper understanding of the hiring manager’s goals, project objectives, work style and team culture. Additionally, some vendors have better post-placement support than others. Resume-only submissions restrict a hiring manager’s ability to account for vendor responsiveness and candidate performance management throughout the engagement.
All vendors receive the same information on every open requisition.
As many buyers release dozens, if not hundreds, of staffing requisitions each week, disseminating position details from every hiring manager to every vendor for every position is near-impossible. As a result, most vendor management processes provide vendors with only written job descriptions. This way, each vendor receives the same amount of information on every open requirement and hiring managers can focus on accomplishing their core responsibilities.
While relegating vendor communication to job descriptions may save time, it hurts a buyer’s chances of receiving high-quality personnel, which costs hiring managers productivity in the long run. Vendors require a great amount of position intelligence to not only screen and qualify candidates successfully, but to also compel top talent to consider a new opportunity. How large is the team? What is the team dynamic like? What are the business drivers of the engagement? Are there advancement / permanent opportunities? What is currently working / not working? What are the best and worst aspects of the job? To provide superior candidates and win customer business, some vendors are willing to invest the time and effort to uncover these details. However, if the information they discover must then be shared with vendors that did not bother to seek deeper understanding (i.e. free riders), there is less of an incentive to aim higher than the status quo.
All vendors are held to the same performance / scorecard targets.
In theory, judging vendor performance by a standard list of targets makes perfect sense — so long as the list drives the correct behaviors and measures the desired results.
So how does a customer measure a vendor’s ability to provide the “right” candidates? “Right” is a subjective measure that morphs according to the many factors contributing to any one hiring decision. Sometimes buyers even change their minds about what makes a candidate “right” after evaluating a candidate with a skill or background not previously considered, but desired nonetheless.
Given the difficulties in monitoring vendor performance relative to each hiring factor, many buyers attempt to objectify “right” by sidestepping the gray-zones and focusing purely on the outcomes. If the candidate is deemed “right” — by whatever criteria necessary — that candidate will be hired. In other words, these buyers measure “right” placements through some form of submittal-to-hire ratio.
There are two issues with this approach. First, submittal-to-hire ratios are lag indicators of performance, rather than lead indicators. Thus, they fail to prevent the buying organization from investing the time and energy in reviewing and interviewing all of the wrong candidates; they merely measure how often these mistakes occur. Second, submittal-to-hire ratios only gauge “right” candidates based on pre-placement considerations. The true measure of the “right” candidate must also account for post-placement performance throughout the duration of a candidate’s engagement — i.e. what are the hiring manager’s performance expectations and how did the candidate fare in comparison?
Besides measuring important, but highly subjective criteria, buyers are also challenged to measure the entire continuum of the buyer-vendor experience to optimize end-to-end vendor performance. In addition to the hiring processes, great vendors add value during other areas as well, including: workforce planning, billing and consultant performance management. Moreover, they often interface with a variety of organization stakeholders, such as IT hiring managers, HR leaders, procurement leaders, vendor management officers and the contingent workers they manage. Many vendor scorecards do not adequately measure all performance dimensions across all vendor touch points.
Centering attention on only a subset of criteria allows for easier management. However, since “the areas that get measured” are often the only things that “get done,” it also risks domination of the lowest common denominator. Buyers can find themselves unintentionally fostering mediocrity rather than superior vendor performance.
For example: How is a vendor recognized for being consultative? Proactive? Seeking to understand business drivers behind project staff needs? Sharing relevant market trends? Helping to develop talent attraction and retention strategies? Building efficient onboarding processes? Taking good care of its consultants post placement to ensure high performance and speedy resolution of any issues? Ensuring billing goes smoothly? That vendor gets to stay on the list. What does a vendor get for doing none of these things? As long as the vendor never breaks the rules, that vendor gets to stay on the list too.
Despite the challenges involved, successful partnerships between IT staffing buyers and providers are possible. Like any relationship, they just require commitment to clarifying expectations and investing the time and energy to establish a positive, mutually-reinforcing dynamic. Below are a few suggestions to help nurture the romance and keep it strong:
1Buckingham, Coffman. First, break all the rules. New York. 1999
3 Q1 ITPPS 2012