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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® 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.
When asked directly how to describe the current situation between IT staffing providers and using organizations, one Procurement leader responds in earnest and without hesitation: “It’s the wild, wild west.” The group smiles, they shake their heads and some chuckle aloud. But they all agree. Despite efforts made in the last decade to institute greater control, many organizations feel their relationships with IT staffing providers require significant improvements.
Historically, hiring managers made many staffing decisions in a vacuum. When they needed resources to execute a project, they decided which vendors to use, which contingent workers to hire and what rates were fair. In time, as the direct and indirect expenses of managing the contingent workforce grew, many companies realized they could benefit from introducing process efficiencies and managing the organization’s objectives, rather than simply the hiring manager’s objectives. Seeking to limit risk, improve costs and optimize vendor performance, today’s organizations frequently task Human Resources (HR), Procurement and Vendor Management Organizations (VMOs) to partner with IT hiring managers to make vendor management decisions.
Based on their different functions and organizational jurisdictions, each stakeholder engages at different stages in the vendor management process. Each also tends to represent or steward different organizational objectives when managing IT staffing vendors. While this diverse spread of representation should encourage a more comprehensive and responsible approach to vendor management, stakeholders express frustrations with their staffing vendors’ failure to comply with their processes and add greater business value.
To gain a complete picture of the assorted vendor management landscape, it is important to examine the roles and objectives of each player involved.
The IT Hiring Manager:
IT hiring managers are typically swamped. To implement their projects, they look for the best people to help them hit their goals, on time, within budget and according to their customers’ quality standards. They may draft job descriptions for their openings, but the IT hiring manager is most involved during the interview process and throughout the duration of each staffed consultant’s assignment. As their “neck is on the line” to complete their projects successfully, the IT hiring managers’ main desire from their IT staffing providers is that they provide competent, qualified personnel that remain committed to completing their assignments and meeting project milestones.
The HR Leader:
HR leaders are just as busy. As is the case with the IT hiring manager, IT staffing vendor management represents but one of HR’s many responsibilities. Not only do they define organizational policies regarding human capital, they are also chartered with keeping such policies alive and well within the organization to increase performance and limit risk throughout the employee lifecycle. HR tends to be comfortable with managing a variety of IT staffing vendors to meet their needs. As they are often not IT specialists themselves, however, they expect that each of their vendors possess specific expertise in the IT labor market. They also expect their vendors to abide by their policies to ensure contingent employees are recruited, engaged, developed, retained and terminated appropriately.
The Procurement Leader:
Procurement leaders are responsible for ensuring their organizations acquire the right resources at the right costs. Most recognize that cost extends beyond financial measures to include an organization’s total experience. Yet, they are often primarily concerned that their IT staffing providers can perform according to quantitative measures — especially the most direct reflection of cost, staffing rates.
During the selection process, procurement seeks to align with providers that demonstrate financial stability, maintain core competencies in the skill sets they staff and provide needed resources at competitive rates. Upon selecting vendors to engage, procurement then manages its supplier base to encourage the greatest degree of competition to ensure that all vendors have the same access to information and to sustain that all vendors are held to the same performance metrics.
The VMO Leader:
Leaders of VMOs are more difficult to generalize, as their role differs depending on the maturity of their organizations. Early in their development, many VMOs are primarily focused on achieving substantial cost savings through tighter internal management and / or by outsourcing vendor management activities to a Managed Staffing Provider (MSP). As they evolve, they expand their focus to other areas of performance such as policy compliance, candidate quality and diversity, speed and customer service.
VMOs are typically designed to centrally manage the organization’s most comprehensive goals related to IT staffing provider selection and management. To ensure they can execute their responsibilities and maintain the necessary control, VMO leaders want their IT staffing providers to comply with their processes and to work with, rather than around, them.
The IT Staffing Provider:
The IT staffing industry is continually challenged to break from the trend toward service commoditization. Some firms are comfortable competing on rates or speed alone. They source mass candidates from job boards using buzzwords and flood their customers with resumes hoping one sticks. Others seek to differentiate themselves through a broader geographic reach, wider range of related services or higher-quality staff delivery and account management models. While most IT staffing providers tout the same customer benefits, their internal processes and structures can differ greatly behind the scenes.
The IT Consultant:
IT consultants seek contract work rather than permanent employment in hopes of achieving higher pay and more professional flexibility. Their number one desire from their IT staffing providers is continuous employment on assignments that develop their skills and advance their careers. They are loyal to the recruiters that take time upfront to understand their skills, goals and interests and that staff them on assignments that complement their strengths. Once staffed, IT consultants also want their recruiters to maintain consistent communication to provide performance feedback, as well as proactively resolve issues and secure subsequent opportunities for employment.
Interestingly, despite their relatively distinct roles, HR, Procurement and VMO leaders (identified collectively as “participants” below) express very similar issues with the IT staffing community:
Vendors do not understand my business
Participants say they want their IT staffing vendors to act as true business partners. Specifically, they prefer vendors that exhibit two main behaviors. First, participants want their vendors to show interest, effort and creativity in identifying how they can help the organization accomplish its goals. Second, participants want vendors to share intelligence on the external landscape. For instance, data and statistics on labor market trends, local employer activities and skill set rates are welcomed insight.
Most participants believe, however, that staffing firms care only about pushing their product and very little about forging partnerships. As one VMO leader said, “Vendors are about selling, not about adding value.” In support of their claims, participants cite examples of vendors that “show up and throw up” during customer meetings. These vendors spend the bulk of customer time talking generally about their companies’ capabilities rather than seeking to understand the customer and sharing relevant information.
Participants further point to vendors that fail to do their homework in advance of customer meetings. These vendors ask questions they could answer on their time. With available resources such as company websites, annual reports, general Internet searches and vendors’ large candidate databases, participants feel vendors that fail to prepare or read up on “what type of shop I am” waste their limited time.
Many participants also take issue with vendors that, without any effort to gain business insight or add business value, solicit hiring manager time for unproductive activities like golf, lunches or sporting events. Participants perceive these vendors as “leeches” trying desperately to win business, not because they deserve it, but because the hiring managers see them as “cool and likable,” or simply because they feel “they owe them one.”
Vendors do not respect my process – or my role in it.
Overwhelmingly, participants are frustrated with vendors that demonstrate what they term, “a hall pass mentality.” Viewing HR, Procurement and VMOs as “barriers” or “policemen,” these vendors attempt to circumvent formal processes and engage directly with the IT hiring managers to “fish for requisitions.” Once they obtain the IT manager’s buy in, these vendors then go back to the participants with an air of entitlement. As one procurement leader explains, “These vendors come to me and say, ‘Put me on the list. Hiring Manager X said you need to put me on the list.’”
Participants insist that there is just cause for their involvement in the vendor management process because they protect the organizational priorities IT hiring managers do not always keep top-of-mind. According to the participants, IT hiring managers are often so desperate to complete their projects that they do not prioritize healthy competition among vendors, regulatory compliance or even fair rates for their temporary staff. Participants assert that vendors are aware of this fact and attempt to “exploit our dysfunction.” Specifically, they get the IT manager to fall in love with a candidate outside of the formal process, then use that love to get whatever they want – on the list, a very high rate, etc. One Vendor Management leader refers to vendors that behave this way as “drug dealers dealing people.” Another HR leader calls them “shady” and “arrogant.”
Vendors do not care about their people
Another key issue all stakeholder groups identify is that many vendors treat their contractors “like commodities rather than people.” Participants specifically cite instances where vendors submit candidates to open positions without first talking to those candidates about the positions. They also point to vendors that fail to maintain appropriate communication with their contractors, post-placement. These vendors do not take responsibility for managing performance feedback, thus increasing the chances of co-employment violations and unresolved performance issues. Furthermore, without good contractor relationships, they cannot provide the customer with advance notice should contractors leave their current assignments for other engagements.
Certainly, HR, Procurement and VMO leaders are not wrong in their experiences. They have plenty of real-life examples that shape their perspectives. But, are there any factors driving vendor behaviors beyond a “salesy attitude” and sheer laziness?
One legitimate driver of some vendor behavior is that vendors can feel trapped in a catch-22. For example, consider the participants’ desire for vendors to act as true business partners. Vendors assert that vendor management processes often limit contact to the degree that they cannot gather the intelligence they need for a good business partnership. Specifically, vendors say more access to the hiring managers helps them to better understand the IT organization’s strategic goals and operations. When their communication channels are too rigidly controlled, they feel their ability to consult, share relevant data or proactively build a pipeline of candidates to support their customers’ workforce needs is inhibited.
Take the hiring manager’s desire for a quality IT candidate as another example. Controlled communication comes into play in this scenario as well. Vendors say they want access to hiring managers to deepen their understanding of open position requirements. Information concerning various obstacles to project execution or specific nuances about the IT culture tends to be missing from a job description. Yet, these details should be considered by vendors that want to source and screen for the ideal candidate. Why? One reason is that top IT talent will not jump from one job to another when they know little about it beyond a job description and some information found on the Internet. Moreover, a vendor cannot weed out those candidates that do not precisely match job requirements if they do not know all the unwritten success factors.
Another driver of vendor behavior is that vendors may not feel it is worth the effort to go above and beyond. 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? That vendor gets to stay on the list. What does a vendor achieve by doing none of the above? As long as they don’t break the rules, that vendor gets to stay on the list too.
The once wild, wild West is relatively tame today. Likewise, the status quo in the world of IT staffing vendor management can change for the better. Given the multiple perspectives involved and the sometimes competing priorities, the road to success will not be easy. However, as organizations and staffing providers continue to work together, success is a goal worth striving toward.
Some suggestions for vendor management improvement include: