VMS: Friend or foe?
A former insider says staffing company attitudes need to change
By Dana Shaw
VP Strategic Staffing Solutions, Staffing Industry Analysts
As their contingent workforces grow, so does the use of vendor management systems within the corporate enterprise. Attitudes of corporate purchasing and procurement managers toward VMS are becoming more positive every day, and their desire for these systems and solutions is not fading. Times are changing, and our research shows that more and more very large companies intend to take proactive measures toward buying technology to optimize their temporary labor spending.
That’s a big attitudinal change on the buyer side. But staffing company attitudes aren’t keeping pace. The gamut of attitudes toward VMS runs from fear (“Will I be eased off the vendor list?”) to stubbornness (“There is no such thing as vendor neutrality and I’m going around the system any way I can”).
Those are the wrong attitudes. Having worked for both staffing companies and a VMS, I’ve heard all the arguments, pro and con, about VMS. What I haven’t heard from staffing companies is how to turn what is usually construed as misfortune into opportunity.
VMS can help a staffing agency gain credibility with its client. Heresy? No, because a VMS is a great way to provide real-time visibility and access to information in addition to added efficiency. VMS can give you data to present to your client regarding its spending. Any staffing provider should be able to wisely impart knowledge to clients about types of spending when coupled with technology, VMS or other.
In addition to tracking contingency spend, the data collected can give a staffing company basis for a more wide-reaching conversation about the client’s workforce. The metrics that come out of the technology solution give a rear-view mirror look at what’s spent on contingent workers, but it takes the staffing company to tell the employer how to manage its workforce needs going forward. The rear-view mirror look at spend does not help companies determine optimum spending levels, habits and key areas for change. If hindsight’s 20/20, then isn’t this a great starting place for forward-thinking offerings that include where to go now that you know where you’ve been?
In addition, VMS cannot currently provide insight into direct-hire methodology, checks and balances in certifications, and independent consultant tracking.
Partner up
At our recent IT Summit, I asked several CEOs about lessons they’ve learned and mistakes they’ve made. One said that he took too long to implement a VMS strategy. The company started out by home-growing an offering and ended up partnering in the end, which he wishes in hindsight he had done from the get-go. There has been much activity in the past six years from technology-driven “neutral” solutions providers going after end-users without the staffing industry. Starting out in a competitive mode, with recent shifts in terms of alliances and even units and segments totally dedicated to joint ventures with staffing companies, it’s no wonder the clients remain confused. Isn’t it time to align?
Whenever I speak with large purchasers of contingent labor, they are all over the map in terms of neutrality. Some say it’s a huge factor and agree that limiting the number of engagements with a staffing company that owns a VMS is perfectly acceptable. Others say that there can be no fiduciary tie to the staffing company that provides the VMS. And still others really don’t care. They simply want the best offering and seamless pairing of appropriate solutions to fit their size and complexity of spend -- domestically and, more and more, globally.
Having worked in VMS directly, in a neutral, technology-driven setting, I used to get myself in trouble saying I could argue for or against neutrality depending on the client and, in some cases, the day.
Let’s face it: The client still drives the solution, more than technology providers drive the client. Efficiency always wins over lack thereof.
Finally, bear in mind that satisfaction scores and loyalty marks tend to go up when VMS is in place. If you are a staffing company working with a VMS, whether your own or another, it’s hard to argue the facts: Our research shows that larger employers give their staffing companies higher marks when a VMS is in place. And their loyalty increases.
Staffing companies need to join the VMS movement, having failed at beating it. Perception is reality.