Imagine one day you walk into your favorite Italian restaurant to find it has updated its pricing. Now, its signature lasagna, for example, is priced by the ingredient — flour, tomatoes, mushrooms, garlic, sauce, cheese, meat — instead of one price for the meal. The menu also includes an additional surcharge if you choose to add on the salad and rolls. After being seated for a few minutes, the hostess swings by and asks you to support their local charity of choice because “giving is important.” And before ordering, the owner hands you a disclosure letting you know you will be charged an hourly rate for the waitstaff with a minimum of two hours’ time for sitting at the table. And last but not least, when the bill arrives, you see that the owner has slipped in a small finance fee because the ingredients were purchased weeks ago and the restaurant has been floating the invoice until you arrived. Fees, fees and more fees.
Is this how your contingent program looks today? Is your contract filled with “ingredient pricing?” Do you ask for “charity staffing” with below-market rates? Are there discounts for “sitting too long” (tenure)? Are there fees for placing too many people (volume rebates)? Do you have 90-day payment terms and hope staffing firms can float payroll? Is it all about the fees, fees and more fees?
Over the past 20 years, the contingent industry has evolved with more staffing company startups in niche categories, the invent of managed service providers, vendor management systems and a variety of robust technologies able to source, engage, test, screen, interview and pay.
However, even as more providers emerge to help us do a better job at finding people, pricing continues to decline. It is understood that clients need cost savings, but it’s a trickle-down problem all landing on the staffing company’s plate. More fees, less lasagna. And sometimes less pasta means less quality — and that’s not good for any program.
Imagine a Smaller Menu
Perhaps you have fewer staffing partners, but the ones you have are strategic partners who know your job descriptions better than your hiring managers do. They have a pipeline of candidates, so your time-to-fill costs go down.
These same strategic partners pay candidates the going market rate for their skills and offer incentives such as referral bonuses, training and annual raises, which means your contingent workforce doesn’t turn over as much and your cost to replace decreases.
Maybe your program gains value by hosting roundtable discussions with all of your partners. There is insight to be had through hearing what your partners are seeing in the marketplace, current trends, future plans, feedback on challenges they face and more.
One of SIA’s VMS partners stated that most companies only use about a third of their technology’s capabilities. Is there more can you do with the tools you already have to save more time in the process through automation and thereby increase the productivity of your team?
It’s OK if you still have a few fees. Perhaps you choose one or two that are most important or most impactful, but spread them out across your staffing, tech and MSP partners. Equal opportunity funding!
More Palatable Fees
Having a smaller supplier base also helps fees taste better. When your staffing partners feel there is opportunity for placements, they will try harder and complain less about some of the costs associated with finding the talent.
I have heard of programs with nearly 100 staffing partners to fill 3,000 open roles per year. Calculating the math on this, and assuming that all 100 are equal, that’s only 30 roles per year per partner — and only three jobs per month. Now add on all those contract ingredients, volume hiring (which at this rate no one will ever reach), tenure rebates (we can only hope all 30 workers will stay long enough to reach the rebate) and 90-day payment terms, and this program is a “restaurant” most staffing companies won’t pay attention to.
However, if there is more opportunity and less competition, most staffing companies will give it their all. It’s strange to believe that having fewer partners would be better for your program, but if you have the right strategic partners who are engaged and feel like they won’t be just another company in a long line of companies, then you become the “A-rated” client and not the one who gets all the leftovers. And that is something we can all toast to!