Many enterprise organizations have strict “no-contact” policies as part of their core operating strategies. This approach involves eliminating direct communication between managers and vendors, relying instead on managed service providers and internally managed programs to manage the sourcing and engagement process for contingent talent. While this model has its advantages — such as creating a level playing field for vendors, ensuring vendor neutrality and increasing contingent workforce governance — it can also lead to challenges in terms of quality improvement, rogue spend reduction and operational efficiency.
Enter the controlled vendor contact model, which allows direct communication between managers and vendors within predefined parameters. This approach seeks to strike a balance between efficiency, quality and program governance.
Let’s explore how embracing controlled vendor contact can yield substantial and potentially higher levels of benefits in CW program quality, efficiency and competitive advantage.
Quality and Productivity Improvement
Quality starts with a job description. However, what happens when your job descriptions fall short?
Managers have unique insights into their teams and job requirements. They can provide context beyond what the best written job description and intermediary can translate. By allowing managers to provide real-time feedback and insights, vendors gain a deeper understanding of the specific requirements of each role, enabling them to identify and recruit the best available CW talent for the unique needs of the manager. By eliminating communication, vendors are left flying blind trying to fill requestions. This recruitment method has become known in the industry as “throwing spaghetti at the wall and hoping something sticks.” As a result, the quality of the contingent talent your organization is engaging can suffer and costly attrition can increase.
This is important: Engaging the right contingent talent is crucial not just for quality but for organizational productivity. Studies suggest that top performing talent can be up to 800% more productive than average talent. Therefore, while eliminating vendor contact may have short-term control gains, the long-term consequences of increased talent mismatches and high attrition can significantly erode your organization’s productivity and profitability.
Reduce Rogue Spend and Misclassification
Supporters of strict no-contact policies argue they will keep spend within the program’s parameters by ensuring managers work through the program. In reality, imposing no-contact policies may not eliminate communication between managers and vendors at all; rather, it may drive such interactions underground, leading to increased rogue spending and misclassification issues — both in terms of independent contractor misclassification as well as staff augmentation misclassified as costlier statement of work. Further, misclassification of staff augmentation under SOW has additional business risks. Many staff augmentation agreements offer contractual advantages such as max bill rates, conversion terms, volume discounts, the flexibility to terminate with minimal to no repercussions, and no upfront sunk costs to manage. These benefits could be lost if talent is engaged under an SOW.
By adopting a controlled manager contact approach, you can minimize the need for managers and vendors to circumvent your contingent workforce program and reap the benefits talent engagements properly flowing through your program.
This strategy enhances transparency and enables organizations to leverage the advantages offered by standard staff augmentation agreements.
Increase Operational Efficiency
Contingent workforce programs often face efficiency bottlenecks due to limited bandwidth and restricted communication channels. The contingent talent sourcing process can become a lengthy game of telephone tag, leading to delays in filling positions. Adopting a controlled vendor contact model fosters direct communication, streamlining administrative processes, reducing overhead and minimizing delays. In a time-is-money business environment, this controlled approach significantly impacts the organizational costs associated with unfilled contingent positions.
A study by Fiverr International states that just one open role costs businesses, on average, nearly $25,000 a month in output. If your program has a one-business-day response time to requisition inquiries, multiplied by the number of open requisitions, imagine the substantial productivity loss your organization is incurring. Adopting controlled communication not only reduces administrative burdens and costs but also presents an opportunity for optimization and efficiency gains.
Foundation for Success
This approach does not advocate for a return to the unbridled era of the Wild West. Successfully implementing a controlled vendor contact program requires a strong program foundation with clear and enforceable policies and rules of engagement. These critical elements include:
Optimized supplier pool. Before adopting a controlled contact model, programs must cultivate a streamlined, trusted and compliant supplier pool. This will not work if your program has 200 vendors. The success of this approach hinges on suppliers who are willing to operate within program policies and rules, fostering a collaborative partnership with the CW program.
Clear, documented guidelines. Documenting clear and enforceable guidelines is vital. This comprehensive rules of engagement document, or ROE, outlines contact policies, protocols and procedures, ensuring that direct communication remains within defined parameters. A key element should specify adherence to a manager’s preferred communication method, which may be subject to controlled limitations.
Technology integrations. Technology is integral in safeguarding program governance while facilitating and monitoring direct communication. Leverage vendor management system features such as rate cards, mark-up percentage calculations and integrated chat functions to maintain transparency, compliance and cost controls while streamlining communication and maintaining oversight.
A strategically implemented controlled vendor contact program has the potential to simplify and elevate CW programs to new heights of competitive advantage. With a solid foundation, mature programs can transition from the restrictive no-contact model to a more dynamic and collaborative approach. This shift can unlock new levels of performance and competitiveness, benefiting organizations in terms of efficiency, cost savings and the acquisition of high-quality contingent talent.