Your proven formula for delivering your services to agencies who are managing a company s recruitment activity

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1 Working with Managed Service Providers Your proven formula for delivering your services to agencies who are managing a company s recruitment activity Introduction In recent years there has been a growth in the number of companies (usually Recruitment Agencies) who are managing the recruitment needs of a company. A report from the REC estimated that 10% of the recruitment market - over 2bn in annual fees and margins - was transacted through such arrangements and their research suggested that this service would grow by 5% annually in coming years. The Managed Service offering might be an onsite team handling both Permanent recruitment as well as Contractors and Temps and managing every aspect of the recruitment lifecycle or simply an offsite Agency acting as a post box for CVs and as a way of streamlining the flow of information and filtering unsuitable candidates. The advice given herein is relevant to both arrangements. Whilst most Agencies have experience of working with one or more MSPs this guide provides clear advice and guidance to ensure that you harness the maximum amount of business that you can from delivering your services into such arrangements, protect your margins within them and ensure that your business retains its profile with the end user - the customer. The Managed Service model is not a particularly new concept. For many years High Street Agencies have taken on projects to recruit complete teams for a company and have agreed to recruit all of the staff/temps required for particular areas of the business. In some cases they would use other Agencies to fulfil the requirement but, in the main, they would supply everybody required. These arrangements were not particularly formal and it was the arrival in the late 90s of specific software systems that developed the concept further and enabled the business model to become more defined and in wider use. Whilst the Managed Service model has normally delivered operational and structural benefits to the end recruiting company, it is not so clear how much actual money has been saved since there is only so much Gross Margin to go around and many such arrangements have fallen away when savings predicted have failed to materialise. Many Agencies are suspicious of such arrangements and often resent the fact that there is a managing intermediary between them and the end hirer who they may well have developed a strong working relationship with and they must now relinquish that relationship to the new managing agent. Furthermore if the managing agent is also supplying staff within the arrangement - often known as Vendor on Premise (VOP) - then other suppliers feel at a disadvantage and are suspicious that they will only receive the difficult requirements that the VOP struggles to fill and at a reduced margin to boot! You need to know how to protect your candidates and your margins within such arrangements as well as how to develop and maintain a relationship with the end user - the staff hirer. This guide provides the advice and guidance you need to achieve those aims. Service and Software Types A plethora of jargon has grown up around this service area. This has a lot to do with bright people trying to mystify the offering they are providing and making what is a pretty basic recruitment service sound grand and imposing in order for the market to believe that only an elite few can build and deliver it. Whilst many recruitment specialists see through such techniques you would be surprised at how often junior (and sometimes senior) recruiters will shy away from wishing to work with these services.

2 However it is simply an on-site (and sometimes off-site) recruitment service that finds good candidates and places them - which is what our industry does every day. So let s look at some of the jargon/tlas (three letter acronyms) that abound: MSP: Managed Service Provider VMS: Vendor Management Services RPM: Recruitment Process Management RPO: Recruitment Process Outsourcing VOP: Vendor on Premise CVM: Centralised Vendor Management CWM: Contingent Workforce Management VNA: Vendor Neutral Arrangement - the Managing Service Supplier does not supply staff within the arrangement No doubt there are others - some being dreamed up as I write this paper, I fancy! For the purposes of this guide I will continue to use the one term: Managed Service Provider or MSP. Within this marketplace a large amount of software has been developed to help manage the recruitment workflow. Examples include: Virtuoso VMS Fieldglass Hy-phen Peopleclick Vurve I-grasp And there are many others. Such software acts as the glue that binds the process together and, in its simplest form it provides screens that a hiring manager, HR Manager or Resourcing Manager can use to request a particular resource including a Job Profile and experience/skills required. This staff/temp requisition is then accessed by the on-site/off-site resource centre who, having checked it, will pass it in turn to a selection of Recruitment Agencies. They, in turn will complete a screen which includes the candidates names that they are submitting and with CVs attached and pass it back to the resource centre who will check it and pass it on to the hiring manager. They will assess the candidates and request interview or accept the booking and so it goes on in the standard recruitment lifecycle that we all understand until the placement is made. This isn t rocket science but it does assist with the management of the flow of candidates CVs and temp bookings and, in a company that is constantly recruiting, such software is essential. Chimes, for instance, was used in the US to help manage over 7000 hires per year for General Motors. It is hard to imagine how that behemoth managed such large scale recruitment programs before installing such software. The software supplied will often have additional modules, for example, timesheet management and the management of complete teams of workers. It will assist in recording the on-boarding and off-boarding processes, so, if a temp worker needs particular clothing or equipment, it will record the fact that that has been issued and ensure that it is checked off and collected back when the temp worker finishes the assignment. Aside from these benefits however, the main prize to be gained from the implementation of such software, beyond potential financial savings, is the management information that is readily available. If the system is recording every step of the recruitment process through the use of request screens as described, then it is very easy to report on a myriad of service levels and KPIs. Agencies and hiring companies spend an inordinate amount of time assessing how long it took to provide/receive a CV, what was the CV to interview ratio or the interview to placement ratio. All of this is available to the minute via the MSP software.

3 To the FD and the Procurement Manager this alone can provide something that they are always desperate to know - the total spent on temp or contract workers and on fees for permanent recruits - something of a Holy Grail to these budget overlords. Furthermore the MSP will usually offer a consolidated, single invoice and this greatly reduces the administrative burden of handling dozens of invoices from myriad suppliers - positively music to the FD s ears! Working with the MSP So a company you have been selling into (or trying to) has decided to deploy a MSP and you have been invited in to talk to them. You are likely to be pretty concerned - the MSP is often very big and you are anxious about your relationship and ongoing business with the end client. It s no use being resentful - you need to understand the game that you are now in and although you may have several hiring manager friends within the customer who tell you that they will continue to deal with you directly, that isn t how things are likely to pan out. The game here is compliance and control and the MSP will usually have high level sponsorship within the customer. There is little to be gained from trying to work around the MSP - be respectful to their position. So what do you need to establish? Here s a list of questions you should want to get clear answers to: What Terms and Conditions will you be working to - the present contracts and terms you are used to, or a completely new set to be agreed? Will the MSP be supplying staff/temps themselves? If the MSP will be supplying staff/temps, what process will be adopted - will they, for instance, have a lead time before you receive the requirements? What would such lead times be? What margins are you being asked to work to? What software and processes will they be adopting and how are you expected to interface to them? What training will be provided in the new software that will be used? Will you be able to interact with the customer in the way that you have been up to now? If not what communication rights /opportunities will be available to achieve good communication with the end buyer? What SLA s will be worked to - what minimum service levels can you expect from the MSP - CV turnaround, request for interview, offer after acceptance etc.? What payment terms can you expect? What resolution and complaint procedures will be implemented? How often will you have direct access to the end customer? What access will you have to your temp and contract workers? (Naturally they can t stop you communicating with them but they may wish to deter you from visiting the customer s premises without them present). What will happen to temp and contract workers who apply to the company directly? Will you get a number of these offered to you to administer/payroll? What will happen if a CV you submit is also sent by another supplier or (more contentiously) the MSP tells you that they already know of that candidate themselves? How will your service be measured and how often? What KPIs will be adopted? How will you interface with the MSP s Accounts department? All of these points should be established and the good, professional MSP will have ready answers and a clear process that re-assures you that you can look forward to an ongoing business relationship with both them and the end client.

4 Making the arrangement work for you There are MSP arrangements that work extremely well and there are those that are doomed to failure because the MSP maximises their own business within the customer to the detriment of other suppliers who can provide better candidates that are not available in the MSP s own database or via their own attraction methods. In my experience the MSP that actually supplies to the customer themselves (and most of the service models you will encounter will involve this aspect in some form rather than the Vendor Neutral concept previously defined) provides the largest potential for things to go awry. How do you manage to work within these service arrangements when things are not going well? Here are a few tips and ideas that will help: Make sure you have a clear understanding of how the MSP who is also a VOP (vendor on premise) will treat the confidentiality of your candidates. What you don t want to hear from the on-site Resource Centre is that horrible phrase we know about Fred Jones already. How do they know? Fred told you he didn t know of the role from anybody else. You need clear guidelines as well as access to the data that the software is recording on how such duplication can occur. If software isn t being used then you want to know how CVs received are being recorded and duplication avoided. What ownership of the candidate do you really have? Record such issues at all times. Make sure the arrangements that are put in place allow you to have some contact with the real customer. If the MSP baulks at this recommend that a supplier forum is set up and that it meets with the MSP and representatives of the customer - Procurement, HR etc. They should welcome this since they want to know that they are getting the best service possible, not just what the MSP wants to tell them. Keep your profile as high as possible with the hiring managers. If you have temps and contractors onsite visit them and ask to see their line manager to review matters. If the MSP objects add that to your issues list to be discussed at the next supplier forum. Send the hiring manager some useful information on what s happening in the market place - salary trends, rare skills analysis. Add a covering letter to it reminding him/her that you are continuing to supply to the company - he or she will be appreciative and keen to retain you on the list. Ask for a hiring manager satisfaction survey to be undertaken within the customer - reviewing each supplier s performance. This will enable your service to be complimented and will provide internal references and can therefore counter any attempt by the MSP to de-select you from the supplier list. I once de-selected a supplier based on them increasing their prices and got roasted by a bunch of hiring managers who loved that supplier ardently because of the service they had received from them. If all else fails and you feel that the playing field is constantly tilted against you then tell the MSP that you intend to visit the client yourselves to discuss these issues. Ask to see the client and ask for some form of immunity against any MSP backlash - no removal from the list for at least six months, for instance. Put your case clearly and without edge based on all of the issues and irregularities that you have fully documented. The MSP will not want this to happen and often the very threat of it will see a step change in their working arrangements with you and, hopefully, the other suppliers. Summary You ve read this far so you want to get the most out of any MSP arrangement. Remember the following key points: Ensure that you fully understand the T s and C s of the arrangement Ensure that you have access to the end customer on a regular basis Ensure that you can live with the margins and fees offered

5 Understand how duplicate CVs will be managed Work as you have done previously but don t ignore the MSP - they are a key stakeholder in the process What software will be used and will you receive training in it? What billing and payment terms will be implemented? How will issues and complaints be handled? Finally The MSP model is here to stay. Many work well and will reduce your cost of sale since they will bring all of the requirements of the customer to you in a managed and formal way - normally at the same time as they are relayed to all other suppliers. They can dramatically reduce your administrative burden since they can develop your invoice and roll it up into one invoice that the customer pays more quickly - positively benefiting your back office and cash flow. Often you will be able to gain access to a large customer through convincing the MSP of your specific and niche capabilities, which the end user will not be convinced of. Nevertheless some of the MSP models in place will not work well and this paper has, I hope, provided several techniques that will help you work better within them and shown ways where you can adapt them to better suit your purposes.