The status quo will no longer do

Posted by: Joel Capperella

We have, in fact, said repeatedly on The Seamless Workforce that the new workforce paradigms have, in no small part, been accelerated by the current global downturn. A brief summary:

1. Strategic workforce planning must no longer be a matter of addressing the employee base and ‘managing’ ancillary segments of other talent categories, but instead be oriented toward developing an end-to-end strategic supply chain.
2. Achieving true talent supply chain efficiencies requires influence and collaboration across Human Resources, Business Leadership, Finance and Procurement.
3. Every talent-related expenditure must be analyzed for proper categorization.
4. Risk mitigation must drive the analysis of any and all recruitment and other talent-related services.
5. Providers of talent services must be required to drive value and partner with a firm’s overriding fiscal and strategic business objectives.
6. Employment brands must be factored in to all recruitment and talent service-related decisions.
7. Closer analysis of project and contract work can improve compliance, boost cost-efficiencies, and help retain the right talent.

The more conversations we have with leadership of different organizations, whether it be HR, business or finance, the more validation we receive that these trends are not only real, but are driving investment and action. Yet we remain very surprised that companies serving this marketplace have not only been extremely slow to adapt and provide the solutions needed to move toward a strategic talent supply chain, but have actually been hostile even to the suggestion that such a shift is occurring.

Most recently, we came across this post at SpendMatters.com that derides a partner program recently implemented at Yoh. The program in question seeks to better align talent providers against the objectives of Yoh managed services clients. Modeled after the successful partnerships that are typically found between service providers and technology companies, or engineering firms and their sub-contractors, the program allows smaller providers to capitalize on their geographic and subject matter expertise. The benefit to the client is a more ordered supply network, higher quality of talent, more accountability requirements imposed on suppliers servicing them, and precise control and protection over their employment brand. Equally as important, the program enables clients to trust that as more demand moves into the program (as a result of moving 1099 spend or minimizing the amount of project or statement of work bids), the resulting network of suppliers is incentivized to respond as quickly as possible.

We have taken this approach because we want to increase the level of competition among the supply network invited to serve our client base. Membership in the Yoh program inherently increases focused volume for the partner and mandates specific performance. The partner must maintain performance to remain in the program and is incentivized to fill requirements as quickly as possible within the program quality guidelines.

Why create these motivations? Because too frequently, managed service providers operating in a vendor neutral model have no incentive to order the supply network, nor do they care which supplier fills which requisition. This results in a purely tactical ‘body shop’ mentality that plaques the client firm with a poor employment brand, questionable quality, and missed opportunities to drive cost out of the process, not to mention the inevitable increase in maverick spend by business personnel seeking to circumvent the program.

The negative response on Spend Matters to such an approach is reflective of the legacy of treating contingent workforce management needs with a purely procurement approach. The status quo–believing that the more broad and wide the requisition is cast, the more procurement is in a position to ‘beat vendors down on price’–will no longer do. Workforce strategies are just that: strategic. And in a strategic relationship, which most managed staffing programs should be, ‘vendors’ are not what is needed. Rather, a well-defined and comprehensive ecosystem ordered and fiscally incented to tackle the complexities of delivering a talent supply chain is the only approach that brings together finance, HR, business and procurement to build sound and durable comprehensive strategic workforce plans.

UPDATE: This topic has sparked some very worthy conversation within the procurement community. Some of this commentary has served to underscore the point we are making here. Consider the line: “Membership in the Yoh program inherently increases focused volume for the partner and mandates specific performance.” It is being read by some as if “performance” only refers to volume. This is, perhaps, indicative of those in procurement who limit themselves to considering performance as anything but “volume related discounts.” To be clear, the Yoh Partner Program performance mandates have nothing to do with the volume of fills being made by a partner, but by their overall performance against a multi-faceted quality score card. Whether submitting one resource or one hundred resources, they are measured by the quality of the talent supplied.