Managed staffing: Evaluating a new program

Posted by: Joel Capperella

The decision to control how an organization uses temporary labor — or perhaps more accurately, staffing providers — is typically one born of a desire to eliminate redundancy and improve the cost efficiency of using temporary workers as a part of the workforce. The need to determine a way to better manage temporary staff procurement is frequently revealed by a series of events that highlight that the company is using what feels like an unreasonable number of staffing providers.

We use the term feel because for many, moving from distributed control to centralized control begins as a subjective realization that there is not as much order as there should be. In other words, the company’s control and management comfort level has been exceeded. This reality pushes the company to perform a more objective analysis to determine if there is a need for a managed staffing program.

Companies typically move away from distributed management of staffing suppliers and toward a centralized managed staffing program when its temporary labor expense begins to approach or exceeds $5 million. Now, there are large organizations with temporary labor expenses that exceed $5 million that have not yet deployed a managed staffing program. Annual expenses of $5 million account for approximately 50 to 100 temporary employees working with the organization every single week of the fiscal year.

Even for a large organization, this is an extremely high volume of people coming in and out of the organization. In situations such as this, it is likely that there are several professional staffing providers sourcing the talent. This volume almost always leads to a desire to evaluate how that expense is being managed.

For organizations seeking greater control over their contingent workforce for the first time, the managed staffing program typically takes one of these three approaches:

1. Preferred Suppliers. This approach is a best practice on the path to achieving greater control. The process whittles down the field of staffing suppliers that are contracted to fulfill the temporary staffing needs of your hiring managers.
2. Self-Managed Program. A self-managed staffing program establishes a degree of process control and accountability. It places formalized program management over your preferred suppliers.
3. Partnered Managed Staffing. A managed staffing program introduces a third-party staffing partner into the equation. The daily management, performance, and adoption of the program throughout the organization become the responsibility of the staffing provider managing the program.

What follows are the typical pros and cons of each approach:

Preferred Suppliers
Pros:

• Yields quality analysis of current professional staffing providers
• Poor performing professional staffing providers are eliminated
• Selected professional staffing providers have clear and defined performance expectations

Cons:

• A preferred professional staffing supplier list necessitates management
• Difficult to enforce
• Limited visibility over cost efficiency

Self-Management
Pros:

• Introduces standard professional staffing procurement processes
• Establishes internal cost expectations and guidelines

Cons:

• Requires dedicated staff member to manage the program
• Enforceability still challenging
• Performance tracking and reporting can be difficult

Managed Staffing Program

Pros:

• Capitalizes on the experience of the professional staffing partner, as it typically manages many staffing programs across varying industries
• Eliminates the need to have full-time staff members managing a staffing program
• Increases enforceability and access to program performance metrics

Cons:

• Relinquishes immediate control over program costs and quality to the third-party provider managing the staffing program
• Could potentially exclude the preferred and specialized staffing of some hiring managers
• Multiple options for deploying a managed staffing program could initially introduce complexity and limit adoption