Staffing solutions that you love to hate

Posted by: Matt Rivera

For years, temporary services and other staffing solutions have been gaining acceptance and garnering broad usage. While the services help companies effectively manage contingent labor and other recruiting needs, it still seems like they are the service that companies love to hate.

In a 2010 Staffing Industry Analysts (SIA) survey of contingent buyers, only 41 percent of buyers said that they were promoters of their managed staffing provider (MSP).

Buyers in a similar SIA survey for 2011 gave professional staffing services suppliers in general a net promoter score of 11 percent, which is basically a B. This is a great improvement over the past eight years, during which the net promoter score was stuck at a C, or worse. Perhaps buyers were more grateful for the help after the Great Recession.

Even with this improvement, why do staffing solutions continue to be a service that companies love to hate? Here are a few of my observations.

Companies think they can do it cheaper (or for nothing) themselves. If a program costs money that is paid to a third party, why can’t HR or procurement just manage it? In short, it’s not a core competency of HR or procurement. Plus, if they are managing your staffing solution, they’re probably neglecting something else (such as employee engagement or properly classifying independent contractors). And while in-house staffing solutions might seem free, there are still significant costs. The price is just hidden in your overworked HR or procurement staff.

Misaligned value proposition. Many times, HR wants quality and compliance while procurement seeks cost savings. When the price of a staffing solution is too low, quality can suffer. This will cause managers to abandon the program and the duration of the hiring cycle to increase. On the other hand, when quality is high, executives and managers might complain that the program costs too much. A happy medium does exist. You simply have to work with the provider to find it.

The staffing services provider is treated as just another vendor. We’ve seen contingent staffing solutions fall under the same procurement manager responsible for snow removal and fleet car vendors. If talent is important to your company, a provider should be more important than the person who sprinkles salt around your parking lot.

No executive visibility. Spending $20 million or more on temporary labor might seem like a large amount of money. Therefore, executives need to know that the cost of hiring actual direct employees, including recruiting costs and wages, is likely 30 to 40 percent higher than the cost of temporary labor. This is the first place the value proposition must be clear.

Recruiting a temp is easier than recruiting a direct hire, right? Many companies believe that they shouldn’t have to pay high mark-ups and fees for staffing solutions. Many fail to realize that good, sustained recruiting takes time and effort, no matter if it is for a short-term or a direct position. A low-price solution might seem like a good idea initially, but a staffing provider that builds your company a consistent and reliable talent community can save you a lot of money in the long run.

Finally, according to the 2011 SIA contingent buyer survey mentioned above, 26 percent of buyers said they plan on increasing the number of temporary workers in 2013. Similarly, a 2011 CareerBuilder survey found that 36 percent of companies surveyed said they will hire temporary workers in 2012 (up from 34 percent in 2011, 30 percent in 2010, and 28 percent in 2009).

Professional staffing services companies are apparently here to stay. Examining why your company might not love its staffing solutions is the first step to creating and leveraging a provider relationship that takes your workforce to the next level.