Managed staffing: 3 types of vendor neutral programs

Posted by: Joel Capperella

Managed staffing programs first emerged in the 1980s as companies attempted to formalize control over their staff augmentation expenses. Since then, as contracted labor use expanded into more professional and certified areas of expertise, companies that saw the value in using contracted labor to extend their workforce sought to improve the cost and operational efficiency of that usage.

Central to the evolution of managed staffing programs is the discussion of whether or not a program can be classified as vendor neutral. In order to identify and prioritize the right objectives, customer organizations and managed staffing providers alike must have a clear and shared understanding of what vendor neutral means. (Staffing Industry Analysts offers a good perspective on vendor neutrality.) Ideally there is a single, broad statement of strategy that guides program selection and implementation. The strategy doesn’t need to be complex. Instead, it must be a simple statement of intent.

Motivated by open and fair competition

The most common understanding of vendor neutrality is founded on the intent to drive a level and equitable playing field for all participating professional staffing services providers. There is a good reason why a company would want to insist on fairness for participating providers: Failing to do so could enable the company selected to run the managed staffing program to collude with participating suppliers, thus affecting price. In addition, the quality of candidates could be restricted to the ability of those suppliers that are friendly to the program manager, and overall service quality could suffer due to a lack of competition.

This ultimately leads to one of three possible types of a vendor neutral managed staffing program.

1. Vendor participating. Perhaps the biggest factor in defining the type of vendor neutral managed staffing program is whether or not the managing partner is also participating as a supplier. Some managed staffing suppliers position the portion of their company that handles managed services engagements separately from the portion that actually places contracted labor. In such instances, the program will be managed as neutral, but the provider’s leadership has an interest in participating in that program. Unless the different areas of the business are truly separate operating entities, the staffing company as a whole will have a singular perspective of how beneficial such managed staffing programs are to their business.
2. Vendor preferred. The vendors participating in a managed staffing program will include organizations that have relationships with the company consuming the resources, the staffing provider managing the program, or both. The relationship between the managing partner and the participating staffing provider is likely well-established. The staffing industry is dotted mostly with small, regionally focused providers. These providers partner with larger firms to increase their transaction volume. The relationship between two such organizations grows based upon how well they have been able to mutually benefit. The result is a preferred list of vendors that are the go-to providers based upon their geography or ability to place specific skills. Different managing partners handle this ecosystem in different ways. It’s important for organizations to evaluate the ecosystem and insist on transparency in the preferred supplier network.
3. Vendor opaque. Also called a pure play vendor neutral managed staffing program, vendor opaque is the most definitive example of placing control over the operating expense itself, and not necessarily the participating staffing providers. This is accomplished with a managed staffing program that figuratively places a wall between the participating suppliers and the company seeking the talent. Requisitions for talent are managed by the provider and sourced blindly to the community of participating staffing suppliers. Candidates are sourced and filtered into the process that is established and run by the company managing the program. The entire exercise is one that increases the managed staffing provider’s control, minimizes collaborative input from the ecosystem of participating staffing suppliers, and focuses almost completely on cost efficiency.