The VMS Workgroup
Working here to get the group established.
I am well aware of the HIC’s work on developing the industry standards and guidelines for VMS and MSPs. This is great, however is not to replace or duplicate what the HIC has already done, but to create more of a dialog to create an evolving set of guidelines and standards.
The keyword here is EVOLVING. Case in point: what was true this time last week, isn’t anymore. Things that made sense last week don’t anymore.
There’s a ton of work involved in organizing this, so please bear with me. You can still leave a comment and email me if you’d like to get an invitation to take part in the VMS Workgroup.
In the meantime, what do YOU have in mind? What are your expectations of such a group?
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Post your VMS questions
I have a confirmed interview on Friday with the Director of Staffing of a Silicon Valley-based consumer electronics company who implemented a VMS about a year ago.
I have a list of questions that I would like to ask him that focuses more on what the driving forces were in the decision to implement a VMS, how they selected their vendors and what sorts of best practices he’d like to share, a year after his organization implemented the solution.
If you are thinking about implementing a VMS and have questions you want me to ask him, please post your question here or e-mail me.
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A word on my blog
I’ve received a few comments and quite a bit of e-mails about the VMS series. Quite a few readers have pointed out that I have wrong or misleading information and a few have said I shouldn’t be writing about it because I really don’t know what I’m talking about.
I’m not writing as an expert but as someone who want to facilitate a discussion, which is clearly happening, based on the amount of e-mails and phone calls I’ve received about my VMS posts.
- So a few housekeeping notes here about my blog.
- This is my personal blog. I work for a staffing firm, but as it says on my sidebar, what I say here is my personal opinion and not that of my employer. I am writing from the point of view of someone who has about 10 years of experience in the contingent staffing industry. That experience pales in comparison to those with 20-30 years of experience. I have a lot to learn and I’m using my blog to give people a platform in which they can converse with me, and in effect, educate me. My blog is my listening tool.
- Now that I’ve explained the “personal” label…yes. Of course. It benefits my employer, albeit indirectly. But this is not my employer’s propaganda outlet. None of the stuff I say here is pre-approved by anyone. This blog is not even hosted on any of our servers. So how does it benefit my employer? I’m in marketing. To do my job effectively, I have to continuously educate myself. I have to listen to conversations. I have to keep tabs on the industry. I have to know what the industry is doing. This is my listening tool. Please see #1. Some of us go to conferences, some read trade publications, some attend webinars. Me? I blog.
- Also, I just happen to love blogging. I have another blog where I write about almost anything, and I started this as my career blog. What’s a career blog? Jeremiah Owyang, a senior analyst at Forrester, talks about it here, and I wrote a post about it here. Someone commented to me over e-mail that this blog could very well benefit my employer. I’d like to think so, because I do aspire to be a value to my organization. I write knowing that my personal brand affects my employer’s brand. But other than that, this is NOT part of my employer’s marketing arsenal.
- In addition to my blog being my listening tool, this is also my public notebook. I’m a big believer in the power of collaboration. It’s the Web2.0 way. I post my thoughts and people weigh in. I ask questions and people respond with their opinions or sometimes they will point me to a certain direction. Sometimes they will point out certain things I haven’t really thought about. It’s just like going to the library. I’m not going to try to read all the books they have available on a subject, but I will ask for help. I will ask for the librarian’s help, I will ask other people in the aisle which books they recommend. Those recommendations mean more to me than the database search results. So in addition to my blog as a listening tool, my blog is also my research tool.
- And a few housekeeping notes about the VMS series:
- I work for a contingent staffing supplier and my experience with VMS comes from that perspective. I’ve recruited for VMS accounts in the past. Some were great experiences. Some were horror stories. My intent is to highlight what made the first group great experiences, and highlight the reasons why the second group were horror stories. The end result, hopefully, would be that we’d work with more with accounts from the first group, and hopefully those who stumble upon my horror stories will avoid those mistakes.
- There are those that said since I work for a staffing supplier, that I must be anti-VMS and that my ultimate goal is to discourage prospects from using VMS. I recognize that VMS will be around. There are a myriad of reasons why companies implement VMS. Theoretically a product or service will not exist in a free market if there was no real value for it. But any solution is only as good as the way it is implemented. A few have pointed that out that it’s quite a lofty goal to aspire for some sort of VMS best practices that will benefit all parties – clients, MSP, VMS, suppliers, HR, purchasing, hiring managers and contingent staff – and a few have said it’s not going to happen. That may be true, that it’s too much to aspire for, but the conversations that result from the postings whether they be on my comments section or via e-mail, are priceless.
- A few have pointed that out that someone’s gotta be paying for my blog to come so high up on Google’s search results. I’d like to take that as a compliment to my SEO skills, but the real reason behind it is that there isn’t much information about VMS on the Internet. There are plenty of whitepapers and there are plenty of corporate sites that talk about it, but it isn’t addressed much in the Blogosphere and Google’s algorithms tend to have a preference for blogs due to their high trust ranking. But no, there is no advertising at all to drive traffic to this blog.
To summarize all of the above, this blog is my conversation tool. I’m glad you’ve found my blog and I’m grateful to those who have weighed in and pointed things out to me and to those of you who have taken the time to e-mail and call me. That right there, is this blog’s main goal.
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Hiring in a hurry
The cost of hiring entails more than just the person’s hourly rate. These costs start to incur before before the employee works his/her first hour and may continue on even after the employment is over.
When you are hiring in a hurry and in volume, these costs and risks get magnified. This is an area where contingent staffing could provide a cost-effective solution.
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Staffing firms are more than just middlemen
I think I mentioned it here before but a while back I did a presentation to a group of jobseekers consisting of project managers, financial analysts and some engineers. The presentation was about “how to work with a staffing firm.”
I had a few slides prepared but didn’t really get to use them because my audience quickly took over with their questions before I was done with my first bullet point.
Judging from the questions my audience believed that staffing firms serves no other purpose than be the middleman.
I was just revising the presentation so here’s a quick rundown on what purpose staffing firms serve — from the job seeker perspective.
Advocate — As your recruiter is trying to place you, your recruiter is basically your advocate. A good recruiter has well-established relationships (read: “is trusted”) by the hiring managers he or she is working with, as well as with the candidates he or she is trying to place. By design, contingent staffing is set up (at least in my experience) to ensure that “pushing bodies” does not happen. How? Most contingent staffing programs are set to bill by the hour so the only way to be profitable is to keep each placement in billing capacity (ie working). Staffing firms cannot achieve profitability with high turnover rates, so it is NOT in the staffing firm’s interest to push a candidate that’s simply not a fit for one reason or another because that person will not last and therefore not bill. Just like any other industry, we gotta deliver great products to keep our consumers buying. Keep this in mind when talking to a recruiter who is trying to place you on contract. That recruiter wants to give you an assignment/contract that’s the perfect fit. Sounds cliche, I know. But really, that’s the way it is.
Employer — a lot of job seekers don’t realize this and fail to take this into consideration when accepting an assignment or a contract. It’s not just about who can find you that assignment, but more importantly, who would you want to work for? The staffing firm’s role does not stop at placement. They cut the check, provide benefits, and handle your issues if anything goes wrong (workplace injuries, conflicts, sexual harassment complaints, you name it). If you don’t think that’s a big deal, imagine someone who missed a paycheck because the staffing firm’s payroll messed up. Sure that happens anywhere, but how would the staffing firm handle it? How quickly do they resolve issues? It doesn’t seem like a trivial thing now, does it.
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Quantifying the value of contingent staffing
Ok so “what’s riding on our placements” isn’t quantifiable.
I’ve complained on different ocassions in this blog that staffing firms have such the bad rep online, specifically in the Blogosphere. There’s a two-year-old post entitled “reducing staffing firms’ margins one blog post at a time” and on the ERE network, “recruiters are blood-sucking parasites,” the point from both posts were that staffing firms’ “cuts” or “mark-ups” are simply unjustified and that the company itself will save more money if they just hired directly, as opposed to a “contract-to-hire” or the more popular term “temp to hire” arrangement.
This argument is everywhere, on and offline. I hear it every day. Why should I pay you $75/hr for someone I can hire directly for $45/hr?
Unfortunately for our industry, it doesn’t seem to be a well-known fact that a person’s hourly wage is the only thing that comes out of his/her employer’s pocket. Most know that benefits need to be added too, but beyond that, most are still unaware of other employer costs which are abated by the use of a staffing firm.
If you are hiring on your own, you will most likely have to spend some money on advertising, which could run you an average of $150/posting per job board. If you post it somewhere popular you’re probably going to get at least a couple hundred resumes, 95% of which are probably not qualified for your position for one reason or another. So in addition to your $150/posting/job board cost, factor in the amount of staff time that will be spent sorting through those resumes, replying to them, and then contacting the ones you are interested in, bringing them in for their first, second, third interviews, do their reference checks and background checks (cost varies). Then add to your cost whatever projects that were delayed because staff’s attention was diverted to hiring or because the project needed that new hire’s expertise. And that’s even before the employee even begins employment or collects his/her first hour’s wages from you.
Hiring on a t-p basis through a contingent staffing firm, on the other hand, minimizes the above activities to a minimum. Contingent staffing firms charge a fixed hourly mark-up that their clients don’t have to pay for until the employee works his/her first hour. Meanwhile, you got your job sourced for and advertised. You only saw the top two or three candidates for an interview versus having to see 10 or more. Someone else did the reference checks and background checks. The time it took you to hire that person was dramatically reduced and you got your project started right away. What is the ROI on that?
Employment
FUI, SUI, FICA, workers comp insurance, payroll taxes and benefits add up to 38% on top of an employee’s hourly wage.
Termination/Attrition Costs
It happens. Sometimes the hire just doesn’t work out, or due to unforeseeable economic events, you had to let the employee go. Start adding on COBRA, outplacement services, and (if you have a large number of former employees drawing from it) the risk of your unemployment insurance rates increasing. Oh. And if the former employee decides to file a grievance. Add your legal fees.
Contingent staffing firms charge a fixed mark-up and are only applied to the employee’s hourly wage. On the low end it will be around 45%, on the high end, around 55%. No charges before, and the charges end when the employee is terminated.
So in doing the Math, hiring through a contingent staffing firm just makes sense, doesn’t it?
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Selling the middleman?
I had one of those eye openers earlier this year when I was invited to do a presentation at ProMatch. It seemed easy enough. Speak to the members about “How to work with a staffing firm.” I knew there were going to be plenty of questions so I came with just four Keynote slides on the basics of working with recruiters.
I was introduced to a full auditorium of maybe 75 job seekers ranging from financial analysts to project managers to HR managers. I didn’t really have a fear of public speaking, but when your introduction goes something like “please go easy on her,” I say brace for impact. They don’t want to know how to work with a staffing firm. My gut feeling was they they’ve all had some sort of interaction with one or several staffing firms and judging from my introduction, their experience with staffing staffing firms weren’t positive.
So I scrapped my presentation and felt my way around, asking the audience to share their experience with staffing firms. A majority of the stories that were shared fell under one category. Lack of feedback from recruiters who initally call and promise to submit their resumes for a requisition they were working on, never to be heard from again.
I can vouch for a handful of recruiters I personally know and have worked with and honestly say they give their candidates the courtesy of a follow up call, but I must say this is also a widespread issue. I bet some of you will even scoff at this post and tell me to post about more interesting things like VMS or better margins. But I found it fitting to post about this first before anything else, because let’s face it. First things first. The candidates are our bread and butter. There will be no VMS or margins to speak of if the candidate refuses to work with us.
Aside from not getting follow up calls, the job seekers that I spoke with also felt that staffing firms are just middle-people taking a huge chunk of what the company is actually paying for their services. Sure we can talk about overhead and fringe benefits and statutory costs but that’s not the point. Staffing firms are seen as unnecessary middlemen. In their eyes, we are just a barrier between the employee and the employer. There is no value to working with a staffing firm.
But there IS value. Otherwise there wouldn’t be a market for our services and the staffing industry wouldn’t exist. And even more perplexing, why isn’t that value communicated anywhere? Wouldn’t our jobs be much easier if the publics we served (the job seeker community and our clients alike) understood why we exist? Why we are relevant? Let’s face it. It’s hard to sell from the position of a middleman.
This blog will attempt to answer that question, one post at a time. But in case you wandered into my blog, please feel free to answer this question in the comments section.
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A contingent staffing-specific blog
There are over 9,000 (and counting) staffing firms in the nation yet there is very little online conversation happening about the industry. While some staffing firms are already involved in offline discussions and collaboration with each other, the majority are still in the “every man for himself” mindset. Some stick to it for completely valid reasons. The staffing industry is a fiercely competitive market.
In the meantime the communities we serve has evolved into something that highly values transparency and collective intelligence. Several years after blogging took off there are still very few blogs in circulation that relates to the staffing industry. Several years after Wikipedia was born, there is still a bare page that serves worthless information to someone who wants to learn about the staffing industry. I won’t go into details right now about why I think these are not good signs, but I will say that these show that while everyone can agree that there is a ton to talk about, we aren’t discussing it either.
And this is why I am opening up this blog. To discuss my thoughts on what is going on in the staffing industry and hopefully lead the conversation.
If you made it here, thanks for coming and please excuse the dust. I have smoke coming out of my head from all the issues I’d like to open up for discussion here. Stay tuned.
Oh. And speaking of collective intelligence, I’m actively looking for other staffing industry blogs (I’ve been looking, and looking, and looking. There are plenty of HR blogs, but virtually none specifically for contingent staffing) to link to on my brand spanking new blogroll. Please leave your suggestions in the comments. I did find contingentstaffing.org. Unfortunately they have not updated since May of 2006. I’m going to read through the archives and try to figure out what happened.
Lisa out.
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About This Blog
Lisa Amorao is currently the Marketing Programs Manager for ATR International, a Silicon Valley-based contingent staffing firm.
Lisa has held roles in recruiting and sales before moving on to her current role in Marketing.
The opinions expressed here are her personal opinions and does not reflect those of her employer or any of its clients.
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