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VENDOR NEUTRALITY IN MSP: THE DEBATE RAGES ON ONE THING HR AND PROCUREMENT CAN AGREE ON

BLURRED LINES:

AN MSP AND RPO MARRIAGE OFFERS TALENT BENEFITS © 2014 Yoh Services LLC | A Day & Zimmermann Company

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WHAT’S INSIDE 03 Blurred Lines: An MSP and RPO Marriage Offers Talent Benefits

10 Vendor Neutrality in MSP: the Debate Rages On

15 One Thing HR and Procurement Can Agree On


BLURRED LINES:

AN MSP AND RPO MARRIAGE OFFERS TALENT BENEFITS For years, the choice was simple. If it’s contingent, temporary employment, then line up on the left side and let procurement or an outside managed service provider (MSP) handle it. Permanent recruitment, line up on the right so HR managers or recruitment process outsourcing (RPO) might take the lead. But a funny thing happened on the way to the silos. Enterprises realized strategy trumps legacy. Lines are blurring as companies are now integrating best practices for recruitment regardless of whether found on the contingent or permanent side of the equation.

The walls between temporary and permanent employment are crumbling and enterprises are better off for it. The tightly bound chains that once separated and segregated contingent and permanent staffing are not so clear anymore. Domain authority is shifting as procurement works to integrate more with HR and as the distinctions between MSP and RPO become less clear and definitive.

The reasons are many. It starts with a shifting workforce. After a brutal jobs recession that is just now resuscitating, many employees learned to stop viewing their careers through long-term prisms. Š 2014 Yoh Services LLC | A Day & Zimmermann Company

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In fact, many have come to realize that a more fluid, short-term “gig” economy isn’t so bad. Surprisingly, contingent assignments sometimes fit better with more flexible lifestyles that balance work and life in appealing new ways. By-the-hour contingent work, if lived well, can allow employees to put their job away at the end of the day and focus more on family, avocations, continued education, or even more thorough job searches—which could lead to permanent positions with the very companies where they are temping!

At the same time, employers have come to view workforce planning not in terms of discrete, siloed processes, but rather holistically with the business objective of finding and recruiting the best possible talent. What does it matter if that quest is the result of a permanent search, controlled and managed by HR or an RPO provider, or if it comes from procurement’s management of a contracted MSP? Integration is spurring innovation with the intended benefit of streamlining the talent acquisition pipeline.

The twains are meeting. “The shift is seismic in some instances,” begins Robin Johnson, Senior Vice © 2014 Yoh Services LLC | A Day & Zimmermann Company

President of Enterprise Solutions at Yoh. “We’re seeing corporations completely revisit assumptions that date back a decade with regard to how and why permanent and contingent recruitment was separated in the first place, and how integration might streamline and shortcut time to fill. At the same time, these same companies are realizing that sharing best practices over both sides of the recruitment fence can provide for a more agile enterprise, better able to build recruitment pipelines that assure the best possible talent is available at the time a position opens or a new initiative requires hiring.”

Take, for instance, one global consumer electronics company that works with Yoh. Today, gaming represents nearly 12 percent of that company’s worldwide revenue. But building a game for market is a Herculean task, requiring armies of full-time and contingent workers. The entire game development may have taken years to conceive, plan, and execute, a task best managed by full-time employees. But along the way, in coding, testing, and any number of points along the development line, highly skilled contingent employees are needed to identify and eliminate bugs and anomalies from the gaming experience.


In 2013, this international company realized it needed a new, more flexible staffing model. Drawing best practices from the contingent management theories of MSP as well as the proven tactical advantages of RPO, the company transitioned to a holistic approach to managing its permanent and contingent employment mix. It outsourced the program to Yoh, whose unique market position within both RPO and MSP gave it deep insights into the benefits and best practices of each.

“The ‘aha’ moment came when we realized that our talent pool often does not categorize itself as permanent or contingent. They see themselves as programmers, or artists, or coders, or testers first and foremost. The length of the assignment or status being subordinate to their love of gaming and their desire to work on the next great blockbuster as part of an integrated team of both permanent and contingent associates,” says Jon Grosso, VP of Managed Services at Yoh. “The workers they use fill different roles at different times during development. Having access to great talent for long- and short-term phases or specific roles is a matter of what levers the client pulls and when they pull them. Having it all in a single program increases visibility and allows them to leverage their brand while having a centralized point of management and control.“ © 2014 Yoh Services LLC | A Day & Zimmermann Company

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Integration also provided one additional strategic advantage. By merging contingent with permanent, this global CE company was able to create froth inside its recruitment pipeline, increasing flow and velocity. “Contingent hiring can often generate more candidates, more quickly, some of which may be better suited for permanent positions,” says Grosso. “Quantity is never the name of the game. But the ability to see more candidates can play a role in recruiting very specific talent that flows from the active nurturing of a talent community.”

Yoh offers these best practice recommendations for any organization looking to win higher quality talent while reducing total cost and time to fill:

1. Understand the changing nature of the American workforce. As we inch closer to a shorter-term employment economy, the distinction between permanent and contingent labor matters less to talent than the opportunity itself. The aforementioned gaming case study serves as one example but that experience is applicable to a wide range of industries, from IT to health care to engineering.

The corollary: Forget the length of the engagement and focus on finding the best talent available.

© 2014 Yoh Services LLC | A Day & Zimmermann Company

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2. Weed out inefficiency regardless of siloed pockets of power. Procurement and HR both hold authority

4. Seize the efficiency of fewer, more integrated providers, the single throat to choke. Juggling

when it comes to hiring, but dividing their efforts only adds inefficiencies. Both need to be on the same page so that in the end it’s not all about lowest hourly costs, but rather about finding quality employees who might someday transform into permanent workers.

separate providers for MSP and RPO can lead to conflicting interests, competing priorities, and mixed signals in the employment marketplace. Distinctions are becoming more negligible given the dynamic nature of the American employment landscape.

The corollary: Integration between procurement

The corollary: Efficiency isn’t just about bottom-

and HR is the new rallying call for enterprises eager to reap the benefits of an improving economy and that need to move quickly to capitalize on fresh opportunities through the quality of their talent.

dollar savings. It’s also about streamlining management’s involvement by reducing the number of vendors from a slate to a single, highly skilled, and accountable partner.

3. Deliver a singular recruitment brand in the marketplace. More and more, workers are

5. Gain intelligence by testing new models. Live in

responding to the employment brand of employee-seeking employers. Siloing between procurement and HR -- between RPO and MSP -opens the door to brand confusion and diffusion.

a silo, die in a silo. The limits of closely cropped worldviews deny an organization the ability to grow, evolve, and borrow from best practice learnings from other areas of the organization or outside providers.

The corollary: Socialize your recruitment brand

The corollary: Use integration as an opportunity

throughout the organization, centralizing control to improve its clarity and power between all recruitment initiatives in all channels, be they traditional or digital and social.

to find winning solutions around which you can focus your recruitment practices, lower costs, improve outcomes, and ultimately attract quality talent at the time of need.

© 2014 Yoh Services LLC | A Day & Zimmermann Company

The limits of closely cropped worldviews deny an organization the ability to grow, evolve, and borrow from best practice learnings from other areas of the organization or outside providers.

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As the lines between contingent and permanent staffing continue to blur, the regimented division of recruiting is breaking down. RPO providers and MSPs, once given their own domains, must increasingly work in concert to reach a workforce more receptive to either long-term or short-term employment as expectations and lifestyle demands shift and evolve. As new hybrid recruitment models take hold, enterprises are learning there’s much to gain from both sides of the table, whether it’s RPO versus MSP or the sometimes conflicting priorities of procurement and HR.

© 2014 Yoh Services LLC | A Day & Zimmermann Company

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ON THE FENCE Š 2014 Yoh Services LLC | A Day & Zimmermann Company

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VENDOR NEUTRALITY IN MSP:

THE DEBATE RAGES ON

How can something that sounds so good—neutrality— h a v e a n y n e g a t i v e r e p e r c u s s i o n s ? We l l , w h e n i t comes to vendor neutrality in temporar y employee recruitment, there are t wo sides to the argument.

On the one hand, when a company outsources its temporary recruitment needs to a managed service provider (MSP), it wants the best quality talent, regardless of the source. So that lends credence to this notion of non-neutrality—meaning the MSP can draw from its own lineup of candidates to fill its client’s positions.

© 2014 Yoh Services LLC | A Day & Zimmermann Company

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On the other hand, it could be argued that an MSP, with its insider knowledge of client demands, could rig the process, opting to overweight the candidate pool with its own resumes—a more profitable approach for the MSP yet arguably less effective for the client’s stated objective of finding the best possible talent.

Complicating the issue, the very definition of vendor neutrality isn’t universally agreed upon. For many it means the MSP abstains from finding talent. To others, it simply means a level playing field—the MSP offers its candidates but is treated like any other supplier.

Which argument is right? Here’s the debate laid before you:

Argument 1: If an MSP can fulfill, won’t it be motivated to only provide its own candidates, optimizing its revenue to the detriment of the client? The truth is that with the recent growth in demand for temporary workers, it’s rare that a single provider can fill all or even a majority of openings. An effective

© 2014 Yoh Services LLC | A Day & Zimmermann Company

recruitment strategy is to concentrate on those providers with unique expertise in a vertical and require your MSP to work with those firms that can tap the appropriate talent pool. Sometimes, that might include your own MSP. At other times, maybe not. Because the MSP signs up to fill all of the client’s jobs, it needs to have the best suppliers (possibly even themselves) working to meet their client’s needs. If they don’t and it impacts the client, they won’t be the MSP for very long.

Argument 2: Shouldn’t MSPs serve as independent, thirdparty managers of the temporary recruitment process? If they can fulfill on openings, d o e s n’t t h at t h row o f f t h e i r i m p a r t i a l i t y ? It depends on the client’s business objective. If the objective is somehow compliance with an internal goal of impartiality, then independence is important. However, if the end game is to find the best possible talent and closing the time to fill on urgent openings, then a wider net will catch bigger and better fish, which undermines the argument for neutrality.

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Argument 3: If the MSP can fulfill, it makes it impossible to determine the real interests, and monitor and track the effectiveness of your temporary recruitment strategy. Not so, if the client is clear in its objective and demands transparency from its MSP. Then there’s little to worry about when using an MSP that can also fill from its own roster of candidates. Since most MSP engagements enlist the help a vendor management system (VMS) to track all activity and supplier performance, there should be no issue as long as an MSP is tracked and held to the same standards as all other suppliers. If they’re performing, it’ll show. If they aren’t, it’ll be just as apparent. Again, the end game should be finding the best possible talent, at the best possible price, in the shortest amount of time. If the MSP can track and verify on that matrix, then it matters not where the candidate originates from. This is the level playing field for all that should be the focus of vendor neutrality.

Argument 4: Won’t other suppliers simply not participate in a managed staffing program if they know the MSP is also a provider? The MSP model is now a mainstream, accepted © 2014 Yoh Services LLC | A Day & Zimmermann Company

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model in the staffing industry. Some suppliers choose not to participate, but many see it as an opportunity to gain access to jobs and clients they wouldn’t otherwise have. If they feel that the playing field is level and the MSP will provide good, open communication with suppliers (and possibly allow some direct communication with hiring managers), then it’s a win-win for both the supplier and the MSP. The MSP fills more jobs for the client by having good suppliers, and high-performing suppliers have more opportunities. MSPs that hoard jobs or don’t give suppliers an opportunity to perform often fail in short order. In the early days, this was more common. With today’s technologies and educated clients, there’s no place to hide if you’re not delivering as the MSP.

Argument 5:

organization needs to grow and win in an increasingly fluid labor market.

Vendor neutrality should mean nothing more than a level playing field for all. If that’s created, and good relationships are established with suppliers, jobs will get filled and both the MSP and the supplier win. If fairness is ever in doubt, a VMS will make it obvious. But in the end, the decision on vendor neutrality lies with the client, and only the MSPs that are honest and fair in implementing the best solution for a client will ever be successful.

MSPs that hoard jobs or don’t give suppliers an opportunity to perform often fail in short order. In the early days, this was more common. With today’s technologies and educated clients, there’s no place to hide if you’re not delivering as the MSP.

But isn’t neutrality always a good thing? It’s funny how something seemingly good might not be all good or all bad. Think of the Affordable Care Act. Don’t let the semantics fool you. There are pros and cons on each side. But in the end, partnering with an MSP always comes down to the same goal: the need to acquire the game-changing talent your

© 2014 Yoh Services LLC | A Day & Zimmermann Company

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2 PEAS IN A POD Š 2014 Yoh Services LLC | A Day & Zimmermann Company

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ONE THING

HR AND PROCUREMENT CAN AGREE ON One lasting effect of the recent recession is the want of American businesses to continue to closely manage their staffing requirements in order to maintain the efficiencies and nimbleness gained during tough economic times. Perhaps nowhere is this fact seen more clearly than in the composition of today’s labor force. A surprising 16 percent of the American workforce today consists of temporary or contingent employees. That’s up from 11 percent in 2005. And as the economy makes a turn for the better, the number of temporary workers has jumped 8.5 percent in the last year alone.

While the growing interest in contingent labor offers the enterprise new agility and cost savings, it also sometimes drives a wedge between two camps of decision makers: Procurement and human resources (HR). That’s mainly due to competing priorities in building a quality contingent workforce. While procurement is focused on controlling the short-term cost impacts of hiring talent, human resources typically directs its © 2014 Yoh Services LLC | A Day & Zimmermann Company

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attention to compliance, retention, and the inherent long-term cost advantages of hiring the right people for the right positions.

While reconciling these differences is often an uphill battle, payrolling is one strategy that can bridge the divide, offering the best of both worlds to procurement and HR. This strategy is used by many companies who have large or small numbers of workers they already know and have worked with in the past, but for various reasons do not want to hire as employees.

Put simply, payrolling displaces the time, effort, and cost of onboarding pre-identified contingent talent onto the balance sheets of an outside managed service provider (MSP). The client calls upon the MSP to provide a specific contingent employee they’ve worked with before. It might be a recent retiree, a former employee, a freelancer, or a consultant with whom the client had a strong working relationship. The MSP delivers the exact worker on its payrolls at the precise moment of a client’s need.

Though not new, payrolling is again back in vogue

Š 2014 Yoh Services LLC | A Day & Zimmermann Company


with large enterprises now that employment is picking up and procurement and HR are being pressed to set aside differences and focus on filling the assignments needed for growth. And in many ways, payrolling satisfies the understandable demands of both procurement and HR.

From procurement’s perspective (and possibly finance as well), payrolling done correctly saves costs by reducing the internal administrative needs that accompany a new hire and sidestepping the cost of many corporate benefits—avoiding legal complications and challenges. For HR, payrolling does away with the long and tedious screenings and avoids all the compliance issues, administrative burden and onboarding processes that typically accompany new employees, by quickly delivering a candidate that will meet the needs of the project or assignment.

Is payrolling right for your enterprise? Consider: 1. The importance of shortening time to hire. With the economy heating up, time to hire is a critical consideration in meeting a company’s growth phase, payrolling offers the fastest route to securing the pre-identified contingent workers you need. © 2014 Yoh Services LLC | A Day & Zimmermann Company

2. Can payrolling save costs by sidestepping administration and costly benefits? Benefits alone account for nearly a third of the compensation of an average full-time hire. Payrolling can avoid some of these costs by displacing the employment relationship on MSPs that will be the employer of record and responsible for employment costs and benefits.

3. Are you interested in having contingent workers who have already been test driven and approved? Under payrolling, the temporary workers you source have already been vetted in real world work situations within your company, allowing them to hit the ground running.

4. Is your real interest in reducing the total costs of hiring—not just controlling the shortterm expense? Then payrolling provides a better long-term glide path that allows you to land the talent you want, now, and make a larger impact on your organization.

5. Can you realize compliance or a legal advantage through payrolling? As employee counts trigger p. 17


increasing health care requirements and other regulations, payrolling is increasingly being used to manage the growing cost of compliance.

While HR and procurement might view the world through separate lenses, their epic battles are coming to an end. More and more, payrolling offers a solution that meets the needs of two disparate camps and is increasingly becoming a staffing tool of choice for companies eager to maintain the flexibility and agility learned during the recession but still important now that growth is the new rallying cry within the enterprise.

Š 2014 Yoh Services LLC | A Day & Zimmermann Company

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YOU NEED IT. WE HAVE IT.

Yoh is here. Yoh is there. Yoh is virtually everywhere. All in and busy going all out, doing everything it takes to take you where you want to go – forward. How? By foregoing the talent pool in favor of our own sea of talent, helping you find just the right person for the job or just the career you’ve been searching for.

Yoh magazine july14