Vendor Management 101
by Bob Corlett Tuesday, February 17, 2004
Bob Corlett is the founder and President of Staffing Advisors. He developed The Results-Based Hiring Process® and is one of Washington’s best known thought leaders on staffing and recruiting. Thousands of HR executives and business leaders receive Staffing Advisors’ popular newsletters and read his blog – The Staffing Advisor. In his volunteer work, Bob runs the Staffing Alliance of Maryland Employers.
Full Bio
“In many service-driven companies—including some manufacturers—the relevant driver of learning potential is not a company’s worldwide market share or cumulative production volume. Rather it is how long individual employees have interacted with specific customer, vendor and fellow employees in their specific niches in the company’s business system. Companies don’t learn, individuals do, and their learning takes time. In companies where employees perpetually leave in mid-career, learning is forever falling back to nil.” Frederick Reichheld “The Loyalty Effect”
Do you consistently get what you really want from your staffing vendors, or have you tried several vendors and been consistently disappointed? Have you been with the same vendors for more than five years on a sole-source exclusive basis, or have you not yet found a vendor worthy of that relationship? If you feel like you are seeking long-term partnership while your vendor is seeking short-term profit, this article may help you break the cycle of vendor disappointment, while building the foundation for a lasting partnership.
I believe that two commonly held misunderstandings about staffing vendors often trap employers in an endless cycle of disappointment and frustration. Before you spend months breaking in a new vendor, you might want to spend a moment considering whether your own assumptions contribute to the problem. You may find that a quick review of your procurement practices can save you many hours of frustration.
Misunderstanding number one: “Staffing firms are ‘all the same’ because they all draw from the same pool of people.” While it is true that any one candidate might consider working with a variety of staffing agencies, each firm will attract very different candidates depending on their recruiting strategy and the caliber of jobs they offer. Quite simply, the agencies that have relationships with the best employers and offer the best service to candidates attract the best people. Agencies vary enormously in their ability to intelligently match candidates with clients, typically as a direct result of their culture, training and management philosophies. From my work with literally hundreds of staffing firms, the differences can be striking. If all staffing firms look and sound the same to you, perhaps you are not looking in the right place. The best measure of a staffing vendor is almost never mentioned in their marketing literature and rarely mentioned in a sales call. The best measure of a vendor is how well they retain their internal staff and the strength of their references from similar clients that they have served for several years on a sole-source exclusive basis. For a free insider’s guide to vendor evaluations, visit the Staffing Advisors website at www.staffingadvisors.com.
The second common misunderstanding is that “All vendors lose interest in old accounts and therefore service will inevitably decline over time.” Employers concerned with this issue often employ several procurement strategies to “keep vendors on their toes” - typically by constantly threatening to use another vendor. In temporary staffing, the most common ploy is to keep two or three staffing firms in constant competition for every order. While these approaches may be useful in purchasing commodities like office supplies, they are disastrous in purchasing labor. Labor is not a commodity and, as mentioned earlier, the services of one firm are not always interchangeable with services from another. This is best illustrated by an old axiom within the staffing industry. “The adequate is never replaced by the excellent.” If a client places the same order with three different staffing firms, the first one to present an adequate candidate will earn the business. If an excellent candidate surfaces a day after the hiring decision is made, they will not even be considered. In the simple act of using three firms at once, the employer has trained all three vendors not to do what it takes to recruit the best candidate, but instead to recruit an adequate candidate as quickly as possible. Hardball purchasing tactics train vendors to ignore the client’s long term best interests, and work only to maximize the vendors’ short-term interests. New vendors cannot break the cycle of mistrust; they can only play by the rules the employer establishes. This multiple vendor strategy mainly attracts less selective firms who must constantly win new accounts to replace lost accounts. This is hardly the foundation for lasting partnership.
The time to negotiate with vendors is before you select them, not after you have already given them an order. If you evaluate and select vendors more carefully, their service can and should continuously improve over the years. Just as casual vendor turnover can destroy value, long-term vendor retention can create value. Every interaction with your staffing vendor further trains them in your business, in your needs and your preferences. Over the years this investment in understanding creates an enormous base of knowledge that can be used to make better matches between candidates and jobs.
Do you consistently get what you really want from your staffing vendors, or have you tried several vendors and been consistently disappointed? Have you been with the same vendors for more than five years on a sole-source exclusive basis, or have you not yet found a vendor worthy of that relationship? If you feel like you are seeking long-term partnership while your vendor is seeking short-term profit, this article may help you break the cycle of vendor disappointment, while building the foundation for a lasting partnership.
I believe that two commonly held misunderstandings about staffing vendors often trap employers in an endless cycle of disappointment and frustration. Before you spend months breaking in a new vendor, you might want to spend a moment considering whether your own assumptions contribute to the problem. You may find that a quick review of your procurement practices can save you many hours of frustration.
Misunderstanding number one: “Staffing firms are ‘all the same’ because they all draw from the same pool of people.” While it is true that any one candidate might consider working with a variety of staffing agencies, each firm will attract very different candidates depending on their recruiting strategy and the caliber of jobs they offer. Quite simply, the agencies that have relationships with the best employers and offer the best service to candidates attract the best people. Agencies vary enormously in their ability to intelligently match candidates with clients, typically as a direct result of their culture, training and management philosophies. From my work with literally hundreds of staffing firms, the differences can be striking. If all staffing firms look and sound the same to you, perhaps you are not looking in the right place. The best measure of a staffing vendor is almost never mentioned in their marketing literature and rarely mentioned in a sales call. The best measure of a vendor is how well they retain their internal staff and the strength of their references from similar clients that they have served for several years on a sole-source exclusive basis. For a free insider’s guide to vendor evaluations, visit the Staffing Advisors website at www.staffingadvisors.com.
The second common misunderstanding is that “All vendors lose interest in old accounts and therefore service will inevitably decline over time.” Employers concerned with this issue often employ several procurement strategies to “keep vendors on their toes” - typically by constantly threatening to use another vendor. In temporary staffing, the most common ploy is to keep two or three staffing firms in constant competition for every order. While these approaches may be useful in purchasing commodities like office supplies, they are disastrous in purchasing labor. Labor is not a commodity and, as mentioned earlier, the services of one firm are not always interchangeable with services from another. This is best illustrated by an old axiom within the staffing industry. “The adequate is never replaced by the excellent.” If a client places the same order with three different staffing firms, the first one to present an adequate candidate will earn the business. If an excellent candidate surfaces a day after the hiring decision is made, they will not even be considered. In the simple act of using three firms at once, the employer has trained all three vendors not to do what it takes to recruit the best candidate, but instead to recruit an adequate candidate as quickly as possible. Hardball purchasing tactics train vendors to ignore the client’s long term best interests, and work only to maximize the vendors’ short-term interests. New vendors cannot break the cycle of mistrust; they can only play by the rules the employer establishes. This multiple vendor strategy mainly attracts less selective firms who must constantly win new accounts to replace lost accounts. This is hardly the foundation for lasting partnership.
The time to negotiate with vendors is before you select them, not after you have already given them an order. If you evaluate and select vendors more carefully, their service can and should continuously improve over the years. Just as casual vendor turnover can destroy value, long-term vendor retention can create value. Every interaction with your staffing vendor further trains them in your business, in your needs and your preferences. Over the years this investment in understanding creates an enormous base of knowledge that can be used to make better matches between candidates and jobs.