The Eagle Blog

A Staffing Model that Works!

I have been in the workforce for way too long to mention, and in the staffing industry for a little more than twelve (12) years. One of the trends that I have observed in our industry is a move to bring in external “supply chain experts” to effect savings from the supply of contingent labour. The typical modus operandi of these consultants is to destroy the client/vendor relationships and hammer down the suppliers to the point that they question why they actually want to be there anymore. Some suppliers choose to exit from the relationship right away, others plan to reduce their dependency on the client over time and others just change their levels of service to match their compensation and ride it out until either the client “boots them” or realizes things are just not working!

It does not have to be like this!

In Canada, the Canadian staffing companies know and understand this business. The business leaders of these companies would be happy to work cooperatively with our clients to effect efficiencies that will bring significant savings, without major impact on delivery. Save yourself the “expert’s” fees (I do believe my friends at AT Kearney got $24 million from the Federal Government!). Here is Kevin’s plan to implement an effective, cost-efficient model for hiring contract resources.

1. Adopt a standard bill rate card. Use your existing suppliers to help you develop it. Map your existing contractor base against that rate card to determine your potential go forward savings. The rate card should be ceiling rates that the suppliers compete below!
2. Implement internal standards for bringing in resources. Eg. Compete every position; There needs to be at least 3 suppliers bidding on the position; No rates above the rate card with special permission (or hot skills premium); No “friends and family” for payrolling; Payrolled contractors must be benchmarked against candidates from approved suppliers; etc.
3. Implement a “supplier council” with executive representation from your major suppliers. Meet with this group regularly for discussion about what is working/not working; ideas for improvement; rate card changes (up and down).
4. Implement a reporting system where every supplier provides a monthly report detailing every contractor placed, their rate and how they fare against the rate card. Explanations for variances should be included.
5. Have a standard set of terms and conditions to be applied by all agencies.
6. If there are concerns from your legal department about co-employment (usually driven by US knowledge), then involve your supplier council for the real scoop.
7. In the IT space this process should be managed by IT with help from procurement.

The Financial Post ran a supplement recently devoted to demographic pressures and an impending shortage of skills across the board. This article suggests that 40% of the North American workforce is due to retire in the next four (4) years. I had a blog entry about the aging workforce back in May. If companies do not get these staffing issues under control before then in a sustainable manner, they are going to be in big trouble!

There … I just saved you a few dollars! ($24 million of my tax dollars was it?)


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4 thoughts on “A Staffing Model that Works!

  1. I’m surprised that you recommend a ‘rate card’ system to clients. I was under the impression that because the market can fluctuate significantly within a set period of time (ie. over the course of a year), a set rate table would cause suppliers to have limited access to specific resources at fluctuating market rates.

    I can see the value of clients putting controls around their use of contractors to avoid paying more than market value, but wouldn’t putting each role out to competiting firms and hiring based on current market rates suffice?

    Couldn’t this potentially lead to a ‘bidding war’ that would cause a client to end up with a rate table that would be too low to attract the best talent in the marketplace?

  2. I’m surprised that you recommend a ‘rate card’ system to clients. I was under the impression that because the market can fluctuate significantly within a set period of time (ie. over the course of a year), a set rate table would cause suppliers to have limited access to specific resources at fluctuating market rates.

    I can see the value of clients putting controls around their use of contractors to avoid paying more than market value, but wouldn’t putting each role out to competiting firms and hiring based on current market rates suffice?

    Couldn’t this potentially lead to a ‘bidding war’ that would cause a client to end up with a rate table that would be too low to attract the best talent in the marketplace?

  3. The rate card works very effectively IF it is reviewed regularly, otherwise you are right there would be the potential to have a rate card that is out of step with the market.

    My recommendation is a monthly review of the rate card against actual market feedback. This can be very effective if there is good communication between the client and their suppliers, together with a standard reporting structure (either automated or not). Again, my suggestion is for a “supplier council” or some form of senior supplier representation working together with the client regularly (monthly?).

    One other observation would be that this is a model for clients that use lots of contractors. The ROI for both supplier and client would be minimal where only small numbers of contractors are utilised.

  4. The rate card works very effectively IF it is reviewed regularly, otherwise you are right there would be the potential to have a rate card that is out of step with the market.

    My recommendation is a monthly review of the rate card against actual market feedback. This can be very effective if there is good communication between the client and their suppliers, together with a standard reporting structure (either automated or not). Again, my suggestion is for a “supplier council” or some form of senior supplier representation working together with the client regularly (monthly?).

    One other observation would be that this is a model for clients that use lots of contractors. The ROI for both supplier and client would be minimal where only small numbers of contractors are utilised.

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