As the workforce continues to evolve and transform, thanks to new economic models and vocational paradigms, the way we manage talent must adapt and change alongside it. The shortages in sought-after skills and talent in general have made the acquisition and retention of human capital one of the most pressing concerns in business today. As Rita O’Donnell wrote in The Predictive Index, “With a new focus on employees, smart companies are looking to support core business strategies with strong talent acquisition, growth, and retention initiatives. The result for human resources is an inroad to upper management. HR may be vying for a seat at the boardroom table or collaborating on workforce plans that meet operational goals. Today’s best HR professionals aren’t the compliance officers of old: they’re partners in strategic planning, driving businesses to success.” Interestingly, the same can be said of managed services providers (MSPs), who are rapidly moving from the transactional to the strategic.
Human Resources, Your New Strategic Partner
“Upskilling existing employees to maximize their capabilities for today is a high priority,” O’Donnell explained. “And future-proofing business and employees for the twists and turns digitization and the market lob their way is mission-critical.”
She added that “when HR collaborates with the C-Suite, the needs of the business guide the actions of human resources: the actions of human resources help the business achieve its goals. In top-performing HR departments, this synergy drives every task and initiative.”
Outsourcing Transactional HR to Bolster Internal HR Innovations
Fluctuating market dynamics haven’t just reshaped the nature of work, they’ve forced a reinvention in the roles of people who help oversee that work. The contributions of HR professionals are expanding beyond benefits administration and compliance. Business leaders seek to build teams of thoroughly motivated, skilled, and engaged people; and they’re treating talent as most significant contributors of their competitive advantage. Following suit, functions which were traditionally managed by HR professionals have now been Business Process Outsourcing (BPO) providers. This enables HR teams to focus on core responsibilities and strategic areas where HR innovations will translate to significant business results.
HR leaders now find themselves with a unique opportunity to focus their attention on the people issues affecting the business performance of their organizations. Many of these issues correspond to implementing new talent strategies such as aligning employee goals and team goals with the strategic goals of the organization. Outsourcing some roles to a BPO or enlisting the aid of a qualified HR consultancy may drive results. But what happens when an enterprise-wide contingent labor program comes into the picture? For companies that already have an MSP in position, the answer could be self-evident. Like HR, MSPs are also accelerating their progress toward becoming valued strategic business partners, particularly for the sometimes complex integration of non-traditional employees and contingent talent.
MSP as Strategic Advisor
MSPs have keen insights, essential data, and experience across disparate businesses that benefit HR leaders and hiring managers in mapping out their goals. By including MSPs in business growth and planning initiatives, clients can strengthen the outcomes of their contingent workforce.
Clients face challenges across several fronts. They are desperately seeking top talent to fill in-demand positions, but time and resource constraints conspire against them. Their workloads have become more demanding, they’ve been stretched by lean operations that attempt to contain overhead costs, and they have fewer people in key positions to perform the work. It doesn’t end there, It seems that with each new quarter, managers must confront a fresh batch of pressing responsibilities, operational goals, and mounting pressure to innovate and optimize processes. MSPs, with their resources, expertise, and data, can become an untapped goldmine for strategic planning.
The primary motivation for MSPs is to deliver the right talent at the right price and at the right time. Making the program equitable for all parties involved—clients, suppliers, and workers—is tantamount to their success. Leading MSPs balance the need to deliver the best possible talent with fiscal responsibility. They accomplish those objectives using tools such as market rate intelligence, people analytics, labor economics, rate controls, supplier surveys, and data aggregation across client programs.
MSPs also develop cost-savings plans with their clients. Together, they determine the data to be measured, the sample size, the reporting frequency, and the format. The process becomes a comprehensive and collaborative cost savings analysis in which the MSP reviews pay and invoice rates, supplier markups, tenure policies, discounts, and more. The MSP also identifies the risks and countermeasures associated with implementing the strategies.
When budgets are created and overseen at the enterprise level, they sometimes omit the instrumental input of department managers. However, this input is essential to effective planning and forecasting. Together with MSPs, hiring managers can identify upcoming expenditures or savings opportunities that may have been missed by executives removed from the frontline:
- Rate standardization (bill rates, market-based pay rates, markups)
- Locally and nationally leveraged supplier discount opportunities
- Evaluation of supplier agreements and program structures, with recommendations for improvements gained from lessons learned across a variety of client organizations and industries
- The introduction of supplier competition and tiering
- Benchmarking and rate analysis for positions and the market
- Strategic management of workforce turnover and overtime
MSPs Promote Visibility
The ability to make informed decisions using reliable real-world data is vital to the success of business planning. MSPs enforce controls across the enterprise and ensure that all contingent work is captured in a vendor management system (VMS) or similar technology. This gives clients visibility into all aspects of the program: the overhead, the costs, demand planning, and forecasting. The reporting capabilities of the VMS deliver analytics that allow MSPs to drill down into market dynamics and then provide that insight to hiring managers. Examples include:
- Spend by job category
- Spend by location, division, or department
- Job category spend by supplier
- Job category spend by business unit
- Supplier diversity
- Fill times
- Requisition trends that include peaks, valleys, and seasonal demands
- Market rate analytics to determine whether margins or pay rates correspond to the acceptable industry range for specific titles, locations, managers, business units, or staffing partners
The datasets collected by MSPs provide hiring and HR managers with a trove of information that can be used to forecast demands, usage, and financial considerations for near-term and long-term aspirations, while eliminating rogue spend.
Uncovering Market Opportunities
Budget and resource planning requires a level of transparency that extends beyond the organization. It’s just as crucial to understand the external factors of the market. MSPs use a variety of methods to compile market rate intelligence:
- Existing data captured in the client’s current HRIS, ERP, VMS, or other database system
- Data mining through internal databases and outside sources for specific labor statistics, cost data, and market dynamics
- Staffing supplier data specific to job titles and work locations
MSPs combine these data sources to create matrices with recommended rate strategies, and then determine the best rate card to support the hiring manager’s business goals. They review rates regularly to ensure that changes in market demand and statutory costs are captured. By nature of the program design and contractual agreements, MSPs can enforce adherence to these controls across the supplier base.
In a larger corporate context, MSPs properly manage purchase orders (POs) to make it easier for accounting professionals to determine financing needs. Increased accuracy in this area mitigates the need for clients to borrow as much money to cover short-term cash flow, thereby reducing charges.
Even in outsourced contingent labor programs, retention is key to the success of the engagement. MSPs and their staffing partners excel at placing the best matched talent to the role, which contains costs and significantly speeds up time-to-productivity.
More importantly, MSPs and their staffing partners substantially reduce the risk of attrition through comprehensive onboarding programs. They have cultivated and mastered their onboarding experiences across clients, creating repeatable, continuously improving, and transferable practices that enhance acculturation and retention for every organization. With a more stable and informed indicator of worker longevity, HR and hiring managers have the advantage of developing strategic plans that are less likely to encounter unexpected disruptions or gaps.
New Business Demands, New Business Partners
The potential contributions that MSPs can bring to organizations should not be discounted. MSPs have access to past experiences, data, market intelligence, and business planning acumen that can strengthen the outcomes for expanding businesses. And as we’ve seen lately, a lot of MSPs are tailoring their solutions to fit businesses of all sizes, bringing their tools and insights to a wider array of evolving companies.