August 1, 2019

Why MSPs Need Specialist Staffing Suppliers

Way back in 1971, while discussing the “economic miracle” of Japan’s rising dominance in business output and performance, Harvard Business Review’s Peter Drucker hit on a fascinating topic that seems just as relevant today: understanding the nuanced balance between being a specialist and a generalist. Western companies, Drucker asserted, were afflicted with a sort of “tunnel vision” in their structuring of personnel. The Japanese, meanwhile, promoted a sense of continuous development where a young professional could quickly transition from production to market research to accounting. In the end, Drucker discovered an interesting paradigm—that talent in Japan remained specialists in their core areas of expertise while gaining a generalist’s knowledge of managing all the related processes. Basically, smaller boutique departments produced a bigger impact on the company’s overall operations. With that in mind, let’s explore why MSPs should focus on enrolling smaller, less generalized staffing suppliers and how niche vendors can join the ranks of these programs.

Specialists in Deed, Generalists in Thought

In striking a profound difference between 20th century business practices in Japan and the West, Drucker cited the career path of an engineer he interviewed during his research. The simple anecdote defines the essential value that smaller players bring to the larger stage.

The individual departments in an office tend to be rigidly specialized and highly parochial in the defense of their “prerogatives.” Yet the tunnel vision afflicting so many people in Western business is conspicuously absent in Japan. For instance:

The industrial engineer I quoted earlier insists meticulously on the boundaries between the industrial engineering and personnel functions. He himself never worked in any other function, from the day he graduated from engineering school to the day when, at age 55, he was made president of an affiliate company in the corporate group. Nevertheless, he knew the work of every other function. He understood their problems. He knew what they could do for his industrial engineering department and what, in turn, his people had to do for them. He is the purest of specialists in his own work, and yet he is a true “generalist” in his knowledge, in his vision, and in the way that he holds himself responsible for the performance and results of the entire organization.

In staffing, many well-established agencies continue to embrace the traditionalist mindset of attempting to staff every labor category in scope, hoping to capture the bulk of their clients’ requisitions. In some ways, the approach echoes the axiom of “let’s throw everything at the wall and see what sticks.” Such enterprises become generalists, but in a way that Drucker would likely have labeled the Western idiom. They try to be all things to all customers. Or, to use another old expression, they risk becoming “Jacks of all trades, masters of none.” They may be less willing to take risks or pursue unconventional paths toward innovation. This can result in a lack of focus and dilution of service. Whatever their core competency was—let’s say financial analysts—they may shift their attention to other roles, like QA testers, to seize more business, even when recruiting for those positions falls outside their primary skills or candidate pools.

Integrating smaller and perhaps less familiar firms into a program can help MSPs establish a more diverse supplier community. MSPs may discover that, when pitted against niche providers, some of their incumbent suppliers fall short in locating talent for hard-to-fill categories, challenging regions, or at the client’s preferred markups. Boutique agencies and those just entering the space will be striving to lay down roots in the industry. They could be more likely to offer:

  • Greater concentration on delivering specific skill sets, now and in the future;
  • Streamlined and well-organized candidate recruitment processes;
  • Experience filling specialty positions in the client’s industry, especially when emerging or niche job titles enter the picture;
  • Closer cultural alignment to the MSP and the client—shared values for the current or transforming environment (e.g., emphasis on sustainability, enhanced diversity and inclusion, common mission, etc.); and
  • A superior grasp of geographies where talent populations may seem scarce or difficult to reach for larger firms.

In an editorial response to Staffing Industry Analysts’ report on how suppliers can gain access to MSP programs, Matt Fringeli of Allegis Global Solutions (AGS) presented a crucial perspective that underscores the relevance and vital contributions of smaller suppliers:

In the past, many small to midsize companies feared they would be removed when an MSP was implemented at a client because they couldn’t support at the same level as a larger staffing organization. That’s not the case when we begin an MSP engagement. We don’t block out small to midsize suppliers. We create targeted distribution lists within our supply chain using analytics which, in many cases, enables smaller companies with a smaller footprint to have equal (if not better) opportunity to fill requirements.

Our Dynamic Sourcing Model (DSM), built using our proprietary business intelligence platform ACUMEN, enables us to provide data-driven recommendations that help us align the right suppliers to our clients. We can see where these small to midsize companies can be most effective to provide talent to hiring managers in specific geographies, labor categories or niche pockets.

There is, however, another powerful dynamic at play here, harkening back to the observations of Drucker. As specialist firms gain more exposure to MSP programs, they gravitate toward the optimal state of becoming (to paraphrase Drucker) the “purest of specialists” in their own work, while evolving into “true generalists” in their knowledge, vision, and in the way that they hold themselves responsible for the performance and results of the entire organization. This foundation of continuous development ultimately benefits the staffing suppliers, the MSPs they’ve engaged with, and the client programs they support together.

The MSP Dating Game

Sometimes, getting the notice of an MSP feels like living through a bad 80’s movie about high school dating. Or an endless swiping campaign on Tinder. Courting an MSP isn’t really much different than attempting to woo the most popular person in class—or in online matchmaking platforms. For some prospects, there’s a natural connection. For others, the experience can be a disastrous and soul-crushing foray into self-doubt and capitulation. Few, if any, suitors ever land their dream date by simply asking that person out. Begging is even worse. You have to stand out, and not necessarily in comparison to an ideal or scores of competitors, but in a way that shows mutual alignment, shared traits, uniqueness, and value in pursuing the interaction.

As SIA explained in the report we cited earlier: “Many staffing suppliers, especially small and medium sized ones, think that their chances of supplying an organization are over once the organization decides to introduce an MSP and/or VMS solution into their Contingent Workforce (CW) program. The reason for their skepticism is because they believe the aim of such a MSP or VMS program will only be interested in minimizing the number of suppliers, at the lowest possible price, and this is assumed to be only feasible for larger staffing suppliers. But is that really true?”

Turns out, the answer may be “no, it’s not true.” SIA’s research indicated that there are “huge opportunities for small and medium sized staffing suppliers, especially those who are specialized in a certain industry niche. Compared to unmanaged CW sourcing, MSP/VMS engagements provide often better opportunities to add specialized suppliers without losing management oversight or affecting efficiency and the benefits of supplier consolidation.”

SIA went on to detail 12 key focal areas for new suppliers interested in securing a spot on an MSP’s enrollment list that Oloop has taken to heart:

  • Focus on worker quality: Know your recruiting strengths and play to them with the best talent you can find for the skill sets you best represent.
  • Differentiate: Stand out from the crowd by excelling in critical areas such as redeployment, hard-to-fill roles or regions, customer service, benefits, employee engagement, the candidate experience, unique services, innovative sourcing strategies, etc.
  • Look before you leap: Make sure the program parameters, tiering models, structure (vendor neutral vs. master vendor), payment terms, and skill sets fit your business solutions and requirements.
  • Determine your limits: If you can’t effectively deliver against the existing supply base, consider passing on the opportunity. Stepping back with integrity leaves the door open in the future, where failure may become an insurmountable barrier.
  • Determine appropriate timing: Gauge the program’s direction and goals right away. If the client’s focus is on quick wins and immediate fills, rather than onboarding new suppliers, the timing could be poor.
  • Get on the MSP/VMS provider’s list: You may not be selected to join your program of choice, but that doesn’t mean you can’t move there later. SIA recommends getting on the list of your preferred MSP in another program. Success there could springboard your firm into other, more lucrative engagements with the same MSP.
  • Prepare your business: Before joining a program, you must have all your ducks in a row: communication protocols, recruiting tools, insurance coverage, certifications (if applicable), operating procedures, customer service plans, internal staff, etc.
  • Comply with CW Program policies: Participating in an MSP program means playing by the rules. Learn the policies and adhere to them; don’t attempt to bypass the MSP and contact client personnel directly. Circumventing the MSP’s compliance standards is a surefire way to end the relationship before it begins.
  • Prepare net-pricing (don’t count on volume rebates): “Most MSP providers try to avoid refunding,” SIA wrote. “Partly because it is counterproductive to their efficiency objective, but also because they don’t own the CW budget. An alternative could be to get a higher initial rate accepted, to be reduced once a certain volume has been reached.”
  • Avoid talking about options to increase pricing: Rates are usually established at the onset in a rate card by the MSP and client. There’s little point in haggling over it. Instead, concentrate on long-term, strategic wins. A solid partnership will be rewarded.
  • Prepare for growth through performance: There are seldom guaranteed volumes or requisitions when you begin with an MSP. Price your services competitively, deliver on promises, and prove your value in the program. Growth and increased opportunities will naturally follow.
  • Prepare elevator pitch: As SIA pointed out, “Some MSP providers receive many requests from new suppliers, even if they are not looking for one. Initial contact is usually over the phone, and usually short.” A sharp, concise, and compelling pitch about your strengths and differentiators will go far in retaining the interest of the MSP.

Photo by NeONBRAND on Unsplash

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