Driving Cost Out Of The Contingent Labor Supply Chain

Another winning post title.

When I speak with a procurement professional, the discussion always comes around to bill rates for contingent labor and how our rates compare to others. The importance of low bill rates is constantly impressed upon me, and the offering of most favorable pricing and terms is a requirement to win the contract. Then, the next items discussed are service levels and the added value that I as a supplier of contingent labor can provide to my clients.

I wonder whether this has been given real thought. It seems to me that to drive costs down in the contingent labor supply chain, there needs to be efficiencies in both the supplier AND client organizations. For example, that coverage SLA that the supplier needs to meet? It INCREASES costs to the client because the supplier has to staff recruiting to cover requirements they have no hope in ever filling.

To date most of the discussion in the IT space has been aimed towards the supplier, and solely in the form of rate management. Rates are only one aspect of managing cost. What about sales costs? Administrative costs? Recruiting costs? The cost of a reactive supplier model vs. a more proactive model?

For example, there are many clients that require the assistance of a skilled sales person to help them define their IT staffing need. The sales person has to spend time with the hiring manager, be knowledgeable about the technology and role, and step the hiring manager through definition of their need. Then, the sales person has to accurately communicate this need to internal recruiters who screen and match up candidates with the position, rewrite the candidate's resume', and present the candidate.

Think of the costs incurred by the supplier:

- Sales person salary
- Recruiter
- Time spent: determining need; communicating to recruiter; finding, recruiting, screening and presenting candidate.

This doesn't even get into the interview phase. When the hiring manager decides who they want to interview, the sales person is contacted, then a series of back and forth communications to get the candidate confirmed occurs, candidate prep is done, and then we go from there.

Now, what if it worked like this:

Client company regularly communicates contigent labor forecast for the next 30, 60, 90 days so supplier is able to proactively recruit talent. Hiring manager goes to a portal where he can search through a pool of available candidates from approved vendors. Hiring manager selects candidates they want to interview and sends an interview request along with available times. Candidate and vendor respond back through the portal. Interview happens.

A lot of cost is eliminated in this type of model. There is really no "selling" going on at the transactional level. The supplier's role becomes more of a "resource pool management" and "fulfillment" type of role, and the sales person really becomes more of a true Account Manager, ensuring the process moves smoothly, and that the supplier focuses on value adds rather than managing the individual transactions.

There are other variations of the supplier model, and there are parts of the current processed that can be greatly improved with minimal cost. Still, the point is that a mature client organization and a mature supplier organization can work together, collaboratively instead of adversarially, to effectively to minimize costs in the supply chain, benefiting both organizations directly through cost saving efficiencies and indirectly through increased competitiveness in their respective markets.

So far, the vast majority of the dialog I have read or been exposed to has happened solely within the supplier community or solely within the client community.

I wonder what would happen if a group of supplier organizations with relatively mature processes and a group of client organizations with relatively mature processes got together and discussed how to make the contingent labor supply chain more effective and drive cost out of the process. Think of the discoveries that could be made and the "light bulb moments" that could occur when both client and supplier organizations look at the process as a whole, and work together to optimize it.

Nah, it'll never happen.

You 2.0

OK, so the title is a bit cliche', but so were the others I came up with.

I talk to people all the time, and in particular I come into contact with a lot of folks who are looking for a new opportunity in a field where employment is soft or in decline. Too many of the conversations go like this:

• Me: "Tell me what you might be looking at doing in your next position".
• Candidate: "Well, I've got a lot of experience as a (pick your job name) while working at my last job, and before that I was (pretty much the same thing) at my previous company".
• Me: "Really. Tell me about some of your talents and strengths".
• Candidate: "I work well with others, I am really good with (whatever the core skills are for what they've been doing for the past 15 or 20 years), and I am a great, loyal employee".
• Me: "Tell me about some of the skills you've added or responsibilities you've taken on over the past few years. I'm really interested in how you've grown". (this is a big hint)
• Candidate: (long pause)"I took some classes on (something they've never applied) and they sent me to training on (something else they've never used)".
• Me: "Why do you think your job went away, and why would they release somebody like you who has been a good employee?"
• Candidate: "The company had to save money due to tough times, and they let a bunch of us experienced folks go."
• Me: "Really? What happened to the work that needed to be done?"
  Candidate: "The company decided to (cut back on projects, sent work offshore, kept the less expensive people to do the work that needed done, consolidated operations in one location, etc.)".
• Me: "What did you learn from this?" (hoping for a light bulb moment...)
• Candidate: (spews forth something about cheap offshore labor, poor leadership, bad management, or that they don't understand how the company will keep its doors open without them)
• Me: "Companies go through changes through all sorts of reasons, and it can be tough. Tell me what you are looking to do in your next position".
  Candidate: "I'd like to get on with a good company doing (pretty much the same thing they've been doing the past 15 years...)".
• Me (trying to lead to an obvious conclusion): "What have you found out there in the market?"
• Candidate: "Not much. There aren't very many jobs posted, and what there is out there doesn't pay very well".
  

And so on.

As mentioned in my bio and earlier posts, I have been blessed through my life and career. One of these blessings was an early lesson about volatility in employment and managing your career. My father was out of work in the early 1980's during a recession that hit his industry (civil engineering / construction) fairly hard. He still had six kids living at home, a ton of expenses, and not much in terms of a fallback plan from a financial perspective.

What did he do? He reinvented himself and became successful in a loosely related, but quite different, job than what he had been in. He decided to adjust, adapt, and thrive. Similarly, my experience in the IT consulting / staffing / contingent labor field for the past 18 years has sensitized me to the ups and downs of the economy and how one needs to evolve to survive and prosper.

I see too many people that when faced with a job that has gone away, they refuse to change or adapt themselves, and instead become disenchanted when the world changes and doesn't accommodate them. It is a shame because so many of these folks have a lot to offer, just maybe not in the way they are used to.

We all have the tendency to define ourselves in terms of the job titles we have held, not in terms of the jobs we have the potential to do. When we look for a job, the first thing we do is look at jobs just like the one we had. However, we have aptitudes, knowledge, and abilities that can be combined and leveraged in all sorts of jobs that are quite different from each other.

For example, I met a person not too long ago who was a senior IT manager / director at a large financial services company. He's been looking at similar positions, a tough find given the market. As we talked, I asked him about his accomplishments, his hobbies and interests, and what he felt he was really good at and what he got the most satisfaction out of. One of the things he felt he was really good at is bringing people together across a diverse, large enterprise, and getting them to act together to meet objectives and accomplish projects.

I told him working effectively across large organizations is golden and applies to all sorts of organizations and industries. It shows excellent communication skills, ability to work with diverse groups, political sensitivity, etc. These skills can be used at:

• Any geographically distributed company
• Sales / account management / sales support
• Not for profits
• Rapidly growing companies

He had been thinking primarily of senior IT management positions in financial services, but by they end of our discussion started thinking of a much broader field of possibilities.

I encourage people to go through what I call a "personal inventory" to see what they might have to offer. Essentially,

• Create a set of lists with the following headings: "Job Titles", "Roles", "Industry & Company Experience", "Subject Matter Expertise & Business Knowledge", "Technical & Professional Skills", "Personal Characteristics & Aptitudes", "Passions, Interests, and Hobbies"
• Under each heading, list everything you can think of. Go back to your old resumes, your old performance appraisals and project notes. Think about your volunteer, charitable, and church activities. Do this over the period of a couple days as the more you think about things, the more you will recall.

Look at what you've put together. I am betting it is way more impressive than what you thought. If nothing else, you just went through a huge exercise in self affirmation! You've got way more to offer than simply 15 years at Company X.

Now, start to think about different types of jobs and how you can pull skills, experiences, and aptitudes from your inventory to do some of these jobs. Look at a newspaper or an online job board at jobs you never targeted that you can probably do. I am betting that you will be pleasantly surprised at the possibilities open to you.

While I am certainly not a career coach by any stretch of the imagination, there are some basic things we all need to consider to remain viable from an employment perspective.

The observations I have made include:

• We need to constantly be adding skills, experiences, and talents to our portfolios so that we can proactively move to new jobs, roles, and / or companies as needed.
• Furthermore, we need to be cognizant of these skills, experiences, and talents that we are adding to our portfolios.
• The paradigm of what work and career means has changed. "Go to school, get a job with a good company, work hard and be loyal, and things will work out" is just about gone in many if not most fields of endeavor. The paradigm now is, "Add value in every way you can, and if you aren't adding value, move on to where you can".
• If your job responsibilities and skills are essentially the same as they were five years ago, you are at significant risk. Chances are that you are probably compensated at higher level than a replacement person. The added value of your company knowledge only goes so far when the company is looking at dollars and cents.
• I tell my college aged kids that there are only a couple things you need to think about when you pursue a career and a job. First, understand what pays your salary and how what you do contributes to this. Here's a clue: it isn't the department budget. Secondly, think about some of the trends that are impacting the industry sector you are in or pursuing, and how these trends will shape the future of your company and job.

Economic times are challenging. The companies and people that prosper are those that understand what is happening and innovate. Pay attention to what's happening in your company and your industry, and plan, learn, and adapt to ensure your continued viability in the market.

IT Staffing Supply Chain Thoughts...

I just finished working with a team of folks on an RFP response to do business as an approved vendor in the IT staffing space, and this got me to thinking about the process. I've been directly responsible, led, and / or contributed to about a dozen of these types of responses during the past ten years. The client companies generally have most of these characteristics:

• Annual spend on IT staff augmentation services in excess of $100m.
• A formal procurement group and process for securing services.
• A few major centers where most of the IT staffing services are used, as well as ten or more additional locations in various areas of the country.
• One or more of the following business goals: lower cost, improved quality of services delivered (however that's supposed to be measured), favorable contractual T's and C's, etc.

Typically, the evaluation of the RFP response ends up with the client company comparing strict objective factors like price, ability to support the enterprise across the geography, etc. If all goes well, the vendor gets added to "the list" and starts to receive staffing requirements, and goes from there.

What I don't see a lot of is dialog on how a provider can help make the client organization stronger or more competitive. I would be ecstatic to see a question on an RFP such as:

"How would working with your firm help us be more competitive, realize higher profits, and / or be a better member of the community?"

My observation has been that the most effective business relationships take into consideration a variety of factors over and above things like price, contractual T's and C's, and quality of services. In a customer-supplier relationship with a product or service that is relatively mature, there is an implicit assumption that the goods and services delivered will be high quality and cost effective, that working together on the delivery will be seamless, and that issues that come up will be handled in a responsive and appropriate manner.

Doing a good job may get you in the door, but providing added value and making the client better is what defines a true partner. What really helps a client at this level are things like:

• Working jointly with them to streamline their procurement and on boarding process for IT staff. For example, how much time and energy would be saved in hiring managers really understood how to define their needs and write a position requirement?
• Bringing technology insight and business approaches to a client that will help the client achieve a competitive edge.
• Connecting executives and leaders with others who can provide thought leadership.
• Aligning community involvement / charitable efforts with those of the client.
• Sponsoring joint efforts to pilot innovative processes for services procurement.

It is understanding the client's business and environment so well that you can anticipate their needs and wants, and be positioned to respond to them. We are near or at the point in the IT staffing business that being a strong company with geographic coverage, efficient processes, and competitive pricing is not enough.

Our job in the IT services sector is not just to provide good people. It is really to make our client organizations more effective. The IT services companies who will prosper long term will be the ones who figure this out.