Frighteningly, many companies in the industry have no idea as to the actual number of staffing vendors they use. They have neither the time nor the man power to effectively track costs and, for the same reasons, can't determine which vendors are consistently providing good people and which are producing spotty results. As such, this task is mostly left to individual hiring managers. The human resource departments that do make an effort to track quality and cost effectiveness often get bogged down in all the paperwork.
The problem is growing worse in today's economic climate. Many companies, in addition to hiring some full-time workers, are bringing on large numbers of temps provided by staffing companies until they see the "wings" of the economic recovery. This means the entire process is trickier and more complex than ever.
Solution in Sight Fortunately, there is a fast-growing trend that will soon become the industry norm: the "vendor neutral" model of Vendor Management Services (VMS). The VMS concept calls for the use of one vendor-neutral company to manage the entire process: all the tracking, quality control, cost management, and sifting through potentially thousands of applicants and hundreds of staffing companies. In sum, all the general and admin istrative costs attendant to working with staffing firms is transferred out of the pharma company and into the hands of one partner.
Of course, finding the right partner often can be a tricky process.
The Way We Were When the pharma sector first started using staffing companies, hiring managers generally called their friends and relatives for recommendations. But this "buddy" system was fraught with potholes. For one thing, companies were not necessarily getting the best price. For another, they were not always obtaining the best worker. There was no centralized reporting mechanism; each department was acting like a lone wolf in regard to cost containment. And there simply was no quality control over the entire process.
The next big thing introduced was the original form of VMS. This was a system managed by a single staffing provider, who supposedly picked out the best candidates from the various vendors. However, this was like letting the fox into the henhouse. Which company's candidates were picked the most? The VMS vendor's. The process was simply not unbiased, and this meant it worked quite well for the staffing company managing it, but not so well for the company needing the workers.
How to Hire VMS is not a bad concept. But it is impossible to use it correctly if you don't have a partner that is totally vendor neutral—one that will pick the best candidate, regardless of any other considerations. For this reason, many companies are now starting to use VMS partners who are not in the business of supplying workers. But, again, here's where it gets complicated. You've got to know what to look for in a partner or else you'll just be substituting one bad system for another.
When selecting a VMS vendor, consider the following:
Customization. Pharma companies don't want to be just a face in the crowd when it comes to staffing vendors. They need a customized system that is tailored to their individual needs. So be sure to choose a VMS partner that has a state-of-the-art, proprietary web-based system that manages the entire process. Furthermore, pick a partner that provides on-site management. If your partner is on site, problems don't become crises and wasted minutes don't turn into hours (or worse, days).
Competition. Choose a company that spreads out the requirements among a group of approved staffing vendors. Each order should be processed in a competitive environment, for quality of candidates as well as price.
Quality control. Verify that your potential VMS partner has a total quality management program that fairly evaluates vendors. Pharma executives should confirm that their partner has a method of determining exactly which companies get the best people at the best price and in the most efficient manner.
Labor laws. Your partner should have demonstrated experience in issues concerning 1099 independent contractors. Many of your workers may come from this pool, and the IRS is keen on corporate compliance in this area. In today's regulatory climate, it's also important that your partner has expertise in overtime laws and other issues related to the Fair Labor Standards Act (FLSA).
Industry knowledge. Look for a partner with experience in the pharma arena because they'll need to walk the walk as well as talk the talk with your managers.
Financial foundation. Prospective vendors should have financial backing that is not venture capital. During the past few years, many VMS providers built on venture capital have gone under. Your company needs a partner with solid financial footing.
References. Ask your prospective vendor for at least five long-term client references, and speak with them directly. Find out if the VMS has ever lost any clients, and if so, why. If the company can't provide references, run—don't walk—to the nearest exit.
Infrastructure. Make sure your potential partner has the infrastructure to successfully handle your needs—and to do so expeditiously.
Investment. Don't base your choice on price alone. Trying to cut corners will only result in spending more money and time later.
Sarbanes-Oxley Act. Work with a partner who has a good understanding of the maze of Sarbanes-Oxley regulations regarding corporate transparency. No executive wants to be the next one led out of his or her office in handcuffs on national television. If you don't get a handle on your staffing process—and staffing costs—you might be in danger of failing to meet the accounting standards in this complex new law.
The End Result When VMS works, it has a positive effect on the organization. According to one pharma client of PrO Unlimited, "It was like coming in from the desert after 40 years of wandering. Before, the entire process was chaotic, and there was no accountability. Now, we get the right person at the right price. And we know we're getting that person through an unbiased process."
These days, when vendors swarm a staffing requirement like sharks in a feeding frenzy, VMS can be an invaluable tool. If companies employ a vendor-neutral model, they'll be amazed at how well it works.
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