Why Staffing Firms Say “NO” to Low Margin MSPs
April 13, 2017, Tom Ramsey, V.P. / CEO
Total Placement Staffing – Waco, TX.
“Staffing firms are non-responsive and all they send is subpar candidates.”
Have you felt this way before? Do you know of companies that seem to churn staffing agencies hoping to find better performance? If you utilize an MSP vendor, then you are likely experiencing this phenomenon.
From a high performance staffing firm’s prospective, MSP (Managed Service Provider) vendors treat them like a commodity with little respect for their work, slow pay, and views them as a source to shift liability for areas in which the staffing firm has no control. However, to the buyer, Managed Service Providers present themselves as saviors promising only upside possibilities while failing to mention the nightmare of working with low paid inexperienced recruiters who all too frequently lack the personal investment to be successful.
Client companies want the best employees the market can provide, right? Next, they need it affordable, correct? And lastly, they want a high performance premium agency that can and will produce results when called upon for staffing assistance. On these points, I think we all agree. Let’s examine each of the three areas on their own merit.
High Performance Staffing Firms
For a high performance staffing firm to survive, they must first present their best quality candidates to their better clients. Not necessarily their highest markup clients, but clients that support them with mutual loyalty, a fair markup, prompt payment, and can recognize the benefit to their bottom-line. These are their premier clients. It is all about nurturing long-term relationships and mutual benefit.
High performance staffing firms are successful because they have the best recruiters, extensive recruiting channels, and a work ethic second to none. Good recruiters are experienced professionals and a strong productive recruiting network is mandatory. These attributes are not inexpensive. Divide a good agency’s annual operating expenses by the number of employees placed annually and it will cause you to drop in your seat, shake your head, and order a drink. It is that expensive per W2 head count.
Ask yourself, what would your company do faced with a limited supply of product, more orders than you can fill, and rising costs? Would your company sell their limited supply of product as a commodity to the lowest bidder with the longest pay cycle first? Best business practices prohibit this scenario in any industry, especially when more product is just not available. So, product trickles top-down through the ranks like every other industry. Think about it.
What about Affordability
Strong staffing partners can greatly improve your bottom line, but this consideration quickly becomes lost in the pricing game. During the MSP interview process, staffing firms are asked questions pertaining to benefits, processes, general reputation, and of course markup. However, we know the focus is on markup. Perhaps, this is because it’s near impossible to develop anything more when an MSP (Managed Service Provider) is in the middle. Granted, it is difficult to describe a superior process and recruiting team without sounding like everyone else, but how about interviewing a client or two? Ask for information concerning client relationships and longevity. “Winning” an RFP with anything but the lowest bid is extremely rare. In fact, I have never seen it. This three party relationship has an average life of 2.8 years before firms start shopping again.
Over 52% of our clients have been with us for about 9 years and many of those for 14 years or longer. These averages are not necessarily unique to us, and can be found in any agency dedicated to client satisfaction. Our company is recognized as the premium agency in the area delivering attractive bottom line results. These were not my words and to be thought of in this manner is indeed humbling. It is a testament to the loyalty shown to clients and the positive effect we have on their profitability. This vote of confidence is not taken lightly and we do our best to never let them down. We take it personally. So the question is, how can one expect these relationships to develop in a low bid situation with an MSP in the middle?
Want to experience that kind of love, stability, and an improvement in profitability? At some point, you gotta show the love. After 28 years in the business, I have learned one thing. Long-distance, hands-off relationships at low bids are never pretty, the most demanding, and the least productive for all parties involved except for the MSP. If this ever changes, we might reconsider.
Tom Ramsey – Total Placement Staffing Solutions
In a recent survey with hiring authorities, it was determined most employers could tell within 30-90 seconds whether they would hire someone or not. It all came down for first impressions. Appearance accounted for 55% of their decision. Do they look like they can do the job? Do they represent the image we want to project?
While tattoos were a determent, piercings seem to have even more negative connotations. Iowa State University asked older workers and college students to look at resumes with pictures. Half the photos included piercings. Job candidates with piercings were found less employable with younger people having the harshest opinions.
In another survey, when considering evaluations, raises, assumptions about character, and promotions it was found appearance played a significant role. In a perfect world this would not be the case, but people do judge on appearance all the time. Those that say they don’t are lying. Those are strong words, but it’s true.
While people do have the right to do what they want with their body, companies have a right to the image they want to project. If it is perceived tats or piercings will negatively affect business, they have the right to reject it.
While, tattoos may be more socially acceptable today, in-your-face tats are not. In a Harris Interactive pole, almost a third of respondents without tattoos said those with tattoos were less intelligent and half said less responsible. In the most recent poll on this subject, a CareerBuilder poll of 3,000 managers said they were less likely to promote someone with visible tattoos or piercings. So, how should this information be put to use?
Applicants – don’t blame the employer. They did not make you get that tattoo or piercing. Second, consider the type of job and industry you want to work in and adjust. It’s like any game; you have to play to have any chance of winning – so play to win.
Employers – commit to look past the tats and consider their stats. Good workers are more difficult than ever to find and it is not improving. Concentrate on their talent first. Would you consider them if they had no tattoos? If so, how can the applicant, and you, adapt?
Can the tattoo be hidden? Will it show in short sleeves? Does the job require face-to-face contact with clients? Applicants – remove piercings and cover tattoos for the interview. Then, if all goes well, ask the interviewer; “I have tattoos on my arm. What are your thoughts about needing to have those covered up, or is it OK to wear a short-sleeved shirt where they might be exposed?” Be upfront and don’t take offence no matter the answer. Concern for the company’s policies will go a long way to promote integrity. Bottom line – do you want your interviewer to pay attention to you, or be distracted by your decorations? If they are starring at your tattoos, they will not be paying attention to you. How do you want to be remembered?
While things are different these days, the numbers show that visibly tattooed and pierced people are at a disadvantage. Even though it’s not as bad as it used to be, it’s still something both sides of the table can work to improve. Companies need good talent and should attempt to focus on abilities first. Candidates need to be less concerned about rights, and more concerned about blending into a company’s environment.
Both sides need to play the game in order to have a chance to win. Both sides need each other.
Several years back our government changed the criteria historically used to report unemployment rates to make unemployment numbers and the administration look better. They conveniently decided to discontinue counting the underemployed, those who are working menial part-time positions because they cannot find full-time jobs. Additionally, the administration stopped including those who really want to work, but have grown so discouraged they just stopped looking for jobs. Why? Because those people no longer qualify for unemployment benefits.
Unaccounted in the official jobless rate are millions of people who still want a full-time job, but can’t find one in today’s unhealthy economy. It is difficult enough to address problem, but doubly difficult when that problem is being masked.
Jeffry Bartash recently wrote: “That excess level of what economists call labor-market “slack”—an impersonal way of referring to people desperate for work—is what gnaws at many officials at the Federal Reserve. Some are reluctant to raise interest rates until more of these people find their way into the workforce.
Buried in the monthly report is an unemployment rate referred to as U6, which includes part-timers who want a full-time job as well as would-be workers who have grown too discouraged to look for work.”
The article further explains, “The U6 measure is sometimes referred to as the “real” unemployment rate. And it still well above prerecession levels seven years after a U.S. economic recovery began.
In June, the U6 rate fell a tick to 9.6%, and it has fallen sharply from a peak of 17.1% in late 2009. In 2000, the U6 rate fell below 7%. Some 16 million people are underemployed or unemployed as measured by the U6.
The upshot: As many as 4 million in the U.S. who want a full-time work are being shut out. In a fully healed labor market they would be putting in 40-hour shifts.
That is not all the damage, either. This group of people also constitute a surplus of labor that helps to keep wages down for all U.S. workers. Companies feel less pressure to raise pay.
Until the U6 unemployment moves closer to 8%, it’s hard to argue the U.S. labor market has fully recuperated.”
If you really believe the unemployment rate is less than 5%, you probably believe inflation has been flat since 2008. So, why do you think government purposefully understates these economic indicators?
JDSupra (04/25/16) Jeff Nowak
DOL Requires Employers to Use New FMLA Poster, Publishes Guide to Help Employers Administer FMLA. The U.S. Department of Labor has released a new guide to help employers understand and administer the Family and Medical Leave Act.
Furthermore, DOL suggests you watch for the new poster soon to be released as they have announced a mandate requiring employers prominently post the new FMLA notice.