Today’s comparative analytics allow MSPs to capitalize on talent and manage spend for their clients.
By Russ Banham
Managing staffing suppliers at Hillshire Brands is a complex process. Multiple suppliers are necessary to ensure specific skill sets are retained in specific regions to generate profitable business growth. Managing these suppliers is left to Staff Management | SMX, which performs and provides valuable benchmarking of average bill rates, pay rates, and overall supplier performance.
The partnership between the two organizations allows for consistent onboarding processes, compliance monitoring, and comprehensive reporting and analysis. Similar objectives are being realized by other MSP provider-client relationships, where benchmarking various metrics to similar size companies in similar industries has become standard procedure.
“Benchmarking allows us to validate that we are achieving best- in-class performance from our supplier network,” says Brian Sajdak, category manager/indirect procurement at Hillshire Brands, a Chicago-based leader in meat-centric solutions for the retail and food service market. “It also enables us to drive continuous improvement in the company, ensuring we make informed decisions and operate in the context of industry trends within what is a competitive marketplace.”
Hillshire Brands, maker of such products as Jimmy Dean Sausages, Gallo Salame, and Ball Park Franks, is one of many companies that have turned to MSP providers to manage suppliers of contractors and contingent labor across various
skill categories and market geographies. Providers like Staff Management | SMX leverage staffing supplier data from both internal and external sources, turning this data into information for client decision-making purposes.
“We look at wage rates, market analyses, supplier metrics within our own network, and a wide range of survey data from the American Staffing Association and government agencies like the Bureau of Labor Statistics (BLS) to tailor a program that best meets client needs and objectives,” says Janice Weiner, vice president of global MSP services at Staff Management | SMX. “We put all this together with feedback from the hiring managers so clients like Hillshire Brands know exactly when they are hitting the mark.”
Other MSP providers like Volt Consulting, Yoh Services, and Guidant Group, among others, also can be counted on to benchmark key performance indicators like average bill rates by position, vendor spend, and time-to-hire, in addition to softer metrics like supplier quality and performance.
“The managed service world has for so long been laser focused on cost and risk efficiencies—today these are expected,” explains Andrew P. Zarkadas, managing director of strategic client solutions for Guidant Group. “Quality of hire metrics would include time to fill, replacement ratios, and most importantly, performance feedback driven through our customer satisfaction surveys. The increased focus on quality indicates that HR and talent acquisition executives are paying attention which is a critical lever to the long term success of a managed service program.”
For companies like IMS Health, the benchmarking services are crucial. “We’re part of TPG Capital and are among the more than 30 other companies in their portfolio, and we benchmark each other to be sure we have the right talent at the right pay on the ground in the right locations,” says John Ure, director of strategic sourcing at the Parsippany, NJ-based healthcare analytics company.
Finding the best suppliers of this talent and managing them
is not even remotely easy, he adds. “That’s why we rely on
Yoh to manage all the different relationships from the lower levels to high levels,” Ure says. “There is great strategic value
in this—they help us look out 18 to 24 months to understand how we should be evolving according to the market’s evolution. With the Affordable Care Act, for instance, this service has been particularly helpful. We have a strong sense now of what this will do to our rates, the mobility of our workers, and the strategic changes necessary with regard to our hiring practices for both variable and fixed labor.”
No Splinters on the Bench
Benchmarking, of course, is simply the comparison of one organization’s practices and performance against those of others. The process seeks to identify best practices that can then be leveraged to improve performance. “Think of benchmarking as a quality improvement tool to better understand what you’re doing, how you’re doing it, how other organizations go about their business, how well you’re doing compared to these other organizations, and where improvements can be made,” says Elliot Owens, vice president of business analytics at Volt Consulting Group in New York.
If an organization is not benchmarking, he adds, “You can’t measure what you’re doing and compare it to something, which then makes it very difficult to understand where you need to make necessary adjustments to improve your program. If you don’t have that data, you can’t begin to address performance improvements. You’re flying by the seat of your pants.”
Most organizations were doing just that until a little more
than a decade ago, when the concept of managed services gathered steam, and providers came on the scene to watch
the store. Initially, the focus was on the rates charged for
hiring contractors—the bill rate, pay rate, or markup. “An organization hiring light industrial workers in Boise, for instance, would want to know whether it was paying above
or below average rates,” Owens says. “They’d want to know if the rate was fair, was there room to negotiate it downwards, and were there other suppliers that could provide a better rate. That’s where clients started off.”
Since then, many MSPs have greatly expanded their benchmarking services to address not just bottom line costs but also quality and efficiency. In these regards, they developed
an array of performance metrics, running the gamut from how quickly a supplier provided job candidates to how quickly the hired contractors finish their assignments.
“We benchmark metrics like resume submittals to interview, resume submittals to engagement, manager ratings of a contractor’s work, and end of assignment factors—was the person terminated because the contract was over, there was no more money in the budget, the performance was sub par, and so on,” Owens says.
For Guidant Group, the purpose of the firm’s benchmarking services is to discern a client’s talent needs and to create
future pipelines in the various geographic locations in which they operate. “We used benchmark services to allow our
clients to make educated decisions on how they operate their businesses,” notes Zarkadas. “Too often, benchmarking services have been associated with cost savings initiatives. However, we are seeing them used in more strategic ways. The top reason would be talent attraction in highly competitive markets and labor categories. We’ve also had clients come to us asking for these services as they are forecasting labor demands for a new product launches and even guidance on talent markets for new site locations.”
MSP providers benchmark both average bill rates and supplier performance quality with a keen eye focused on talent excellence. Since many clients that leverage MSP operate worldwide in different markets, this perspective takes into account the differences in rates and supplier performance on a market-by-market/geography-by-geography basis.
When it comes to superior benchmarking, data depth, accuracy and quality are paramount. IMS Health’s supplier metrics,
for instance, comprise the entire engagement process. “I’ll look at the entire work lifecycle—how many responses we were provided for a given position over a certain time period, how many candidates were short-listed, how many actually got to the interview stage, and how many were placed in
the particular job and whether or not they stayed full-term
to complete the assignment,” Ure says. “Finally, we examine whether or not they received a positive review when the assignment ended. I examine this entire sequence whenever we evaluate our suppliers.”
Comparing average bill rates to similar sized firms also is critical. When Ure worked at Johnson & Johnson in a similar capacity, the company operated at the pure bill rate level, i.e., there was less concern about the markup charged by suppliers. “The way we do it here is to have a fixed markup with the supplier so I know what the profit margin will be—in other words, I know the math,” he says. “So the focus is more on the pay rates, which ensures that we have rates at market or just slightly below market. That’s why it’s crucial for the MSP to pull market rates for the pay rates from a benchmarking standpoint. We want to be sure the rates are accurate.”
He adds, “It’s really a mix of art and science.”
Erin Fortunato, vice president of managed services operations at Yoh Services LLC, a Philadelphia-based MSP provider, says the value of organizations like hers is its ability on a quarterly basis “to roll up all the results with regard to each supplier, then
drill into their individual performance to determine which ones are consistently outperforming others.” The ability for an MSP provider to cull this supplier information and disseminate it to the clients it serves is the “foundation of the benchmarking services we provide,” she adds.
Volt has a similar value proposition. “We have a substantial data warehouse that contains wide-ranging data on all our clients, and that’s the number one source for our benchmarking information,” Owens says. “We also collect data from the marketplace, but cannot tell you what that is, as it is our `secret sauce.’ In either case, the important thing is to ensure information accuracy by cleansing the data before analyzing it.”
Guidant Group also taps internal and external data sources
in its benchmarking process. “We feel that this the best approach as it provides a fair balance of data,” notes Zarkadas. “Approximately 75 percent of the spend that we managed is managed through our proprietary VMS tool which allows us to provide deep analytics in and around our client’s business environment. The third-party tools that we use allow for triangulation of the data that may not be available within our client programs as well as validation of the data that is available.”
Benchmarking alone does not drive better decision-making, the observers agreed. As Owens puts it, “Benchmarking is only somewhat actionable; it’s the deeper analytics we provide on the metrics that respond to client questions and assist them to change behaviors.”
Sajdak from Hillshire Brands agrees: “Benchmarking ensures we are consistently provided the best available talent, helps assure we are achieving competitive prices and paying competitive wages with respect to our competitors, and, most importantly, are achieving industry-leading performance.”
Russ Banham can be reached at www.russbanham.com