MSP and VMS: Self-managed or expertly supported?

In the decision-making stage, business leaders often wonder why their own hiring and talent teams can't simply lead a contingent labor program and manage a VMS on their own.

The short answer is that those staff members usually do not have the necessary and relevant experience required to capably serve in those roles. They specialize in acquiring and overseeing the many needs related to full-time talent, and often have very full schedules due to those responsibilities alone.

Partnering with an MSP puts experts in contingent labor on your side. They capably and consistently address the unique and often complicated needs of a non-traditional workforce for you, leaving your own staff to focus on areas where they can best support positive outcomes.

Consider these six key areas that highlight the difference in outcomes between self-managed programs and plans that include an MSP partner.

1. Internal company administration

When a business leverages an MSP as well as a VMS for managing contingent workers, it combines experienced and knowledgeable specialists with a solution that supports and streamlines their work.

MSPs bring a consultative and programmatic approach to contingent labor management. Their skilled professionals take on the day-to-day responsibilities related to:

• Requisition
• Distribution
• Order fulfillment
• Supplier communication
• On and offboarding activities
• Reporting
• Program performance monitoring
• Hiring manager communication

With the support of an MSP and VMS, your company can count on benefits like risk mitigation, increased compliance and multi-level administrative efficiencies. Your MSP partner will add value by sharing meaningful business intelligence and identifying cost containment opportunities. With that level of guidance and dedication on the contingent labor side of workforce management, your own hiring managers can focus on their core duties.

With a self-managed VMS, businesses are prone to experiencing a wide range of negative outcomes. Processes and procedures can become inconsistent or inefficient due to the lack of expert guidance, as can monitoring of performance and compliance. Risk mitigation efforts can fall by the wayside, and contract auditing may prove to be inconsistent or even nonexistent. Contingent labor spending can become hard to track and control.

Similarly, your internal staff likely lacks the bandwidth to engage in anything but infrequent and impersonal communication with suppliers, which eventually harms those important relationships. A lack of supplier sourcing and communication can also raise costs.

In that same vein, everything from market research and benchmarking to invoice consolidation and alignment with relevant best practices may not be prioritized efficiently in a self-managed model. Contingent workers can more easily be misclassified or end up in an unintended co-employment situation. These added responsibilities for hiring managers necessitate increased pay and sometimes unnecessary additional departmental headcount.

The value of the crucial human element offered by an MSP is clear when considering the many pitfalls businesses face with a self-managed program in the area of administration.

2. Supplier management

MSPs have deep and valuable experience managing large groups of suppliers across all of their client programs.

They know they can count on networks of proven, previously vetted supplier partners cultivated by their organizations. MSPs offer these high-performing suppliers additional opportunities with other managed services clients, which in turn empowers MSPs to leverage those relationships and improve overall performance for your organization.

MSPs associated with a staffing organization have a real-time understanding of current and competitive rates, as well as valid, market-driven benchmarking. These providers are driven to optimize supply chain performance. They do so by seeking feedback and delivering it back to suppliers to gain a higher-quality understanding of client culture.

Additionally, MSPs develop dedicated departments for supplier engagement and management. They constantly build networks of diverse and uniquely skilled suppliers across all of their accounts and introduce new suppliers only when necessary.

Compare those advantages to common supplier-related outcomes of a self-managed program:

• Hiring manager relationships with suppliers are often driven by past history. Those crucial connections may not be as strong for those who do not use contingent labor frequently, or who have limited time to develop quality relationships due to their core responsibilities. This lack of access to a larger base of vendors can only lead to substandard results.
• The capture of proper and effective candidate feedback is sporadic at best. This leads to a lack of alignment with candidate-position matching, and ultimately means wasted time and frustration with supply chain performance. Adding more suppliers might address this issue to an extent, but it will increase complexity and cost, regardless of the outcome.

3. Key staff

MSPs provide onsite teams bolstered by cost-effective shared services groups to handle back-office support for the administrative tasks associated with sourcing contingent labor. Those teams bring deep experience to the table in efficiently managing a diverse and distributed base of suppliers.

These specialists also have a key talent that many internal hiring managers and similar stakeholders may lack. They understand how to efficiently and effectively utilize a VMS to help eliminate, automate or manage many of the otherwise-manual tasks required to:

• Properly communicate requisitions to the vendor population.
• Manage the candidate review process.
• Facilitate offers.
• Coordinate and on or offboard new talent.

Program governance is established during the initial development stage, with different business processes followed depending upon the specific non-traditional talent category in question. Examples include consultants, contractors, gig workers and interns, as well as 1099 and SOW workers. The VMS provides a system of record to cleanly and clearly process this information and ultimately utilize quality metrics derived from it, which are otherwise absent in manually run scenarios.

In a self-managed program, a variety of departments play roles in sourcing full-time talent and contingent labor, including:

• HR or talent acquisition.
• Internal procurement or strategic sourcing.
• Individual departmental and hiring management leaders.

The work time of these teams and individuals is, generally speaking, better focused on using their own expertise in hiring to fulfill the more mission-critical talent need of the organization — full-time staff. Incorporating contract talent fulfillment duties adds a substantial amount of additional work and can delay or degrade both processes. These employees often do not have the necessary background to realize the benefits that an MSP can provide in conjunction with a VMS.

4. VMS

MSPs possess superior working knowledge of many market-leading VMS systems. Their dedicated professionals are adept at supplying initial recommendations, as well as customization of the tool selected. The MSP brings this software expertise into the business relationship at no cost to your company, offering exceptional value.

A VMS will provide not only the system of record to manage the day-to-day operation of overseeing suppliers and talent across the enterprise but also support generating reports, analyzing data and producing program performance information.

Even though internal hiring managers have personal access to the VMS system, many may not have the experience nor time to utilize the systems to their fullest potential. The MSP's dedicated PMO team, on the other hand, has the necessary system administration knowledge. This strong foundation allows them to:

• Easily configure tools.
• Adjust privileges.
• Administer users.
• Produce ad hoc data.
• Effectively integrate the VMS solution with HRIS and applicant tracking systems.
• Broadly support key departmental leaders with information as requested.

This expertise enables better and more efficient decision-making for key leadership, along with a more clear understanding of real-time and trend-line spending.

In a self-managed framework, many companies consider purchasing a VMS to help manage vendor communication. This approach frequently leads to repeated distractions, as the staff tries to implement and customize a tool unfamiliar to the individual or team leading this effort. The high learning curve distracts from core responsibilities and often leads to a suboptimal setup and structure for the VMS. The end result may require routine service from consultants on the company's dime, contributing to cost overruns and hiring manager program dissatisfaction.

Without a VMS, most enterprises typically utilize spreadsheets, audits, telephone calls, text messages, email and hallway conversations to manage all aspects of a contingent labor program. Mismanagement and unnecessary emergencies are common outcomes of this more manual and disconnected approach, increasing time spent away from core business activities.

Any delay or error in this type of hiring process tarnishes the image of the company in the eyes of its contracted talent, agency and hiring managers. The end result may be worsening internal and public perception, which can then cause staff to work around established processes, increasing risk and costs across the enterprise.

5. Program management

MSPs support your company with broad and relevant experience built through the variety of clients and industries they serve. They can enable a richer focus on continuous improvement initiatives and identify emerging best practices.

MSPs also help clients bring industry best practices to the table to help finalize processes that were never fully established in the past. More efficient and effective workflows support tighter administration and the establishment of standard operating procedures in line with best practices. Your organization can eliminate discrimination and ambiguity in the hiring and selection processes with an MSP partner on your side.

MSPs also think and plan ahead, identifying opportunities to add additional value for clients in terms of better managing the non-traditional workforce. They offer this thought leadership to strategically assist clients with their forward-looking organizational design and best-practice knowledge.

In a self-managed setting, internal hiring managers are generally only familiar with their personal approaches to completing tasks. Some rely on other internal subject matter experts for additional insight, which may also be limited to their personal experience and not as efficient as possible.

Your own staff has the knowledge and abilities needed to be successful in traditional hiring — a core requirement for every business. They aren't, and shouldn't be expected to quickly become, experts in managing a specialized and complex workforce population outside of their traditional area of focus.

6. Responsibility

Self-run systems typically rely on internal procurement or HR teams as the main parties to manage processes related to contingent labor. Absent these two departments coordinating an effective process, individual department heads will chart their own paths. The result often leads to tremendous waste in terms of time, focus and funds.

In sharp contrast, engaging with an MSP:

• Allows hiring managers to fulfill their talent needs without distraction or falling victim to time-wasting traps.
• Reduces or eliminates redundant processes.
• Controls costs.
• Increases productivity.
• Reduces time-to-fill rates.
• Enforces compliance with standardized terms and conditions across the supply base.
• Maintains constant communication with suppliers and hiring managers.
• Supports continuous adaptation, bringing greater value to the program.

A partnership that delivers positive results

How do you know which MSP partner to select?

The OneBeacon MSP program offers a dedicated on-site specialist, along with a two-person implementation team — a project manager and VMS expert — to build out and structure that program, turning it into an effective and personalized solution. That means your go-live date could be just weeks away, as opposed to the many months or year-plus timelines common with a self-managed strategy.

These benefits are offered at no additional cost. They stand in stark contrast with the need for companies with self-managed programs to dedicate significant funds to the VMS platform itself, as well as integration with other key business systems.

Our MSP and VMS can easily and efficiently grow and scale with your company's needs, adapting to changing priorities to continue to provide relevant and effective service. A self-managed program often can't.

Contact us today to learn more!