Why no direct hiring manager contact is beneficial for suppliers in an MSP program

At the CWS Summit in San Diego last September, I noticed a re-occurring theme in my direct dialogue with other program managers as well as suppliers: How do you manage your vendor list and do you allow manager/supplier contact?

As you’re reading this, I’m sure you’re thinking that allowing direct contact is the way to go. You may say you’ve worked in other programs that allow it. You may want to tell me about a specific, direct-contact situation where you were able to fill a position much faster than in a no-contact situation. You may assert that the MSPs don’t “get it” like you do, and that being forced to work through an MSP can cause some details of the sourcing process to get lost in translation. My take: You may be correct, but you’re missing some of the equation.

Maturity Matters

The key to understanding why a no-touch policy exists in a program is to understand how mature the program is and how well it’s managed. In a younger program, the supplier can help the program manager evolve the program over time and be a true strategic partner in the long term. Supporting the no-touch policy while it’s in place can be a means to a profitable end for you.

My career has taken me through three contingent worker programs at some of the largest financial firms since 2005. My current role oversees the overall contingent worker program and MSP relationship for my company. While the program is about 6 years old, it went through a re-launch in 2011, yielding a new supplier list and rate card.

Since the re-launch, we have enforced a no-touch policy, which has proven to be beneficial to getting my program to where it is today. I believe the no-touch rule helps suppliers that are on a program’s preferred supplier list. It helps to drive business to you and prevents leaks to non-preferred suppliers outside the program. In a properly managed program, the hiring managers understand the savings attached to using the program and forge a relationship with the MSP that fosters a comfort level with it as their liaison. The rule works both ways; it helps preserve your market share and also drives business to you that may have been lost to other suppliers. In the long term the supplier list will become a tight-knit group that is impenetrable for the most part. The no-touch rule helps lock down and lock out the competition in the long term.

To be fair, I’ve worked in very successful programs where there was open communication between the managers and suppliers. The difference is that these programs were much more mature and had fewer preferred suppliers on their list than my current program. There will always be nonpreferred supplier deals; that’s what a payroll company is for. The key is to minimize the nonpreferred deals and drive the volume to the preferred list. Again, a no-touch policy can help program managers as well as the MSP achieve that in the short term.

Demonstrate Value

As programs mature, program managers will undoubtedly figure out which suppliers are performing well and which are not. In my opinion if a supplier can consistently place people working through the MSP, then they are probably a good fit for the organization. If a supplier can’t work through an MSP and follow the rules, do I really want them working directly with my hiring managers on an ad-hoc basis? I don’t see those suppliers as “team players,” so when it comes time for cuts, they’ll be the first to go.

The no-touch rule drives consistency and compliance in a young or newly redesigned program. It helps the program manager to centralize the activity and get things in order. The suppliers who stick through it not only show they can be good partners, but also show that they can act in the best interest of the program and not just focus on their profit. Then, as the program matures, the rule can be re-evaluated.

So don’t dismiss the rule. It’s actually helping to drive more business to you in the long run. That is, if you can play by the rules in the short term and prove yourself to be a valuable long-term partner. Just ask the suppliers in my program.