An economics professor performs an experiment in class to illustrate an effect of socialism. All tests would be averaged, and everyone would receive the same grade. After the first test, the grades were averaged and everyone received a B. The hard studying A students were upset and the D students who studied little were happy. For the second test, the A students now studied little so they, too, could get a free ride. This brought the average down to a C. The moral: The harder it is to succeed, the greater the reward must be, or no one will be motivated to work hard enough.
Unearthing real value. It takes hard work to succeed in today’s staffing business. Any staffing firm can occasionally get lucky and make a placement, but to succeed on a long-term, consistent basis is labor-intensive and requires skill. Yes, it’s easy to do job board keyword searches and submit “low-hanging fruit” candidates — but it’s much more challenging to cherry-pick top passive candidates who have the biggest impact on a client’s business. It requires deeply understanding requirements, referral networking to reach exceptional candidates, in-depth skills evaluation, salesmanship to convince sought-after candidates to join a client’s company, and the ability to overcome obstacles.
The suppliers that excel in what they do are the ones that invest the most time, energy and money in their business practices.
Capitalism 101. Here’s where a “capitalism” approach to vendor management can help attract and reward suppliers who will work the hardest to help a client succeed.
To achieve this, clients and vendor managers should provide the following:
- Grant a period of exclusivity to proven supplier(s) for position openings within their area of expertise.
- Create a tiered billing fee schedule that actually increases as suppliers make more placements.
- Permit proven suppliers to communicate directly with hiring managers.
- Allow hiring managers to know which résumés are from which suppliers so top suppliers can benefit from their earned reputation.
- Design volume discount schedules so they’re not disincentives for making additional placements.
Some customers might call these practices an unfair advantage because they favor certain suppliers over others. However, top-performing suppliers deserve such advantage. These suppliers work harder, more productively and more successfully than other suppliers.
The average trap. Many programs are neither motivating nor incentivizing suppliers to work hard enough on their requirements. They’re designed to create a “level playing field” that treats all suppliers equally lest any of them have an unfair advantage.
This is apparent when ALL requisitions are released to suppliers at the same time; ALL suppliers are prohibited from directly speaking with hiring managers; ALL supplier names and logos are removed from submitted résumés; ALL suppliers adhere to the same fee structures; ALL suppliers are subject to the same volume discounts; and so on. The result, ALL suppliers are treated average.
Call to action. As suppliers, what can you do to help increase the success of your client? Make sure you educate them about why and how staffing suppliers should be motivated to find the topquality candidates they demand. Ask them to incorporate profit rewards and incentive programs to make it a win-win relationship.
Seven of 10 CEOs cite talent acquisition in the top three critical factors that affect their company success. Given such importance, tell clients to examine their supplier management process. Is it cost-per-hire or return-on-investment focused? Are positions being filled with A candidates, or B and C candidates? Clients won’t know until they take an unbiased peek under the hood and speak with their hiring managers. And should there be a need or interest to improve results, consider the “capitalism” approach.