Author Archives: Karen Gonzalez

When You Look for Quality Talent, Discounts Don’t Apply

by: Karen Gonzalez , Senior VP of Global Sales
Cost_Management

Talent (or the lack thereof) is cited at or near the top of almost every list of current business challenges. Whether it is termed a skills gap, a war on talent or a constricted supply chain, it all points to a severe shortage of the human capital that powers commerce. When you have positions to fill, you need to find individuals with the skills, experience, character and motivation to match your requirements. Quality is critical. Speed is a bonus. Low cost is likely wishful thinking. In fact, focusing solely on standard talent acquisition metrics, such as bill rate or cost of hire, may turn out to be a costly mistake in the long run.

Can Cost Be Ignored?

Absolutely not. Cost continues to be a driving force behind contingent workforce management programs. In fact, in the latest Staffing Industry Analyst (SIA) Buyers Survey, employers cited reducing and controlling costs as the second highest MSP program priority (behind improving internal customer service). What is important to understand is that there are lots of ways that your MSP partner can help you save money, beyond the basics of rate rationalization, process streamlining, program standards, etc. Selecting a staffing supplier based on the lowest pay and bill rates or focusing solely on cost of hire are not necessarily the only or the best solutions to cost control, especially in a market where skills gaps continue to widen and business leaders repeatedly cite the shortage of talent as a critical deterrent to growth. A more sensible approach is to consider the total cost of hire, focusing on quality, value and return on investment.

A Closer Look at Total Cost of Hire

While securing contingent labor does not carry the typical tax and benefit burdens of a direct hire, there are still downstream economic impacts from making the right hire. The highest-quality candidates, most closely matched to your staffing requirements, will potentially deliver greater engagement, higher productivity, better performance and lower turnover (i.e., higher assignment completion). They will ease into your workplace with the least disruption to the rest of your staff and will quickly contribute to advancing your goals. Poor matches, whether defined by skills, experience or cultural affinity, can have the opposite impact. They can negatively impact your ability to execute plans, delay project completion, damage employee morale and require additional supervisory focus. The bottom line is that decisions based on initial price alone can increase other direct and indirect operating costs.

A Case in Point

Bartech developed an innovative total cost of ownership model for one client that captured $12.5 million in hard savings for in-scope spend. Bartech applied its rate management methodology, which employs a proprietary bill rate calculator as part of a competitive bid process. This calculator captures the costs of wages, employment and supplier overhead, providing full visibility into the bill rate. It also applies a benchmarked and acceptable multiplier for selling, general and administrative expenses and profit. We used this tool to establish a gain-share value proposition, generating client savings equal to 8% of spend for skill areas within the bid network in year five of our MSP engagement.

Conclusion

The talent acquisition process incorporates a number of levers that can be adjusted to reduce the overall cost of hire without excluding the market’s best candidates. Your MSP partner can help you explore innovative ways to save money without negatively impacting the ability of the suppliers in your network to secure the talent you need in a tight labor market.