How to procure contingent staff suppliers effectively

November 3, 2021

With contingent workers now making up one in five of the average workforce, supplying your extended workforce is mainly the role of staffing agencies and employment businesses. But not every contingent staff vendor will perform equally, or meet your requirements. So, how do you know which staffing suppliers will perform best, and who to keep on your preferred supplier list? You can easily compare contingent workforce suppliers who deliver the right talent, at the right time, for the right price, using a vendor management system (VMS).

In this article, we explain how you can source and compare suppliers. But first, there are a few problems to overcome. Monitoring and managing vendors can be difficult because of the number of internal stakeholders, as well as the processes involved. This includes contingent worker specification, procurement, onboarding, and the payment process. And who is responsible for monitoring quality: HR or line management? Who monitors worker churn, why they churn, and the feedback on how well the workers do their job? If you are not properly tracking these performance criteria, it’s impossible to know which suppliers are performing best, which are costing you the most, and how else to increase the effectiveness of your contingent workforce.

What questions should you ask of a potential supplier?

Finding the right information to support vendor procurement and retention starts with acquiring, then reviewing data. You should be able to understand the following from your data, on a vendor-by-vendor basis:

  • How long does it take them to fill a role?
  • Do they recruit and deliver the best talent?
  • How many people do you interview before finding the right fit?
  • How many successful hires do you get from them?
  • How do the contingent workers perform?
  • Would you rehire this contingent worker?

You can enrich your understanding by carrying out qualitative research. For example, try asking department heads about their experiences with a supplier and if they would hire more, or fewer, workers from each. Project data can also enrich these answers: which projects performed well, and which didn’t?

A closer look at your contingent workforce

Quality, as well as cost, is a key performance indicator for your vendors. You should not be afraid of evaluating the performance of contingent workers in the same way as you do permanent employees. For example, you can look at how teams are delivering on a statement of work (SOW) contract. Is it hitting its milestones on-time and on-budget? Is work being rejected, or going smoothly?Meanwhile, you could ask line managers to keep track of whether individual workers are:
  • Meeting expectations
  • Finishing the job within the timescale and with professionalism
  • Needing some or a lot of handholding and feedback – or none at all
  • A good cultural fit for the company

Making sense of the data

Here is where your VMS makes a difference. Once you have input all the quantitative and qualitative data from all recent engagements, your VMS analytics will show you how many suppliers you have, how much you spend with each, and how each performs. You will also have an averaged figure comparing the cost of a worker from each of your suppliers and know how quickly they supply the workers.

Do note, however, that it is not always possible to compare exactly. For example, if you need specialist skills, those skills may take longer to find. One agency might find you a contractor who appears to have the right skills quickly, but this is because they didn’t understand your requirement. So, you swiftly discover the worker is not a good fit. Whereas the agency that takes 20% longer to find workers actually finds workers who have the right skills.

With a VMS, you can drill down into the data – both quantitative and qualitative – as well as determining the quality of the hire.

Take action to improve performance and reduce costs

With that information to hand, you should work with department heads to procure more staff from the best-performing suppliers.

If you are worried about not having workers when you need them, you can give your superstar suppliers preferred status. They are the first to receive requests and you only procure talent from others if they can’t deliver.

If you inform this supplier that they have preferred status and you could be sending more work their way, you might be able to negotiate better terms and create a more rewarding relationship.

How to deal with exceptions to the rule

Of course, things might not be so simple. Some suppliers might be good at sourcing the right talent in only one area. Or, line managers might protest they have already negotiated a deal with a particular supplier.

In either of these cases, the analytics from the VMS will tell you if these suppliers are performing. If they are not, ask hiring managers to explain why that vendor still has preferred status.

Taking data-driven strategic decisions using a VMS

A VMS gives you all the tools you need to gain a view of your company’s spend on contingent workers from various suppliers. Data and analytics tools make it simple to track and manage how contingent workers and vendors are performing and compare one with the other.

To find out how Beeline’s VMS works and how we can help, download our free guide for all the information you need to gain and maintain control over your contingent workforce strategy.