Love them OR Hate them – they’re here to stay
VMS or Vendor Management System has been around for about 10 years now and used by mid size and large corporation for procuring contract or contingent workers. Most VMS’s are web based where suppliers can log in, review open positions and decide if they want to submit candidates against those orders. It’s supposed to be Vendor-Neutral to encourage competition among vendors. Corporations choosing to go with VMS’s also benefit from being able to have a single point of contact for billing, reports, manage and evaluate vendor performance and standardizing bill rates among others.
VMS can be a boon to a small or mid size staffing agency who is a vendor in a large corporation because it essentially evens the playing field. Everyone now gets the requirements at the same time, has the same information and goes out hunting. The company with the best candidate and the best rate wins – almost like an auction. So what’s wrong with this picture?
Relationships Die or stay stagnant.
Most Recruiters and Professional Services people develop their book of business through relationships. Through these relationships, we’re able to understand the unique needs of each client because we can spend time with the client, their team and in their environment which we can then relay to candidates and weed out people that will not fit in that environment. With a VMS in place, our hands are tied – which means we’re not allowed to speak with the hiring manager(s) for any reason. Some VMS’s actually won’t even allow staffing professionals to maintain the relationship that we had before they (the VMS) got there. In such a case, if we do send a resume – we can’t get feedback until the vendor manager decides to send the resume to the manager. That’s if the vendor manager decides to send the resume. So why would someone waste their time dealing with a VMS?
The Vendor Manager
Here’s a little conflict of interest that gets very little attention. For the VMS to work – the vendor manager must be neutral and available to the vendors with answers, since we’re not able to contact the decision makers. However, a lot of VMS’s are staffing companies themselves. So the natural question is – when a requirement comes in, does the VMS recruiters get a heads-up on the positions before the rest of the vendors are notified? A good way for the client to check on this is to run a report to see how many positions are filled by each vendor. If the VMS company has the majority of fills, then it’s a huge red flag and leads to the next point.
Kiss Loyalty goodbye.
Those days when staffing and sales professionals were always available to speak with you, the client, at any hour is over. Most recruiters on the staffing agency side realize that the VMS is a no-win situation for them and their candidates. When you reduce important aspects of your business such as procuring and keeping technical staff on your team to commodity, it tells me that you don’t really respect the work that’s done on the backend. There are something’s in business that you just can’t automate.
Most VMS’s charge the vendor to do business with them. Let me repeat this – Most VMS’s charge the vendor to do business with them. Why is that? The VMS is providing a service to the client, yet we the vendor are paying for it. Shouldn’t the client be paying the VMS for the service?? I don’t get it. VMS’s are charging anywhere between 5-10% of the bill rate as “administrative fees” per placement.
Say Hello to high turnover
Guess who ends up sharing the majority of the cost of doing business? The contractor that got hired. Higher costs of benefits, VMS fees etc. adds to the burden of the company which usually reduces the contract rate that they can pay the candidate. A candidate may take the low paying contract job as a placeholder until something else comes up that pays them market rate. So are you really saving money when your turnover rate is high? Think about all the time spent interviewing new candidates, training them to get them up to speed and then 3 months later doing it again with someone else.
More open positions
Get a report from your VMS to see who is filling most of the open positions. Why? Because you will notice that vendors that used to provide great service to your company are no longer sending candidates in for review. Companies that are sending resumes are not going through their regular screening process that they used to – and why should they. There is no way the hiring manager will know what company sent a resume since the VMS makes the submittal process, “vendor-neutral”. You may also notice that there are more open positions in your company because agencies and recruiters that care about what they do, don’t care about your openings.
I’ve spent a lot of time working with clients that have a VMS. Nextel Communications was a great account that I supported. They went with Kelly Services and it became a black hole. Nothing moved. Nothing happened. There was never any feedback. There was a lot of confusion. The vendor manager was fired or laid off due to rumors of her getting kickbacks from another vendor. I stopped working with them. American Red Cross was a good account. Then they went with Chimes. I worked with ARC through SLA’s to avoid dealing with Chimes – but that stopped after a while. I stopped working with ARC. I’m supporting another client who I will not name, since I’m currently working with them. They’re going with a new VMS and I’ve decided to disengage with them because I know exactly what path that will lead to.
The only client who has a VMS that I support (again, will not name them) today allows me to maintain my relationships with managers and actually encourages talking to managers to understand their growing needs. I love working with them and the Vendor Manager because he used to be an Agency Recruiter and understands the frustrations that we have to go through!
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