Vendor Neutrality is in Your Hands! | DCR Workforce Blog

Vendor Neutrality is in Your Hands!

Life is all about choices.  If you are responsible for selecting the company who will oversee your contingent workforce suppliers, vendor neutrality is a critical factor when making that choice! Let us look at a situation where the oversight company, referred to as a Managed Services Provider (MSP) is vendor neutral. It would mean that the MSP does not recommend or use the services of any particular staffing company in preference to any other staffing company’s services. Some enterprises leave it up to the MSP to select and manage the suppliers – their focus is on getting the expected quality in services – and these companies choose to outsource all of the associated administrative effort to the MSP. Other companies fear that they may be losing out on what the world has to offer.   They may set limits on the MSP’s use of preferred staffing companies (typically 10 or 15% of the total).  Yet others demand vendor neutrality and painstakingly track all orders to ensure the neutrality.

Why does vendor neutrality matter? My experienced colleague from Procurement recently explained the reasons to me and it really made me see the light! After all, what is vendor neutrality and how does one define it? How does one track it? Is it a genuine and enforceable legal obligation?

The enterprise that wishes to put a vendor neutral program in place always makes it very clear to the MSPs up front. It also puts in those contract clauses which prohibit activities which defy their expectations of neutrality. Then why is there a strong atmosphere of disbelief in the matter? There are many reasons, the primary of which is the clear knowledge that an MSP may feed its knowledge of the hiring managers’ expectations and requirements to their staffing “sister companies” or preferred suppliers. While this may not directly dilute the quality of candidates submitted, it restricts the talent pool and totally dilutes the expectations of neutrality.

The bottom line is this:  You deserve more from your MSP than simply giving every vendor equal access to every requirement that is issued, and passing that off as vendor neutrality.  It is the MSP’s responsibility to build a highly productive contingent workforce supply chain for you. That means that they should do everything they can to make every supplier successful.  This is the true essence of vendor neutrality.  If your MSP isn’t doing the following 10 things, then it isn’t doing enough:

  1. Enact a formal process for agency selection that scrutinizes business qualifications, recruiting competencies, and business practices.  Apply the process to every supplier, including incumbents.
  2. Evaluate the performance of incumbent suppliers to identify skills or locations that are underserved.  Source new suppliers to address those areas.
  3. Evaluate the use of diverse suppliers.  Address any needs in this area.
  4. Establish contractual agreements that define expected performance, addressing rates, sourcing, candidate screening and onboarding, and contractor management.
  5. Develop a requirement distribution system that reflects the company’s needs.  Vendor neutrality does not require that all suppliers simultaneously receive all job orders.  It means that all suppliers understand the requirement distribution scheme (round robin, tiered, hybrid, etc.) and where they fit into it.
  6. Provide coaching and training to suppliers to ensure that they understand both the skills and work style that you are looking for.
  7. Provide regular feedback to suppliers on their submitted candidates so that each submission is a better fit with the company’s needs.
  8. Establish a fair dispute resolution process, make sure it’s well understood, and adhere to it.
  9. Establish a formal process for supplier performance review that ties to the contractual agreement and combines monthly reports with quarterly or semi-annual reviews.
  10. Provide incentives for high performance and continuous improvement.  Are increased access to requirements or early access tied to performance”. If a tiered or preferred supplier structure is employed, how can a supplier move up?

These ten steps will go a long way to providing a fair, equitable approach that is attractive to your supply base.  Recognize, however, that MSPs who are part of or affiliated with a larger staffing company are subjected to pressures that impact their objectivity.  In fact, many large staffing agencies view the mission of their Managed Services Program divisions to be increased account control that can leverage increased staffing opportunities.  Simply put, eliminate potential conflicts of interest!

In other words, expect vendor neutrality from an MSP who stands alone and is not linked in any way to a staffing company, and you need not worry about your vendor’s neutrality or waste any time on putting checks and balances in place to track it and eliminate it.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.