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Staffing with Vendor Management Systems (VMS)

In the business world, automation is often king. This theory has filtered into staffing with Vendor Management Systems (VMS). A VMS is a software application designed to help employers procure staff, whether for temp staffing, temp-to-hire, direct hire or contingent labor.  Many staffing firms participate in the VMS process. However, this participation comes with pros and cons for both the staffing firm and the employer.

Surprising Shortcomings

You might consider the VMS debate a battle of man versus machine. Part of the problem is that a VMS system meant to be fast and easy is sometimes, everything but.


“VMS solutions don’t necessarily provide quick turnarounds. Employers are often waiting 7 to 10 days for the VMS process to unfold,” explains Claire Reynolds, managing director of The HT Group Staffing Division. “The turnaround can be slower than working directly with a staffing firm because of the extra steps involved. In Texas, where top talent is in high demand, a delay like this can be a serious issue.”

The process can be so frustrating at times that many top staffing firms refuse to participate in VMS-managed requests.

“Full service staffing firms are highly adept at vetting job candidates themselves,” Reynolds continues. “VMS solutions push these firms down to second tier-level vendors, which can tie their hands. At that point, the quality firms who now get no direct and timely feedback and no direct and timely payment for services may see very little value in putting their job candidates to through the process.”

Colleen Mills, senior VP, Standards and Government Relations, for National Healthcare Staffing Alliance, cites other reasons staffing firms—including those in the healthcare industry—are raising concerns about the VMS process.

“VMS/MSP (Managed Service Providers) companies pose many challenges for [the healthcare staffing] industry, not the least of which include rate suppression, wage suppression, margin deterioration and a host of other ills,” she says. Those “ills” can cause potentially serious consequences including, as Mills points out, the risk of private and critical information being accessed by strangers.

A recent study by Spend Matters concludes the best practices being used in managing materials spending are not well applied to services spending—particularly in the area of contingent labor.  In fact, they estimate the management of services procurement is at least 20 years behind the supply chain management curve.

“Services procurement (and especially the management of external labor) is complicated—and the nuances are often hidden from the C-suite,” reads the report. “It is too easy to become complacent in managing services procurement and, figuratively speaking, let suppliers run the category on your behalf.”


Culture: A Critical Missing Element

In the end, says Reynolds, it’s important for VMS users to be aware of one potential deficit that surpasses all others. That deficit has to do with culture. According to a Cubiks global survey, more than 80 percent of employers consider cultural fit a top hiring priority.

“Sometimes VMS solutions miss the mark on cultural fit,” she states. “That may not be a problem, depending on the type of position you’re filling. But for certain key areas, whatever costs you save upfront by using a VMS, you may lose 10-fold because of increased employee and temp-staffing turnover.”

Hand-in-hand with this concept is the relationship an employer may lose when not working directly with a staffing or search partner. Any recruiter will tell you: The staffing industry is built on relationships.

“We rely on personal interaction with our clients in order to best serve them,” Reynolds concludes. “It’s very difficult to fill a position if I’m not allowed to talk directly to the hiring manager. Relationships are that important. It’s a three-dimensional process. Often, a two-dimensional system like VMS cannot replace it.”

We’d love to spark a discussion on this topic. What do you think about VMS solutions: Do you love them? Hate them? Tell us!


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