In between IT managers and the vendors they use for staff sourcing, there is an administrative organization. This organization is responsible for contracts and policies that support the hiring of contract staff. Some organizations house this inside of human resources, others inside of what would be a traditional purchasing or procurement department.
Here are some of the kinds of responsibilities and values that a procurement organization delivers:
1) Market Research – what are the “going rates” for different IT skills in the local or national marketplace – establishing a rate card for each role or skill to give hiring managers a notion of what a reasonable rate is.
2) Contract negotiations – typically, they provide a master agreement that vendors adjust or adopt, and keep the hiring managers from having to figure this out all the time – this may include rate negotiation for larger staffing initiatives.
3) Vendor selection / management – since multiple hiring managers may use the same vendor, the procurement department can be a collecting point for feedback on vendors especially their ethical or practical practices – so that bad vendors are unseated and hiring managers have a better vendor list to work from.
4) Market Aggregation – larger IT shops that use significant contract staff may use a vendor aggregation portal to post staff requisitions to the pool of vendors all at once.
5) Maintaining policy for contract staff process – These policies ensure fairness (no vendor gets an unfair advantage) and legal best practices – such as preventing contract staff from suing for “co-employment” like what happened at Microsoft a few years ago.
So here is the issue with “procurement” of staff. Procurement treats staff like any other commodity. That means like desks or chairs or pencils – one is as good as the other. It is up to the hiring manager (the customer) to determine which is good. They provide absolutely no assistance in recruiting like an HR department might. That is not their function. While you might argue the value of HR in hiring technical staff, that is a completely different argument – HR recruiting is at least in the game – procurement is on the sideline watching not even coaching.
Market research on staff is not like market research on office furniture. There is no Herman Miller model 34B business analyst or Steelcase model 765-4 Project manager. All staff models are UNIQUE. Moreover, different staff have different capacity that is differently aligned with your teams needs. Lastly, no job title for staff augmentation adequately describes the level of leadership or talent required to do the job.
At the moment you might be asking yourself, what do leadership and talent have to do with contract staff? That is the million dollar question that you, Ms. IT executive, trying to think about staffing strategy have to answer. Why would your team leaders hire highly talented individuals via a contract? Why would your middle managers hire leadership on a temporary engagement? My suggestion is that it is because you have prevented them from hiring them permanently because of your existing staffing strategy or policies.
The thing is that we know when hiring permanent staff, hiring leadership and capability out of the deep end of the talent pool is always going to cost more. Moreover most of us completely understand that the more talent, and leadership capable a resource is, the delta between salary with a less capable candidate is almost always offset threefold or more by the results of the highly talented or capable resource. We know this because of experience. Our salary bands and flexibility in our HR payroll structure is evidence of our understanding of this.
When it comes to contract staff, though – we <stick our head in the EFFING SAND like retarded ostriches and> act as if contract staff are office furniture. We have no talent strata within our roles, no pay bands – just rates which in many cases are based on flawed titles and poor market research. Remember, procurement doesn’t know what we need these titles to be capable of, only what the standard industry definition of the title is and what other firms are paying. Its really hard to do market research on UNIQUE.
When using staff augmentation through a procurement, the procurement function is as likely to get in your way – to inhibit your ability to find quality candidates as it is to help you. When doing outsourcing through procurement – there can actually be some leverage as their process for master service agreement with a consulting firm and process for handling SOW (statement of work) requests can actually make the paper work less arduous. Having someone in procurement who has an ability to negotiate with the much larger firms (some consulting firms are very large) can help.