Rant: Death to the VMS

In the course of the staffing portion of our business, occasionally we are asked to be part of a VMS (vendor management system) program. While we normally decline the business at that point, for a variety of reasons we have chosen to be part of a few of these over the years. Nearly every time I regret being convinced that this next account will be different. Now I will say, with my finance background, I get the logic that managing rogue spend is important and a system can be a good way to do this, no issue here. My beef is simple – if you think that anyone involved in the process will have an improved experience or that you will get any better process or quality out of doing a standard VMS system – you are sorely mistaken. That is not to say that it cannot be done, I just have yet to see any of the big players or the system based programs do this, ever. It is all about the perceived money savings, period, the end.

Here’s a little playback from a recent experience:

Them: you haven’t submitted candidates to the last 8 jobs we sent you….please sign this stating that you know that you got “0″ points for this period and that is bad….we will be reviewing vendors for high scores (submittals for jobs)

Me: we stopped submitting to jobs that we do not have a direct relationship with the hiring manager because any time we did, it was a complete waste of time, we never got any feedback, never, nothing, nada…and the jobs are actually already filled by the time you give it to us thru the system anyway.

Them: Well [hmph]…1st – you are NOT allowed to have direct contact with hiring managers…EVER; 2nd they are not filled when we send them, why would you possibly think that?

Me: “Perhaps 2 reasons: a) because that is what we do to you with those we have the relationship with e.g. the hiring managers reach out directly and we work closely with them to fill the position, then they post the job to the system…to which we submit the final candidates and they make the selection which was already determined… and b) as a result, the other jobs you send us are closed within about 24 hours of you sending them out (an impossibility if client wants to review, phone and f2f interview, etc using the system….) to us.”

Them: um, I was not ready to discuss specific jobs and have not reviewed them, but I am sure that is not the case……I’ll have to check on that and get back with you….

Me: “you do that…..I am sure I’ll be getting a call back real soon” {cut to crickets chirping}

Now, I may be a little harsh in my view, but is there honestly anyone (with a brain) that believes that you can do high quality recruiting with only a (usually terrible) boiler plate job description? No ability to ask questions, discuss the team, the environment, what makes someone successful in the role, and not what aspects are most important, etc. A whole world of information that is relevant both to making the best match and selling candidates on why this opportunity may be worth their time.

Second – the experience for the hiring managers is just as bad! they have to, ahem, do their normal process…. and then put the job into another system, supposedly review resumes, put in the right pay (which is usually terribly hard for some reason) and start day and time. Of all of our clients over the years…I have yet to meet a hiring manager that EVER thought this gave them higher quality talent or improved their speed to hire…..NOT.EVEN.ONE.

That is not so say that there are not companies that have been able to merge the best of high touch and a system (we are working with one Fortune 50 now that has), but the number is staggeringly small in comparison to how many put the systems in horribly. Why is it that these companies cannot get it right, or even be in the right ball park?

Comment by Phil Peters on June 29, 2010 at 8:15am: If there is anyone out there with a better experience with a VMS it would be a major surprise to me

Comment by David on June 29, 2010 at 8:50am: I find the issue is VMS systems sell into finance or procurement who just don't want to manage hiring..too much effort. So they can drop it on the lap of a VMS system, pretend there is cost savings by putting in a low rate card. The theory is fine but the practicality of it doesn't work.

NOTHING WILL EVER REPLACE A PERSON SPEAKING TO A HIRING MANAGER AND A PERSON SPEAKING TO A CANDIDATE.

I have NEVER found a hiring manager who was happy with the "new" hiring process. In order to make money in the VMS model they put a junior resource who failed as a direct recruiter in place to run the "system".

This will go the way of offshore developement and start to come back but it will take a few years.

David Belanger, Director of Sales and Business Operations
AVID Technical Resources
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Comment by Dan Arkind on June 29, 2010 at 8:50am: As a former third party recruiter who started a recruiting software company - I'd love to strike up a dialogue with you about what a *good* VMS could look like - i.e. I'm sure there are things that could make your life easier / better... and I'm curious what those would be.

PS - this is hilarious.

Comment by Phil Peters on June 29, 2010 at 8:56am: The VMS Software is not the issue.
The issue is that it is usually driven by procurement as a cost saving system vs. anayone looking to hire the best & most appropriate candidates in the quickest most efficient manner. I am not saying that "no VMS" is automatically quick and efficient, obviously not, but I have yet to see a VMS system that was quick and efficient unless it was circumnavigated.

Comment by Lisa Howarth on June 29, 2010 at 9:50am: I come from the "other side" (aka the dark side apparently) representing a VMS/MSP company, and I find that your comments are all-too-familiar in the market place. I have spent 8 years on the agency side and another 5 in the VMS/MSP space, so I completely understand your frustration.

The VMS is not the problem - the VMS is just the system, so as long as it is not too cumbersome to use for you and for your contractors logging time, it should be a no-brainer right? Wrong ... I've seen a number of systems that take FOREVER for a vendor to submit a candidate. It's a waste of the vendor's time, time that they could be spent recruiting for more candidates.

Where I see the major problem is on the MSP side - the person in the middle between you and the hiring manager. You're right; often times companies will hire junior people to vett the resumes, liaise with the vendors & managers, phone screen etc. As a vendor, how do you have any trust that these people represent your candidates appropriately to the manager, never mind even understand what your candidates' qualifications are?? I've seen competitors win business promising one person, and bait-and-switch … they hire someone brand new to their company, no track record .. nothing.
So you couple a junior person who likely doesn’t understand the roles, the client, and often not even what the MSP’s role is .. and it spells disaster for everyone involved.

The key to a successful MSP are several fold:
1) Having program managers who know what they are doing – they know how to recruit, they know their client, they know how the process works, they know the challenges that the agencies face internally. This helps to give everyone involved a level of confidence that the program has a shot at being successful.
2) The MSP understands that it needs to keep both Managers AND Vendors happy. The Manager part is intuitive, but so many MSPs don’t get the Vendor part. At the end of the day, the MSP can’t be successful if the vendors won’t recruit for their jobs. This includes not sending out jobs that have really already been filled.
3) The MSP gives enough benefit to the vendors to incent them to tow the party line. In reality, a vendor circumventing the process (i.e. filling outside of the system, contacting managers directly if that’s considered inappropriate in the program, etc.) should be knocked down a notch. If the MSP program actually works, the vendors shouldn’t need to circumvent anything.
4) The MSP recognizes there is such a thing as too many vendors. Realistically, what incentive does any vendor have if they’re competing with 10 or 20 or a 100 vendors? Give them a reason to put their best recruiting foot forward, give them a reason to give you a competitive price for the resource. They need to justify their investment of time by winning a decent percentage of the time.

I’ve been lucky enough to be part of developing these as pillars to our organization’s MSP strategy, and feel that we have been successful in truly developing partnerships with our vendors and clients. Would the vendors prefer to have a direct relationship with the client instead? Absolutely. But feedback has told me that we have a fair program, qualified managers, and the vendors’ success speaks for itself.

Thanks for indulging the other side’s point of view. I share your frustration with how many other VMS/MSP programs just don’t get it.

Comment by Thyaga on June 29, 2010 at 9:55am: Based on our experience - Every hiring company adopts VMS systems with good intentions and high expectations. These decisions generally does not involve any hiring managers, who are suppose to be the main recipients of such initiatives. For their surprise, hiring managers are asked to use VMS and successful hiring managers understand the fact that recruiting process involve lot of human interactions and technology can enable streamlining communications & team collaboration.

Hiring managers and qualified candidates suffer the most because of these broken VMS solutions. What are their options ?

Comment by Tim Giehll on June 29, 2010 at 10:32am: I've spent the last 10 years helping over 500 staffing firms automate and streamline their operations with our eEmpACT and Adapt automation tools. We also started helping corporate HR recruiting groups with their automation with Bond Talent and the topic of VMS is a daily discussion. I feel that the VMS business model is NOT sustainable because of the need to strip off 2-3% of the invoice total from the staffing firms revenues, which is only adding more costs to this Human Capital Supply Chain. That does not even address the operational issues that have been addressed in this string of comments. The other reason for the evolutionary demise of VMS is the "risk" of payments not making it to the staffing firms, as was the case with the Chimes bankruptcy. These are the reasons that Adecco bought Bee Line, Taleo bought White Amber, Nelson Staffing owns Workforce Logic and this leaves Fieldglass and IQ navigator as the only major 2 left standing. Within the next 2 years these last 2 standing will also be purchased by staffing firms.

What does the future hold?? It involves the spliting of VMS capabilites and their assimilation into corporate talent management systems AND into the staffing software solutions. The need for a "VMS middle man" will be gone in about 2 years. The corporate talent systems and the staffing supplier systems will be directly connected in a ERP like supply chain environment.

The need for corporations to better understand and control this important cost catagory is critical to their survival, BUT the staffing firms need to deliver great quality to the hiring managers is also just as important. Both need to move forward, but it will soon be time to leave the VMS vendors behind. For more information, check out www.HumanCapitalSupplyChains.com .

Comment by Shannon Russo on June 29, 2010 at 10:43am: What a great dialog - I cannot say I disagree with any of the observations!
Phil & David - of course I agree but how do we articulate and fix the broken processes so that clients and firms can achieve success for all and the candidates as well?
Dan - would love to chat - I am sure there are plenty of others with opinions. I do think that a system with the right process can be successful, but the focus for many systems today will need to shift and multiple parts of the organization will need to be involved in it. Phil's point about cicimventing to ease the process is so often tru!

Lisa - Thanks so much for sharing - you are NOT the opposing view, we share the same wish and views related to success! Your pillars are a great framework and will go a long way, and alas, so often are not committed to or even focused on - and I hold the clients and MSP's jointly responsible. We also run MSP programs, some with system and some without but we are working hard to bridge the gap of quality in execution and the interaction that requires with the control that typically is a critical goal of these programs. And I won't say we definitively have the answer yet. I think it will take more engagement with clients to understand the dynamics which fail and jointly develop solutions - not an easy task as so many are driven by cost and control only (without regard to the talent acquisition and mgmt part).
Thyaga has the right perspective - our questions should be how can we move the model to what the panecea that is the reason most clients embark on these solutions?
thanks all-
Shannon

Comment by Kim Bechtel on June 29, 2010 at 12:12pm: I am sooo glad I focus on helping small businesses. From time to time a post like this reminds me of what it's like to work for big companies where shaving a couple of percentage points from a cost item in a budget is more important than bringing in talented people to your organization. Great post, awful experience.

Comment by Brian Keith on July 2, 2010 at 10:14pm: VMSs are Rube Goldbergs. Impossibly elaborate complicated systems (machines) use to accomplish simple tasks. They're interesting to look with all of its bells, whistles, tabs, and data. So Shannon I absolutely agree! VMSs aren't worth a shit. IMO it complicates and elongates the process. It has NEVER been a friend to recruiters. I've had experiences similar to yours years ago and made a decision at that point to NOT work with companies who use VMS.

My remedy was to put together a simple spreadsheet. I send it to my clients on Friday before we have our weekly review. Works really well. Simple to understand. Doesn't require additional training.

This stuff is generally pushed at the bean counters who are concrete sequential linear thinkers. If they perceive there is an opportunity to save a buck they'll buy it. Problem is neither business or life is concrete sequential or linear. They live and die by the numbers. That's why there are VERY few CFOs that grow up to be CEOs. I would VERY interested to see someone compare the cost of the VMS to the cost of lost opportunities because recruiters that won't work with them. If the bean counters want to quantify something they better consider those numbers. I'd be willing to bet that in the end VMS loses out EVERY time.

I love technology. Own tons of the stuff. That said, it's been my experience that sometimes the simpler the method the better. Additionally, it strikes me that VMS was designed to handle companies who sell/supply commodity items. People are NOT commodities. Stop treating them as though they were.