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HCMWorks Insights

How to Ensure You're Paying Fair Market Rates for Staffing Vendors

Posted by Julia Fournier on 14 Dec 2015


Staffing vendors play a key role in ensuring companies have the resources they need to complete a project. Being able to have open lines of communication between the business and the vendor is a key factor in both sides feeling their agreements are fair. However, when it comes to the topic of market rates, many groups are hesitant to make their voices heard. Here are some tips to make sure you don’t overpay for staff.

Know the Key Players

Many people in a company are involved in working with staffing vendors. Project Managers, HR Managers, Procurement Leaders, and Vendor Management Officers all play a part, and they all want a piece of the recognition when great staff comes aboard. Project Managers define what needs to be done and send this information to HR. Human Resources is in charge of making sure that people acquired from the vendor meet the policies of the company to do with human capital and worker experience. All of this falls to the Procurement Leader, who makes the actual staffing decisions. They are the ones responsible for which staffing agency the company uses, as well as selecting the individual employees. The VMO’s tasks range from ensuring internal policies run efficiently and with low cost, then shift towards candidate quality, customer service, and policy compliance as the business grows.

All of these people working on the staffing vendor front can create tension, since everyone has a different idea of how to go about acquiring employees. Ensuring that they all work together and know the requirements is the first step to getting quality help at a reasonable price.

Research and Specialization

There are dozens of staffing vendors for companies to choose to hire from, and nearly all of them are specialized in providing workers for specific roles and industries. Finding the correct vendor to work with is a key part of ensuring fair market rates. Shop around as much as you can, and choose a vendor that supplies employees suited to the level of expertise you need. Hiring someone more skilled than your task calls for generally comes with a higher pay rate and possibly more markup from the staffing vendor as well. Take as much time as possible, as choosing the right vendor to partner with will save you time, money, and headaches in the future. Don’t be afraid to ask questions to make sure you get the staff you need while keeping costs down.

In the end the best way to avoid overpaying for staffing vendors is to learn all you can before committing to a contract. Knowing not only the pay rate to the employee, but also the cut the vendor takes, as well as expected benefits and bonuses, will prevent nasty surprises in the future and help create a mutually beneficial relationship between you and the vendor.

Consider a Vendor Management Solution

You may not even know how many staffing vendors you have, how many contingent workers you have, or how much they’re costing you. How can you ensure vendor compliance, fair market rates, and proper classification? Without an effective system in place, you won’t be able to identify possible rogue spend, much less reduce it. A vendor management solution will help you gain visibility over your contingent workforce so you can ensure you’re paying fair market rates and better manage your labor spend.

 10 Ways to Reduce Costs & Risk of Your Contingent Workforce

Tags: Vendor Management

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