Everything You Need to Know About Managing Staffing Agencies with a VMS | Conexis VMS

An Introduction

Formal vendor management, however, has largely been a business practice for large enterprises with vast amounts of spend - allowing them to invest in expensive technology and dedicated procurement departments.

That’s not to say that smaller organizations don’t have vendors. They do. They just historically haven’t had access to the technologies that allow them to truly, and strategically, manage them. Thankfully, this has now changed. With a number of new technological solutions on the market to manage those vendors, smaller businesses are now discovering that they have the capabilities to implement more strategic vendor management practices. 

Are you struggling with the complexities of managing your external workforce and the vendors associated with it? 

In this guide you’ll discover some proven best practices and solutions designed specifically for getting better results from the vendors within your non-employee workforce program, simply by improving how you manage those vendors.

This page will help you to better understand the importance of managing the vendors used within your contingent workforce program, and how technology and best practices can result in a huge return on investment (ROI).

Why Staffing Agencies are Key Partners in your Contingent Workforce Program

If you are looking for temporary workers to fill positions within your organization, working with a staffing agency can help you to find the best candidates for your specific needs.

Here are five reasons your business will benefit from working with a staffing agency:

You can scale your workforce up or down depending on demand

If your business experiences seasonal and fluctuating demands throughout the year, you’ll understand that it’s impossible for your current workforce to fulfill those requirements. A staffing agency is a great solution that allows you to access temporary workers who can be sourced as-and-when they are needed, enabling your business to scale its workforce up and down depending on current demand. 

Faster time-to-fill metrics

Need someone to fill a position immediately so you can fulfill a client’s demands? Staffing agencies have a substantial list of highly-skilled workers waiting to take temporary roles, meaning they can hit the ground running as soon as they are placed in a role with your organization. Cutting down your time-to-fill metrics means you will be in a far better position to fill your client’s needs and start working on new projects as they come through.

You will save money 

Recruiting and training is costly, and your business is unlikely to need every position to be filled with full-time workers. Using temporary workers to fill positions for the exact time period you need them will save your business money on recruitment, training, payroll, tax handling, worker compensation and many other costs. 

Access to specialized expertise and high volume workforces (such as warehousing and logistics)

Skilled workers are becoming increasingly difficult to find, and the growing skills shortage is only making that an ever-growing challenge for a large number of organizations. Staffing agencies have a wide network of highly-skilled and experienced workers, which means they’ll be able to place the right person in the right role no matter your requirements. 

Flexibility 

No matter what industry you are in, today’s markets are constantly shifting. Your business needs to be agile enough to adapt to those changes if it is to continue succeeding long into the future. The use of temporary workers will provide you with the flexibility you need to hire skilled workers for specific projects, allowing you to shift your focus to new tasks when required. 

What are the Top Challenges in Managing Staffing Agencies?

Managing multiple staffing agencies may involve a large amount of data and analytics. 

If you are still using manual management processes such as spreadsheets, in-house databases or share-point-like websites, this can be even more challenging. 

Performing these manual processes lead to a number of challenges, which all result in poor decision making, hidden costs and a complete lack of visibility into your non-employee workforce program.

Here are just a few of the challenges that organizations face:

Lack of visibility: When managing staffing agencies, it’s crucial your entire company is using the same process. With manual processes, it’s almost impossible to prevent department leaders from engaging staffing agencies on their own terms, hiring non-employees at a rate they think is acceptable and not the company-set rates.

Vendor compliance risk: Setting standards for your vendors is a crucial component of making sure they are helping your company to achieve its objectives. If you aren’t managing your vendors correctly and recording data properly, there’s no way of knowing whether your staffing agencies are meeting your company’s standards or adhering to their agreements and local statutory laws.

Vendor data storage: To place temps and independent contractors across your organization, it’s likely you are dealing with multiple agencies, hiring for multiple projects; and multiple team leaders are hiring these workers. To avoid fragmented processes, it’s crucial that vendor data is consolidated into one centralized location and updated in real-time for your entire organization to see.

For Successful Staffing Agency Management, a VMS is Crucial

To address the above challenges, businesses have to move away from manual spreadsheets. Instead, they should use vendor management software. 

Your business is relying on vendors to source, engage and place the non-employee workers into your organization that will drive business growth and meet your current workforce requirements. 

To ensure they achieve what is expected, it’s important that you build a vendor management process that puts data and visibility at the forefront of your strategy. That’s where a vendor management system comes in. 

A vendor management system is a web or cloud-based platform that allows businesses to manage their entire vendor process in one centralized, and automated, location. By consolidating vendors into one place that can be accessed across the entire organization, businesses are able to effectively track, measure and manage vendor performance.

Here’s a comment from Deloitte, on why monitoring vendor performance is crucial:

“Monitoring of vendor services is important to be able to see, communicate and escalate vendor-related issues at an early stage. This requires measurement instruments to reliably and continuously measure and compare performance against benchmarks and between vendors. The challenge is to define and select the right indicators to measure service quality across multiple providers and to have a uniform and consistent view. Vendor monitoring is important because it is the key to continuous service improvement.”

Here are the top five ways a VMS will benefit your vendor management process:

1. Better workforce visibility - By managing your vendors in one centralized location, you’ll significantly improve visibility into vendor performance and the current state of your non-employee workforce program. You’ll have insight into how much you are spending, and where improvements can be made.
2. Vendor consolidation - A contingent workforce program involves multiple vendors and thousands of transactions, making it almost impossible to manage effectively on a spreadsheet. Track and manage every step in each vendors’ lifecycle by automating and consolidating all these processes on one centralized database.
3. Better workforce visibility - By managing your vendors in one centralized location, you’ll significantly improve visibility into vendor performance and the current state of your non-employee workforce program. You’ll have insight into how much you are spending, and where improvements can be made.
4. Reduce costs and improve workforce quality - Ensuring company-wide compliance with vendor rates and standards leads to significant cost savings and superior workforce quality across each department within your organization. You’ll be able to eliminate fragmented processes or differing opinions on how each department sources, manages and pays temporary workers
5. Vendor risk management -Through the improved visibility gained from the use of a vendor management system, you can use data to calculate KPIs such as time-to-fill, time-to submit and turnover. Improving these metrics will lead to better vendor selection decisions moving forward.
6. Vendor automation - Using spreadsheets to manage vendors is not only ineffective, it’s also time-consuming. Automating all of these processes with a VMS will free up time for your employees to focus on core business functions that actually help your organization grow.

How to Measure the Performance of your Staffing Agency: Key Performance Indicators (KPIs) 

When you have a VMS to successfully manage your staffing agency, it’s time to use the data you collect to create some Key Performance Indicators (KPIs).

KPIs are the top metrics every organization should track to optimize agency performance in a contingent workforce program.

These metrics will help ensure that the vendors you work with are delivering continued ROI within your contingent workforce program.

1. Time to Fill (TTF)

• What it measures: The time taken from requisition creation to when a position is filled.
• Why it matters: Delays in filling critical roles can disrupt operations and impact productivity. A shorter TTF indicates an agency’s ability to efficiently meet your needs.
• How to use it: Compare TTF across agencies and job categories to identify bottlenecks in overall process, on both client and vendor sides, and incentivize faster placements for agencies.

2. Quality of Hire

• What it measures: The performance and retention of contingent workers placed by staffing agencies.
• Why it matters: High-quality hires are more productive, require less training, and contribute positively to your company’s goals.
• How to use it: Collect feedback from managers and evaluate performance reviews, assignment extensions, conversion to permanent and redeployment rates to assess agency effectiveness.

3. Submittal-to-Hire Ratio

• What it measures: The number of candidate submissions compared to actual hires.
• Why it matters: A lower ratio indicates that an agency understands your requirements and provides well-matched candidates, reducing wasted effort in reviewing unsuitable submissions.
• How to use it: Use this metric to identify agencies that consistently provide high-caliber candidates and to make process, request or requirement changes if ratios are universally high.

4. Bill Rate Compliance

• What it measures: Adherence to pre-negotiated bill rates by staffing agencies.
• Why it matters: Variances in bill rates can inflate costs and lead to budgetary concerns.
• How to use it: Regularly monitor compliance to ensure agencies are delivering cost-effective services within agreed-upon terms.

5. Worker Turnover Rate

• What it measures: The rate at which contingent workers leave or are terminated before the end of their assignment.
• Why it matters: High turnover disrupts workflows and increases costs related to recruiting and onboarding replacements.
• How to use it: Track turnover by agency and assignment to identify potential issues with role fit, onboarding, or agency support. This metrics is also used to drive client side behaviour and identify issues.

6. Worker Satisfaction

• What it measures: The satisfaction levels of contingent workers with their assignments, agencies, and work environments.
• Why it matters: Satisfied workers are more engaged, productive, and likely to complete assignments successfully.
• How to use it: Conduct regular surveys to gather feedback and identify areas for improvement in agency-worker relationships.

7. Fill Rate

• What it measures: The percentage of job requisitions successfully filled by an agency.
• Why it matters: A high fill rate indicates an agency’s ability to meet demand, while a low rate signals inefficiencies or mismatches in capabilities.
• How to use it: Set realistic benchmarks for fill rates and prioritize agencies that consistently meet or exceed them.

8. Compliance Adherence

• What it measures: The agency’s ability to meet legal, regulatory, and company-specific compliance requirements.
• Why it matters: Non-compliance exposes your organization to risks such as fines, lawsuits, and reputational damage.
• How to use it: Implement periodic audits and measure adherence to background checks, certifications, and other critical compliance standards.

Using Metrics to Drive Better Agency Performance

Metrics provide valuable insights into the effectiveness of your staffing agency partnerships. To maximize their impact:

• Centralize data: Use a modern VMS to consolidate and visualize agency performance metrics.
• Benchmark performance: Establish clear performance benchmarks and share them with agencies.
• Foster collaboration: Provide regular feedback and create opportunities for continuous improvement.
• Reward excellence: Recognize top-performing agencies to incentivize consistent delivery.

By tracking and acting on these metrics, you’ll not only enhance agency performance but also achieve greater efficiency, quality, and satisfaction within your contingent workforce program.

Would you like to Improve How Your Organization Manages its Staffing Vendors?

Our team of experts would love to discuss how our vendor management system is the perfect solution for your vendor management needs.

Conexis VMS is the most innovative and leading edge vendor management system designed to automate and consolidate the entire non-employee workforce and staffing agency management process. 

Conexis VMS is the world's easiest vendor management system - Built on the latest technology, our system has been built with the user in mind to ensure a seamless user experience that improves your return on investment. Conexis VMS has been specifically designed without the complicated bells and whistles of the traditional VMS players.

We can have you up and running within a few weeks with no set up or onboarding costs!

No matter the size of your temporary workforce, Conexis VMS will help you manage it with our award-winning Vendor Management System.