What Your Vendor Management System Won't Tell You About Skilled Trades

Fact: most companies struggle to manage their contingent workforce. As external workforces grow and the construction industry searches for skilled tradespeople, how can construction companies remain competitive?

The world continues to move everything onto ‘the cloud,’ and vendor management systems are one option for talent acquisition and management strategies. Investing in a quality VMS ensures you’ll stay ahead of the curve.

But, as well as the many benefits of a VMS, what are the limitations specific to the construction industry?

Vendor Management Systems: What They Won’t Tell You About Skilled Trades

The benefits of a vendor management system are clear. It can manage labor costs, ensure your business is compliant, engage eligible external talent, and improve and automate your onboarding process.

The right VMS allows you to secure the right talent with hard-to-find skills and respond quickly to workforce shortages, especially during the aftermath of the pandemic and skilled trades shortages.

But there are drawbacks to using a VMS in the construction industry. Vendor management systems aren’t for everyone. We outline the limitations and possible solutions to keep your recruitment and workforce management agile and watertight.

What is a Vendor Management System?

A VMS is a cloud-based software platform that distributes the job requirement to a recruiter, staffing agencies, and other vendors. An agency signs into the VMS and views a company’s open jobs. Agencies can submit talent using the VMS.

A VMS is designed to make the hiring process efficient and seamless. Is it all it’s cracked up to be?

Problem #1: Just Another Number

Many VMS companies treat all staffing companies the same with a one-size-fits-all approach.

Different construction companies have different needs. Smaller companies might not need all the bells and whistles that a VMS provides. Does the subscription reflect that?

A VMS should enhance relationships between the client and the staffing agency, not hinder it– yet staffing agencies often can’t contact hiring managers to find out precisely the kind of person they’re after as everything goes through VMS software.

Finally, a numbers-driven VMS vendor focuses on providing candidates that look good on paper and fit specific requirements but can’t ensure they will fit your company culture.

Solution:

When the contingent workforce needs to be highly skilled and specialized, you need a VMS provider willing to build relationships with staffing agencies and hiring managers to ensure the right skilled tradespeople are placed where needed.

The best VMS providers know that it’s crucial to cater to your needs and adapt to market changes, growing with you over time.

When you’re in the market for a VMS, you’ll be able to tell from the outset how invested they are in you by asking the right questions. Pay attention to how promptly they respond to inquiries and communication throughout, determine how customizable the platform is and subsequent costs, and whether they want to develop a relationship with individual managers.

Problem #2: The Multiple Vendors Trap

A vendor management system might be able to provide highly-skilled tradespeople. But how do you know they’re the right fit?

A VMS can cast its next wide by using different recruiters and agencies to find candidates, but the human element is lost with an emphasis on speed and efficiency. Highly skilled doesn’t mean highly suited to your company and vision.

Without a human element, the first candidates submitted fill quotas, but all nuance is lost.

Solution:

Look for a VMS that includes more personal communication and client handling. Once you have an idea of who you want to work with, explore their website and request a brochure.

• How many years of industry-specific experience do they have?
• Can they provide case studies?
• How many staffing agencies do they serve?

Knowing if you’re one of many or you’ll be a priority is something to consider. Also necessary is knowing how to implement and use the VMS. There needs to be regular support for end-users, including training tools, user guides, tutorials, and customer support lines.

Problem #3: The Middle Man

When a vendor management system is employed, staffing agencies have little to no contact with the hiring manager. Everything must go through the VMS, and the VMS handles all correspondence.

There’s a disconnect between hiring managers and staffing agencies, leading to managers not knowing which agency provides the talent. The VMS receives all the credit for a great hire.

You have to rely on the VMS to match you with the same agency–something they aren’t likely to do.

Solution:

Having direct contact with a staffing agency provides qualified candidates, but you can also be assured you’re hiring contractors that match your culture.

Problem #4: Candidates Don’t Like Vendor Management Systems

The major problem candidates have with vendor management systems is that it paints them black and white. Hiring managers can never tell if a candidate is a good fit because a VMS can’t measure quality, character, or perform careful reference checks.

Candidates might also be ruled out based on where they live (disregarding whether they might be willing to travel).

A transparent communication pipeline is needed to ensure highly skilled tradespeople don’t fall through the cracks.

Solution:

Skilled tradespeople are not a commodity.

People are your most valuable asset, and hiring a candidate based on a VMS recommendation alone might lead to unsatisfactory hires and frustration, especially in sectors with skills shortages.

The recruiting process must be transparent. The client should relay exactly who they’re looking for, allowing the staffing agency to ask questions and develop a relationship. The staffing agency can then source the candidate who is the closest match to the brief.

Problem #5: Lack of Flexible Capacity

When you’re deep into a project and need contingent staff, slow hiring processes hinder workflow and completion times. Reactive hiring through a VMS can be more costly in the long run due to wrong hires, shoddy workmanship, and lack of communication.

Trusting a VMS to bolster your workforce might feel like a race to the bottom at times, and skilled workers are bypassed for workers willing to take lower wages.

Solution: A Deeper Bench

Having a deep bench of highly-skilled tradespeople ready to jump in on ongoing projects is crucial. Staffing agencies offer flexibility to companies who need to hire skilled contractors for various project stages, mitigating the risk of wrong hires.

Direct contact with the hiring manager enables a staffing agency to recommend the right person for the job.

The Bottom Line About VMS

Vendor Management Systems apply a very impersonal, cookie-cutter, approach to finding and accepting talent. That's it. It doesn't mean they're not useful or valuable, but it doesn't beat meeting people where they are.

It also forces the lowest cost possible without much input from the client. This may have worked when there was more talent than jobs, but today instead of driving the best deal on skilled talent it pushed the least talented people into the portal. When margin is cut for agency partners and workers at a time when better deals can be found literally everywhere else there is little incentive to work for a company using a VMS system.

In full disclosure, we have a few partners today using VMS systems at a corporate level. Unfortunately, their lower-level managers are trying to find creative ways to work around the system because they are not getting what they need and missing goals.

When Does A ‘Niche’ Staffing Agency Trump A Vendor Management System?

A niche staffing agency is the best option when you’re looking for a deep bench of highly-skilled temporary staff ready to efficiently and successfully fill a position on a worksite or project.

While a vendor management system can cut costs and simplify processes, it’s best employed when you’re looking for numbers and staff that don’t need to be specialized or highly skilled in specific areas.

Yes, a VMS can handle onboarding and payroll. Still, the best staffing agencies will help you bring the right people who already know how to work in a team environment and are committed to upholding outstanding craft and safety standards.

Instead of outsourcing recruitment, reach out to IST today and enjoy a relationship-driven process to find the best skilled tradespeople for your project.