© 2011 Crain Communications Inc CWS Masterclass Track: Negotiation Strategies and Techniques. • Bryan Peña, • VP Contingent Workforce Strategies & Research • Staffing Industry Analysts
© 2011 Crain Communications Inc
CWS Masterclass Track: Negotiation Strategies and Techniques.
• Bryan Peña,
• VP Contingent Workforce Strategies & Research
• Staffing Industry Analysts
© 2011 Crain Communications Inc
TO COVER:
• Definitions
• Process
• Evolution
• Critical steps
• Required Data
• How to build a strategy
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WHO IS THIS GUY?
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CWS COUNCIL
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Western Europe/Global CWS Council Members
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Captain Obvious……
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Dimension that make the difference.
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Don’t Forget the Demographics
Labour Force Projected Change from 2010
Source: US Census
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SOMETIMES SIMPLE IS HARD…
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27%23%
Master Supplier – A staffing supplier that takes overall responsibility for providing clients with temporary staff. In a master supplier relationship, all orders will usually go first to the master supplier to either be filled or distributed to secondary suppliers. Sometimes a master supplier will not only provide a significant portion of the temporary staff working at the employer’s site but also manage an organization’s contingent workforce program. May also be VOP, Vendor On Premise
Primary Suppliers – Two or more suppliers who have the majority of your spend distributed to them, in lieu of or underneath an MSP arrangement. They may be on site and they may also be in a competitive bid situation or not.
Single-Source Supplier – The provision of staffing services employees through a single supplier source.
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Managed Service Provider (MSP)A company that takes on primary responsibility for managing an organization’s contingent workforce program. An MSP may or may not be independent of a staffing supplier.
Vendor Management System (VMS)An Internet-enabled, often Web-based application that acts as a mechanism for business to manage and procure staffing services (temporary help as well as, in some cases, permanent placement services) as well as outside contractor contingent labor.
Statement of Work (SOW) ConsultantAny consultant performing work on a project under a Statement of Work (SOW) arrangement.
Outsourced Services ContractsContracts under which services are provided by an organization that has expertise in operating a specific client function.
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Types of MSP’s
• Vendor Neutral
• Master Supplier
• Hybrid Implementations
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LOW
HIGH
IV
MANAGED SERVICE
PROVIDER (MSP)
Contingent LaborOne point of contact for suppliers, contractors and hiring managersVMS TechnologySystem & Program SLAs
V
EXPANSION INTO
ADDITIONAL SPEND
CATEGORIES
SOW Management
IC/1099ConsultantsLegalMarketingTargeting
reporting, compliance and cost
Global spend centralized and controlled Global workforce visibilityCustomized SLAs and processCountry Specific SuppliersLocalized VMSConfiguration
GLOBAL EXPANSION
VIMATURITY STAGES
LEVE
L O
F VA
LUE
AD
DED
I
DECENTRALIZED
Multiple suppliersProcurement done on an ad-hoc basisHiring Manager Driven
1980s – Level I
2000s – Level IV
II
MASTER VENDOR
A Prime SupplierOne point of contactLimited AutomationLimited SLAs
III
CLIENT MANAGEDPREFERRED
SUPPLIER LIST
Select set of suppliersStandardized ContractProcurement LedSome automationLimited SLAs
1990s – Level II & III
2010s – Level V & VI
VII
ITM or ?
CW and Perm managed in on Cohesive StrategySource of labor dependant on client defined rulescontractors and hiring managersVMS TechnologyStrategic Integration of suppliers and FTE’s
Future – VII
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A growing problem
• What’s the best RFP process?
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THE SIA ROADMAP
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• Obtain sponsorship and resource commitment
• Define Sourcing Group (SG) characteristics
• Define SG market segmentation and evolution
• Collect internal baseline spend/ demand/pricing
• Document current SG procurement process/cycle
• Conduct SG value analysis
• Assess total cost of ownership/ supplier cost chain
• Develop initial savings estimate
• Assess Sourcing Group (SG) business impact and market complexity
• Conduct supplier focus groups
• Develop SG sourcing strategies
• Document current approaches and gaps
• Revise savings estimates
• Develop global list of suppliers
• Profile supplier’s capabilities via RFI, operation audit or other sources
• Develop prescreening criteria for RFP receipt
• Develop short list of suppliers
• Determine whether supplier development or competitive supplier selection via RFP is the preferred course
• Develop and send RFP
• Analyze supplier RFPs with revised evaluation criteria
• Complete SG total cost analysis
• Develop solicitation/ negotiations strategy
• Establish negotiationsteam
• Develop metrics to evaluate suppliers and savings
• Negotiation rounds with suppliers
• Recommend changes/ agreement(s)
• Develop implementation plan
• Conduct buy-in/ communication sessions
• Test materials/ services
• Implement systems to track spend/savings
• Finalize contracts• Implement new
sourcing plan/ agreement
• Embed and monitor supplier process in user community
• Supplier continuous improvement teams
• Periodically reevaluate SG category and supplier performance
7. Continuous Benchmarking Of Supplier Market
5. Select Competitive Supplier(s)
4. Select Implemen-tation Path
3. Generate Supplier Portfolio
2. Develop Sourcing Strategy
1. Understand Purchasing Category
6. Operational Integration Of Supplier(s)
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Six Sigma Road MapDefine
• Define the Opportunity• Validate Charter• Develop Project Plan• Begin Risk Management
Strategy• Develop Stakeholders
Analysis• Develop Communication Plan• Finalize Project Focus
Explore• Generate high-level
concept ideas• Select the concept that
best meets VOC & VOB• Begin high-level design
elements• Complete QFD Phase #2• Analyze existing data• Proactively manage risk
Develop• Develop detailed design• Create detailed design
elements• Design for Lean• Optimize design
performance• Confirm design capability
Implement• Plan and execute a Pilot• Develop Process Control Plan• Finalize Documentation• Implement Solution• Transition Project to Process
Owner• Identify Project Replication
Opportunities• Calculate Financial Benefits
• Project Selection Tools• Financial Analysis• Project Charter• Multi-Generation Plan• Project Planning• Gantt Chart• Pert Chart• RACI• Risk Matrix• Stakeholders Analysis• Communication Plan
• VOC Plan• Kano Model• Ethnography, Interviews,
Focus Groups, & Surveys• Operational Definitions• Affinity Diagram• Structure Tree• QFD House #1• SIPOC, Top Down & Swim-
Lane Process Maps• Non-Value Added Analysis• Basic Statistics/Histogram• Pareto Chart• Box Plot• Kaizen Event• Scorecard• Target Costing
• Application Analysis• Functional Analysis• Creativity Tools• Brainstorming• Benchmarking• Pugh Matrix• Pairwise Comparisons• Analytic Hierarchy Process• QFD Houses #2A and #2B• Capability Analysis• Statistical Tolerancing• Queuing Theory• Crystal Ball• Hypothesis Testing• FMEA• ANOVA• Scorecard
• Value-Added Analysis• Mistake Proofing/Poka-Yoke• 5S• Line Balancing• Work Control Systems• Design of Experiments
(DOE)• Full and fractional factorial
designs• Main effects plot• Interaction plot• Conjoint Analysis• FMEA• To-Be Process Maps• Risk Assessment Tools• Scorecard
• Process Control Plan• QFD House #3• Control Charts• Standard Operating
Procedures• Training Plan• Communication Plan• Implementation Plan• Visual Process Control• Process Control Plans• Project Commissioning• Scorecard• Project Replication• Financial Analysis Tools
Measure• Understand the Voice of the
Customer• Translate the VOC to CCRs• Develop SIPOC Chart• Develop Process Map• Analyze Existing Data• Implement Quick Wins• Validate Business Opportunity• Create a Scorecard
ExploreExplore ImplementImplementDevelopDevelopMeasureMeasureDefineDefine
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What is Lean? - The Five Principles of Lean Thinking
1. Specify value as defined by the customer - provide exactly what is needed, when it is needed, in the quantity needed
2. Identify the value stream - the physical and information pathway that adds value to the customer, striving to remove what does not
3. Make the value-creating steps flow continuously – make problems visible
4. Establish pull – Real customer demand pulls products & information through the system: Inventory is waste and producing/working on items & information that are not used is waste; Remove excess capacity or increase rate of customer pull
5. Strive for perfection – a never ending quest to:
• Reduce effort, time, space, cost, and mistakes
• While offering a product which is ever more nearly what the customer actually wants
Source: Jim Womack and Dan Jones, Lean Thinking, 1996
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Lean and Six Sigma IntegratedLean and Six Sigma Integrated
Goal – Reduce waste and increase process speed
Focus – Bias for action/ Utilize existing, proven Lean Tools
Method – Kaizen events, Value Stream Mapping
Goal – Improve performance on critical customer requirements
Focus – Use repeatable DMAIC approach (below) for sustained results
Method – Intense focus on projects, performance improvement
Six SigmaQuality + Cost + Explicit Approach
LeanSpeed + Waste + Implicit Approach
X
Lean Six
Sigma
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“Systematic” Invention – TRIZ
TRIZ – The Theory of Inventive Problem Solving
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TRIZ Problem Solution Path
1. ID Current Problem
AnalogicThinking
2. Translate toStandard Problem
4. Investigate Standard Solution
3. Look for a Previously Well-Solved Problem
YourSolution
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CAN YOU KNOW THIS?
What is/are the fundamental problem(s) you are trying to solve?
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TYPES OF TALENT SOURCED
• Temporary Labor• Independent Contractors• BPO Services• Consulting Services• Compliance Services• Offshoring Services• Recruitment Services (contingency/retained)• Recruitment Outsourcing• Call Center Services• Background Check services• Etc.
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CYCLICAL PROCESS
Sourcing is a cyclical process, with four distinct phases• Capture Margin • Reduce Cost• Manage Demand• Create Value
Different spend categories/companies are at different phases in the cycle
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STAGES HAVE DIFFERENT NEGOTIATION APPROACHES
• Capture Margin~ Approach Suppliers for Reduction in Pricing
~ Use of competitive threat in negotiations to reduce supplier prices
• Reduce Cost~ RFP for MSP services
~ Labor arbitrage/Kaizan/Six Sigma
• Manage Demand~ Constraint s on internal usage
• Create Value~ Collaboratively work to identify non-direct sources
of value
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SOURCING NEGOTIATIONS CAN TAKE ONLY MANY FORMS
• Sole Source/Direct Award
• Core Team Vote
• RF(x)
• Reverse Auction
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CONSIDER ALL YOUR POTENTIAL STRATEGIES
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Project Charter:
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Identify a Multi-Generational Roadmap:
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LOW
HIGH
IV
MANAGED SERVICE
PROVIDER (MSP)
Contingent LaborOne point of contact for suppliers, contractors and hiring managersVMS TechnologySystem & Program SLAs
V
EXPANSION INTO
ADDITIONAL SPEND
CATEGORIES
SOW Management
IC/1099ConsultantsLegalMarketingTargeting
reporting, compliance and cost
Global spend centralized and controlled Global workforce visibilityCustomized SLAs and processCountry Specific SuppliersLocalized VMSConfiguration
GLOBAL EXPANSION
VI
Most MNCs are now Level III or IV
MATURITY STAGES
LEVE
L O
F VA
LUE
AD
DED
I
DECENTRALIZED
Multiple suppliersProcurement done on an ad-hoc basisHiring Manager Driven
1980s – Level I
2000s – Level IV
II
MASTER VENDOR
A Prime SupplierOne point of contactLimited AutomationLimited SLAs
III
CLIENT MANAGEDPREFERRED
SUPPLIER LIST
Select set of suppliersStandardized ContractProcurement LedSome automationLimited SLAs
1990s – Level II & III
2010s – Level V & VI
VII
ITM or ?
CW and Perm managed in on Cohesive StrategySource of labor dependant on client defined rulescontractors and hiring managersVMS TechnologyStrategic Integration of suppliers and FTE’s
Future – VII
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SCOPE AND DEFINE PROJECTS
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Project Charter Elements
Business Impact• Why should we do this? What is the benefit?
• How does this project align with the business strategy?
• What is the quantified value of the project ($$$)?
Project Scope• What are the boundaries of the initiative (start and end
steps of the process or parts of a system)?
• What authority do we have?
• What is not within scope?
Problem Statement• What “pain” are we or our customers experiencing?
• What is wrong or not working?
• Why do we think we can generate the value proposition described in the Business Impact?
Goal Statement• What are our improvement objectives and targets?
• Specifically, what are we going to do and deliver?
• How will success be measured? What specific parameters will be measured? Define Y = f(x)
Team Selection• Who are the team members?
• What is their role?
• How much of their time will be dedicated to the project?
Project Plan• How are we going to get this done?
• When are we going to complete the work?
• What are the major milestones (tollgates)?
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CRITICAL CONSIDERATION
• Decision process?~ Most projects fall down/fail due to poor decision process
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WHICH IS YOU?
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STRATEGY DEVELOPMENT
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IN-AND-OUT-OF-SCOPE EXERCISE
• Brainstorm elements of the project
• Write each element on a sticky note
• Draw a circle on a flip chart to indicate project boundaries
• Place the notes either inside or outside the circle’s boundaries to show whether the element is within the team’s scope or not.
• Review with the Executive Sponsor
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SO HOW DO YOU SPOT THE DIFFERENCE?
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HARD CRITERIA
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SOFT CRITERIA:
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CONSIDER COMPANY INTERESTS
• What is their DNA?• Do they have a “consistent” client profile?• Can they articulate a clear vision ?• How promptly do they respond to requests?• What is their technical roadmap?• Where does the value propositions sit relative to
the project office?• What is their process for scoping the solution
delivery?• Under what conditions will they not bid?
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WHAT IS MOST IMPORTANT TO THE LONG TERM?
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1,000 monkeys typing for 1,000 years……..
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SAVINGS ARE REAL……..AT FIRST….
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BUT SAVINGS COMES FROM ONLY SO MANY PLACES
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Adoption
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Culture counts…
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• Procurement
• Human Resources
• IT
• Operations
• Finance
• Other
THINK OF YOUR PRIMARY CLIENT GROUPS:
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BY PERCENTAGE WHICH TARGET GROUP DOES YOUR COMPANIES CORE VALUE PROPOSITION MOST APPEAL TO?
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SOCIAL MEDIA AS A NEGOTIATING TOOL
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WIIFT
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WHAT THEY WANT…
• Higher impact roles being filled
• Clear spend parameters
• IT support for clear VMS integration rules
• Longer tenured roles
• Clear rules of engagement
• Consistent and clear RFP timeline
• Strong executive support
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YOUR RFP SHOULD INCLUDE
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No such thing as a free lunch…
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HOW DO YOU PAY FOR IT?
Program Funding SourceSupplier-fundedClient-fundedCombination of Client- and Supplier-fundedManagement Fees are Bundled as Other Cost
Program Pricing ModelsAdministrative Fee as a percentage of Spend Under
ManagementFixed, Monthly Management FeeFee per WorkerLicense Fee
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CONCLUSION:
• Success starts in negotiating deals which provide input from your entire team
• Start the RFP process with a clear charter
• Take the long view
• Don’t be afraid to engage non-traditional team members
• Be sure to provide the right information to responding providers~ Create a deal they will truly want to respond to
• Finally have realistic expectations of the outcome
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Questions?
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FOR A BID READINESS CHECKLIST:
Email :[email protected]
Subject : “Checklist”
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Bryan Pena
VP, Contingent Workforce Strategies and Research
+1-650-390-6188