Imagine being a corporation so large your IT department is divided into divisions of hundreds of people and you need to fill 200 IT positions as soon as possible. Daunting? Yes. Expensive? Incredibly. For these reasons, the Vendor Management System was born. Using a system that outsources and streamlines your corporate recruiting effort seems like a dream come true. For labor suppliers, however, it can be a nightmare.

Vendor Management Systems (VMS) streamline hiring for large companies by limiting candidates to a group of prescreened staffing companies that fill contingent labor or permanent positions. Although large companies enjoy a reduced hiring costs spent recruiting, the system incurs substantial losses that are impossible to record on a ledger.

You could liken the VMS to the doorman at a club. The club (large company) relies on the doorman (VMS) to screen the crowd making sure only the right people get in. Using an open contract example, a company offers a position through a VMS and the VMS, in turn, offers the contract to its limited group of staffing vendors. The doorman only lets friends of a chosen few inside – the VMS is the gatekeeper to the lucrative contingent labor contract. Once a large company hires a VMS there is no way around it – the velvet rope becomes the Great Wall of China.

Because of the imposition of a middle-man, recruiters lose access to the hiring managers of large companies. Although large companies see this is an advantage, it destroys a critical relationship. Often job descriptions are distributed with incomplete details, compromising the “fit” of a candidate. Because staffing vendors are cut off from the corporate hiring managers, they have incredible difficulty matching candidate’s soft skills to their potential employer.  Companies can no longer see a candidate beyond their technical skills – their personalities become lost in the transaction.

Balancing the need for large companies to get the personnel they need as cheaply as possible, and staffing companies to provide the right candidate, will never go away. Perhaps this will create enough market pressure to support VMS alternatives that put the “person” back in personnel management.