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Majority of the Time, Minority Staffing Firms Find Allies Among Non-Minority Companies

March 8, 2010

Joe Tucker has spent 20 years in the staffing industry, 18 of which have been running his own firm. Yet he admits all that experience doesn’t make him an expert.

Tucker recognizes there are plenty of things he can learn, and he can’t do everything alone. So the African-American president and CEO of Victory Personnel, a small Milwaukee-based firm, turned to Manpower, a much larger, non-minority-owned company, for help.

Manpower has indeed helped Tucker in the decade that the two have worked together. Tucker says Manpower has helped with quality control and provided a deeper understanding of financials, insurance and risk management. Manpower also has helped his company reduce its paper use through automation.

“There is not any aspect of the business that they have not helped me with,” he says.

It may seem odd for a $15 million minority-owned company to partner with a multibillion-dollar non-minority-owned global company, but it works. Tucker gets to grow and improve his firm and Manpower has a chance to work with a company that helps the staffing giant meet its diversity objectives.

Before Tucker started working with Manpower, his company never got over the $3 million mark in annual revenue, he says. But in 2007, Victory hit the $26 million mark, something Tucker says he couldn’t have achieved without Manpower’s help. Manpower has “treated me with the utmost respect and never made me feel like the little guy,” he says. “They’ve always treated me with value.”

If a minority-owned staffing firm partners with a non-minority-owned staffing agency, what’s the best way to do it? What are some tips, tools and techniques that can help ensure that the partnership is successful?

Both companies need to do their homework, says Jorge Perez, senior vice president of staffing for Manpower, who oversees its diversity supplier program. Each company should know as much as possible about the other. Also, each company needs to fully understand the other company’s perspective and what it wants to achieve in the partnership, Perez says.

Both companies need to have a clearly defined business mission and objective, says Michael Larkins, vice president of sales for Lafayette, California-based Zempleo, whose Hispanic-owned company partners with non-minority-owned staffing giants Corestaff, Volt and Kelly Services.

The two companies need to decide what kind of relationship they want to have, Larkins says: Is it going to be mentor-protégé or more transactional?

Also, both companies should designate an internal champion, says Larkins.

“There has to be a vested owner in charge of managing the relationship and making sure it’s healthy,” he says.

Larkins, who used to work for Corestaff, has been on both sides of the minority-owned/non-minority partnership.

Carmen Adames—who is of Puerto Rican descent and owns Philadelphia-based Adames Personnel Service, which has worked with Kelly Services to fill receptionist and customer service jobs—says it’s important to have a written contract between both companies.

Once a contract has been created, read it carefully, says Gene Waddy, the African-American CEO of Diversant, whose New York-based company partners with non-minority-owned staffing giant TAC Worldwide.

“If you’re going to partner with your competition, you really have to read the fine print,” he says.

Review the payment terms, volume discounts and tenure discounts, Waddy recommends.

“The contract might say, ‘We only pay our vendors every 90 days,’ or ‘We only pay our vendors after we get paid,’ which can be difficult for a small minority-owned firm. If you don’t read the fine print, you don’t know these things. You have to understand what you’re signing up for,” Waddy says.

Both companies should establish a sales referral fee before doing any kind of sales work, suggests Tom Kosnik, president of Chicago-based consulting firm VISUS Inc.

“If someone is not willing to sign a referral fee, they are not worth doing business with,” he says.

Both companies need to put together a tactical road map that spells out who is going to do what and when, Kosnik points out.

“The key there is the execution of the agreement,” he says. “The devil is in the details.”

It’s also important for both companies to know each other’s strengths, and there shouldn’t be a lot of competition between them, says Artech Information Systems CEO Ranjini Poddar, a native of India whose Cedar Knolls, New Jersey-based staffing firm partners with more than 50 non-minority-owned firms.

Trust is another key element. Both companies must trust each other from the beginning, says Tucker.

“Trust is huge in order for partnerships to really work,” he says. “Without trust, you can’t get anything done. You have to trust each other. You need to trust that the other party will hold up their end of the bargain and do what they say they’re going to do.”

Both companies must share similar values and culture, Perez points out. He says Manpower won’t work with a minority-owned company if there isn’t a values and culture match.

“My experience has been that values and ethics are probably the most critical thing when a staffing firm is looking to partner with a minority-owned business,” says VISUS’ Kosnik. “There has to be a values and ethics match. Nobody thinks about it. What is going to happen is conflict is going to arise with services, internal employees and paychecks. If you’ve got companies that have different values and ethics, it’s going to be next to impossible to get those companies to reconcile.”

Both companies should have like-minded services or areas of focus, Kosnik says.

“It’s like starting another business unit,” he explains. “If you don’t have similar sectors, it’s going to be a lot more challenging. It’s not impossible, but if you do it in a different sector, it’s just like a new business unit. It’s going to take the same amount of time, focus and energy.”

ZeroChaos CEO Harold Mills, an African-American whose company partners with a number of non-minority-owned firms, says both companies need to be involved and take responsibility. Sometimes a firm will say it is “partnering” with a minority-owned firm, but in reality that firm is doing all or most of the work, Mills points out.

“The relationship has to be substantive,” he says. “They [the non-minority-owned firm] can’t give [the minority-owned firm] the scraps. They can’t give them all the jobs they can’t fill.”

Mills calls that process window dressing.

“Window dressing happens, and it ruins the whole philosophy around growing minority companies,” he says. “If they aren’t doing any of the work, they aren’t developing capabilities for themselves. Credibility really matters.”

India native Sonu Ratra, president of Sunnyvale, California-based IT staffing firm Akraya, says that what matters most when working with a non-minority firm is quality of service, timing and delivery.

“You never want to work with a company that makes promises and doesn’t keep up with them,” she says.

Ratra also is looking for a company that is going to partner with Akraya for a long time. She makes sure the company has good cash flow and offers good benefits for employees.

Amy Bingham of Bingham Consulting Professionals says the best opportunity for a non-minority firm to partner with a minority-owned firm is when the non-minority-owned firm is functioning as a managed service provider for a large user of contract labor and has diversity requirements to meet.

“A non-minority firm selling managed service solutions should actively seek out and negotiate partnerships with diversity suppliers in advance of the sales process because of the intense focus large corporations have on meeting diversity objectives,” she says. “Even if diversity isn’t a mission-critical objective for the MSP prospect/client today, it likely will be soon, as large corporations continue to expand their diversity focus.

“Having subcontractor agreements in place before an account is sold can create a competitive distinction for the MSP supplier. It also avoids having to replace good non-minority suppliers with diversity firms after the MSP is implemented, simply to meet a client’s new diversity objectives. The bottom line: Form alliances with diversity firms today and avoid headaches tomorrow.”

Diversant’s Waddy, whose company has worked with Adecco, ProUnlimited, Bartech and Agilent in an MSP capacity, says it’s important to have a vendor-neutral model, favorable payment terms, real-time access and reasonable pass-through fees in this kind of partnership.

“A 5 or 6 percent pass-through fee could be almost half your profit,” he says.

Challenges
What challenges do minority-owned firms face when they partner with non-minority-owned staffing firms?

One challenge is that non-minority firms tend to be larger and have more bureaucracy, so the decision-making process takes longer, says Kosnik of VISUS. A small minority-owned company has to accept this reality and work through it, says Victory Personnel’s Tucker. “You just have to get smart about it—what it is, what it means, how to deal with it.”

Another challenge is risk mitigation, says Zempleo’s Larkins. “Smaller companies can’t take as much of a risk,” he says.

Markup also is a challenge, says Tamerra Buckhanan, who is African-American and president of Chicago-based BPS Services. Often minority-owned staffing companies don’t have enough markup in the partnership to make it profitable, she says, noting that the best scenario is when the client allows the minority-owned company to have a markup that makes them money.

Buckhanan’s firm has partnered with non-minority-owned firms for at least 15 years.

“It can be a good opportunity for everyone,” she says. “The clients are certainly stronger because of the diversity. They want diversity. This is a good way to make sure it happens by working with a minority vendor.”

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