What an Association Can Learn from their HR Department About Hiring AMCs
Hiring an association management company (AMC) is a lot like hiring a staff person -- but on a temporary instead of permanent basis.
In the effort to get associations focusing on the qualifications of an AMC during a selection process instead of using a low-bid proposal (RFP) process, the AMC consulting world has an unlikely ally – the human resources department.
Before we continue I should introduce what I recommend as the replacement process for the low-bid RFP - Qualifications Based Selection (QBS). QBS is a vendor selection process in which price is not an evaluated criterion. Instead a budget is disclosed by the buyer and the final price and scope are negotiated with only the most qualified firm.
In most RFPs even if price is only weighted at 10%, it can effectively become 100% of the decision if the vendor qualifications are poorly evaluated -- the case in most RFPs. Unless an RFP has a well-defined scoring rubric that uses binary type scores where a proponent can only score 0, 5 or 10 (out of 10) in any category, it is likely that many firms get inappropriately and inaccurately clustered around a similar and subjective qualification score, meaning that the tie-breaker is always low-price and effectively making low price 100% of the selection criteria.
QBS is so effective that the US federal government created federal legislation (The Brooks Act) in 1972 making it mandatory that QBS be used when hiring architects and engineers for any federally funded projects. And since 1972 over 40 states have also adopted versions of this legislation and its use continues to grow in Canada and other countries.
It makes sense that if you’re hiring experts to design important things like hospitals, bridges, labs and buildings that it’s probably best that you hire the most qualified at a fair price, instead of the least qualified at a low price. I would suggest that running an association is also an important thing that is better done by those most qualified instead of those that are cheapest.
Virtually every association that hires AMCs is already unwittingly using the QBS process within their organization – just not in the procurement department. Instead we find the QBS process alive and well in the human resources department where it’s being used to hire permanent staff.
For the record I have never seen an HR department use a low-bid process when hiring a staff person. And in fact if I suggested this to any HR department they would look at me quite strangely, I am sure. Instead of trying to find out who can fill the role for the least amount of money, HR wisely looks for the most qualified candidate within a predetermined and previously disclosed, budget and skill set. They advertise their need for a certain type of expertise within a certain salary range and invite qualified candidates to submit resumés (read: proposals) bearing objective, defensible and credible evidence of their expertise by listing such things as education, previous work experience, specific prior projects, unique training, publications or articles they have written, presentations they have given, research they have completed, awards they have received, etc.
An initial 0/5/10 style evaluation of the resumés (read: proposals) against the objective criteria for evaluating expertise usually yields a shortlist of candidates for an interview – which is really just a chance for the hiring committee to explore and further evaluate candidate claims of expertise with a more robust discussion. The interview is an opportunity to further refine the initial scoring of the shortlisted candidate using dialogue and more specific inquiry.
At the end of the interviews usually one candidate has clearly bubbled to the top, and negotiations then begin with that candidate within the previously advertised salary and requirements of the job.
Should those negotiations not go well, the buyer is free to cease, and move on to negotiating with the second most qualified. In this manner the client is always guaranteed to hire the most qualified staff person for a mutually agreed upon fair price, unlike the low-bid RFP process where the minimally qualified and lowest price typically have the scoring advantage.
“But Cal,” buyers often protest, “hiring one staff person is not the same as hiring an AMC for a million-dollar contract!” Hiring a $100,000 per year employee, with the expectation that he or she will be a long-term employee lasting 10 years or so, is not a $100,000 hiring decision. It is a $1 million-plus hiring decision. It is a QBS-style hiring decision made without a low-bid requirement, using only a two or three-page proposal (read: resumé), and accepted worldwide as the de facto standard for hiring professional staff.
So explain to me again why associations that use a QBS process to make million dollar-staffing decisions can’t also use QBS for million dollar AMC vendor decisions?
Cal Harrison is the President of Beyond Referrals a company dedicated to improving the way professional services firms are hired. His second book Buying Professional Services: Replacing the Price-Based Request for Proposal With Qualifications Based Selection is available at www.BeyondReferrals.com