How to Measure the Efficiency of your Contingent Labor Program

This is the second in a 4-part series designed to help contingent program managers understand and implement analytics to support the QECR Performance Framework developed by Staffing Industry Analysts.

The QECR framework is designed to help define and measure the performance of contingent worker programs across four dimensions—quality, efficiency, cost, and risk. Using the framework, you can get a firm grasp on the current state of your contingent labor program and drive improvement toward future goals.

In contingent labor management, there’s always room for improvement—even in the most mature of programs. Now that we’ve determined how to measure quality, let’s explore the next pillar of the QECR Framework.

Efficiency is an essential element to consider when analyzing your contingent workforce. If you’re not measuring efficiency analytics, it’s time to start tracking the speed of processes within your program.

The trick to identifying inefficiencies is to look at your contingent labor program as a web of stakeholders working together—hiring managers, vendors, and the contingent workers themselves. From there, you can establish accountability for program management among these stakeholders to boost efficiency program-wide.

You can use the following metrics to begin measuring efficiency for each type of stakeholder involved in your contingent labor program.

1. Hiring Managers

As any contingent program manager knows, hiring managers have tremendous power to accelerate—or decelerate—the contingent labor lifecycle. They play a key role in sourcing, onboarding, and retaining talent, so their efficiency is paramount.

Here are 3 metrics to assess and increase efficiency of your hiring managers:

• Time to fill (TTF) – The duration between creating a requisition and the worker’s engagement (or the worker’s start date) is considered time to fill. Measure how quickly hiring managers respond to and complete each step in the hiring process to gauge their efficiency.

Tip: Establish a baseline for expected turnaround against which you can assess hiring managers across the organization.

• Time to complete worker evaluations – Worker evaluations also provide insight into your managers’ efficiency and sourcing capabilities. If hiring managers aren’t completing evaluations in a timely manner—or don’t complete them at all—they’re hindering the engagement review process.

Tip: While many programs administer post-assignment evaluations, best practice calls for multiple evaluations throughout the lifetime of the contractor. This will give you and your vendors the most accurate view of individual performance.

• Approvals – Throughout the contingent labor workflow, approval steps—including requisitions, timesheets, engagements, and statements of work (SOWs)—are always at risk for delay. Without proper intervention, bottlenecks can crop up, signaling a potential issue with a given manager or department. By identifying the source of approval bottlenecks, you can spotlight a powerful lever to boost the efficiency of your contingent labor program.

Tip: Examine approval channels and the duration of approval processes to isolate inefficient managers who aren’t responding promptly. Identify the root cause of delays to determine whether the solution is training, approval delegation, or some other corrective action.

2. Vendors

Vendor performance is equally key to efficiency across your contingent labor program. Holding vendors accountable for their response times and operational efficiency is crucial.

Begin analyzing vendor efficiency using the following metrics:

• Speed/quality balance – Efficiency is commonly associated with speed, but don’t lose sight of quality. Vendors can slow down the screening process by submitting large numbers of underqualified candidates. Finding quality takes time—but it shouldn’t take too much. Vendors and program leaders must come to a mutual understanding of the ideal balance between efficiency and quality.

Tip: Use your reporting platform to track the correlation between candidate quality and vendor submittal speed. Review, reform, or disengage with vendors that don’t maintain an appropriate balance.

• Compliance – Many current contingent labor programs expect vendors to take partial ownership of completing compliance requirements during onboarding and off-boarding. Delayed or inaccurate fulfillment of compliance requirements creates both risk and inefficiencies—including false starts and duplicate work.

Tip: Observe and track whether and how often each vendor completes compliance tasks late or incorrectly. Set and enforce clear expectations in your vendor service-level agreements (SLAs).

• Accuracy in candidate qualifications – For each open position, you rely on vendors to indicate how well candidates meet the job requirements. Without checks and balances for analyzing engagement quality, vendors’ candidate assessments can become biased and self-serving. Develop a plan for evaluating candidate quality and correlating that with performance at disengagement to ensure your vendors accurately present candidate qualifications and avoid prolonging selection and wasting hiring managers’ time.

Tip: Identify vendors that have a track record for submitting high-quality candidates but low engagement satisfaction, which indicates a potentially problematic disparity, and monitor future cases to plan for improvement or vendor replacement.

3. Contingent Workers

Inefficient workers reflect poorly on both the workers themselves, the supplying vendor, and the manager who selected and engaged them. Considering that contingent workers interact simultaneously with your organization and their vendor, using targeted metrics to assess contractors is vital for understanding how to improve program efficiency.

• Early disengagements – Workers who don’t finish contracts cause major disruptions in work, send vendors back into sourcing mode, force managers to spend time training replacements, and otherwise create duplicate effort and inefficiency. Data on disengagements will tell you a lot about where and how you can improve the contractor experience and reduce flight risk.

Tip: Track workers who don’t complete assignments to term. Identify the vendor and look for trends in your organization to determine whether early disengagement is a worker-, hiring manager-, or vendor-related issue.

• Engagement extensions – While extensions typically indicate high-quality talent, other underlying elements could be at play. Did the manager approve an engagement extension because of a skills need? Or did the contingent worker fail to complete their assignment in the allotted time? The former may signal a need for more targeted sourcing. The latter may mean the worker wasn’t qualified for the position, signaling a potential vendor issue.

Tip: When extending an engagement, justify your decision. A report detailing reasons for engagement extensions allows program managers to identify genuine worker efficiency and to determine whether or not to renew contracts.

Lay the Groundwork for Program Efficiency

Your contingent labor program might be experiencing varying levels of inefficiency, and the causes may be interrelated.

Remember, knowledge is power.

By reviewing performance using these metrics, you will gain insight into the efficiency of your manager, vendor, and contractor populations. And that, in turn, will empower you to make smart adjustments to your program strategy and processes.
 

Meet the Expert
Taylor Ramchandani – VP of Strategy

Taylor Ramchandani is responsible for the management and strategic planning of the VectorVMS vendor management system. Taylor is committed to client satisfaction and to ensuring VectorVMS technology meets the current and future needs of clients and managed service providers (MSPs). She uses market research and in-depth industry experience to create products and services that make extended workforce management efficient and intuitive. Taylor oversees product development, marketing, and business partnerships for VectorVMS and is responsible for driving innovation for contingent workforce management. Connect with her on LinkedIn.