Value Seeker

valueseekerKey metrics can help organizations measure what was once elusive: contingent labor quality.

By Eric A. Osterhout

As organizations today rely increasingly on contingent labor to remain competitive in the marketplace, measuring the quality of this growing component of the overall workforce is of paramount importance. Since quality is subjective, changes over time, and varies from organization to organization, it is important to first identify and define worker quality. This can be achieved by looking at worker tenure, favorable versus unfavorable results, worker productivity, or even safety. Hiring manager surveys often produce insights quickly that can yield meaningful answers to what quality looks like for the organization.

Once an organization determines what constitutes quality, quantifiable metrics are next to be developed. These metrics will allow organizations to rate various components of the contingent workforce program as well as offer a benchmark.

From a micro perspective, the quality of an organization’s non-employee workforce typically translates directly to the quality of the supplier base. The supplier base is the root of where contingent labor workers are coming from. Typically, 85 percent of a contingent workforce program’s problems can be solved by better supply base management. How can organizations better manage their suppliers?

One way is to continuous rate suppliers by using a supplier scorecard. This scorecard can often be generated as a report through a technology platform, such as a vendor management system (VMS). Typical reporting metrics would include requisitions received, number of candidate submissions, time to submit, and other general supplier data points. While these data points are a good basis to help identify quality, adding in specific data points to the scorecard to reflect what quality means to your organization is a must in determining worker quality. For example, if worker quality translates to workers staying for the entire length of their assignment, then analyzing attrition rate data among suppliers is key. This will help identify issues with particular suppliers, or even organizational and/or program process issues. Adding such data points to your supplier scorecard can pinpoint areas that need further analysis to improve worker and program quality.

From a macro perspective, the overall quality of the contingent workforce program can be measured by how it’s managed—either internally or through the help of a managed services provider (MSP). By keeping your finger on the pulse of your overall contingent workforce program via a comprehensive program scorecard can also impact worker quality. Tracking such metrics as program satisfaction, adherence to financial metrics, supplier satisfaction with the program, hiring manager program, and VMS satisfaction, and other various program-related metrics tailored to your organizational goals, can also impact the overall quality of your contingent workforce.

For example, low hiring manager and supplier satisfaction can impact the quality of your contingent workforce in ways you might not predict. If the overall program’s performance is not seen as favorable by the supply base, they will spend their time and efforts supplying their best talent to other more favorable programs. Likewise, if hiring managers view the program as unfavorable, they will seek ways to procure contingent workers outside of the program. They might consider bringing in contingent workers under statement of work (SOW) arrangements or other means that might be considered out of program scope. Instituting an overall contingent workforce program scorecard with meaningful metrics tied to your organizational goals can go a long way to ensuring a quality contingent workforce.

Research shows that the contingent workforce is becoming a larger segment of today’s organization and measuring the quality of that contingent workforce is becoming increasingly important. Understanding what worker quality means to your organization and instituting meaningful supplier and program metrics will allow you to modify your program approach to improve the quality of your contingent labor, making your program a successful component of your overall total talent management strategy.

Eric A. Osterhout is a contingent workforce management consultant.

Posted December 15, 2014 in MSP / Contingent Labor

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