The Importance of a Scorecard – Managing and Measuring Your Contingent Labor Managed Service Provider

One of the key benefits of workforce management programs—which either involve leveraging  VMS technology or outsourcing an external contingent labor managed service provider (MSP)—is the visibility and controls they implement for measuring and managing your own MSP’s performance.

In either model, the supplier scorecard is one of the essential pieces of any supplier management program’s infrastructure. Scorecards are certainly not a new development in this field. However, as the nature and composition of the contemporary workforce continue to evolve, there are some considerations to keep in mind to ensure these scorecards are properly designed, deployed, and utilized to their fullest potential. 

Expectations for Supplier Scorecards

It is commonly agreed that a supplier performance scorecard should include parameters for measuring such things as:

• Service level agreements (SLAs) as enunciated in the RFP for such measures as submissions per job, cost-per-head, source-per-hire, conversions, etc.
• Compliance with business processes and regulatory dictums
• Pricing and markups
• Response times to challenges/issues
• Purchase orders/invoice submission
• Benefits offered to contractors
• Proper use of online systems/processes
• Any other Key Performance Indicators (KPIs) that may be relevant to the program

Still, SLAs and KPIs are not the end all, be all to measuring performance. Attention must be paid to specific details to prevent over-reliance on these performance metrics that, if left unaddressed, can lead to skewed perceptions of supplier performance. 

Important Considerations About Contingent Labor Managed Service Providers

The SIA’s Bryan Peña warns workforce management professionals about the inherent dangers of relying on scorecards without examining the underlying drivers of what is being measured, writing, “When building a scorecard, many program managers make the mistake of holding suppliers accountable to elements beyond their control.”

For example, one of the most standard metrics measured by a supplier scorecard is the “time-to-fill,” which is the reasonable amount of days between the  initial conveyance of a job requisition to a supplier and the time a qualifying candidate accepts the position.

Suppliers can submit resumes within hours. Yet, if hiring managers are slow to review candidates, perform interviews, and ultimately hire, time-to-fill may be pushed out beyond acceptable tolerances by no supplier fault. However, the scorecards do not capture this distinction. 

Best Performance Metrics

Best practices dictate that time-to-submit should be the metric to include on a scorecard. Measuring the time between the requisition and the submittal of resumes is a far more fair and appropriate measure of a supplier’s responsiveness.

Other supplier performance metrics commonly captured by scorecards include temp-to-hire conversions as a gauge of candidate quality and cost-per-hire. These are also metrics where, if left unexamined, the supplier may be penalized for actions beyond their control. 

Candidates sourced as part of a temp-to-hire program may be qualified yet exhibit spotty attendance records or lackluster productivity and may not be selected for a full-time position. This determination does not concern a supplier’s ability to deliver qualified candidates. Yet the unexamined data beneath the score on the scorecard may unwittingly punish a capable supplier. 

Wide differences often influence cost-per-hire factors in rates for the same job role across disparate locations. Again, the supplier is potentially penalized by a scorecard that does not differentiate between a role in a major metro area and the same role in a rural locale.

Our Final Thoughts

The bottom line is that supplier performance scorecards will remain critically important tools in the successful application of workforce management programs. However,  each program must examine the underlying drivers of performance when devising or updating its scorecard features. 

A small investment of time with an experienced contingent labor managed service provider to properly develop and deploy scorecards can have an outsized impact on their efficacy over the long run.

At nextSource, our workforce management and training experts can help ensure organizations like yours worldwide maximize the advantages of utilizing contingent labor strategies and minimize the disadvantages along the way. 

Connect with us today to learn how we can implement our world-renowned workforce strategies to optimize your operations. We look forward to hearing from you!