I am going to be renegotiating contracts for my managed service provider and temporary labor suppliers soon. As part of this renegotiation, I want to add specific performance language and perhaps even non-performance penalties, specifically as it relates to time-to-fill, which is horribly long currently. What should I be paying attention to? What is a good time-to-fill number?
There is a saying at Staffing Industry Analysts: "In God we trust; all others must bring data." Another saying that fits is: "That which cannot be measured cannot be improved." I firmly believe in data and measurements, but unfortunately the answer to your question may not be entirely what you are looking for, because the only real and honest answer is "it depends."
Determine Your Goals
The real success metrics that need to be considered depend on your program's goals and objectives. Start with what you would define as success in the coming years of your contractual relationship.
Are you mandated with getting savings, whatever the cost, service levels and quality be damned? Or is candidate quality the paramount concern? What about resume submission? Do your hiring managers want dozens of resumes per submission or just a few?
All of these different concerns have different measurements of success and failure. For example, there is no point necessarily in measuring resume submission ratios if your primary concern is year-over-year savings.
Determining what your primary program drivers are will help you to determine what metrics to include in your contracts. The most commonly tracked metrics addressed by service contracts fall into two main buckets: performance metrics and savings metrics. In the interest of brevity, I will discuss what you cited as being of most interest to you: time-to-fill, which would fall into the performance category.
Time-to-fill is the metric most often referenced in contingent labor programs, and unfortunately the one most often misunderstood and misapplied. Put simply, time-to-fill is the amount of time it takes from the moment a requisition is released to the moment a contingent worker shows up for work. Most often, program managers capture this in an end-to-end number and hold the MSP accountable for all of the time taken.
In my opinion, this is an incorrect application of this metric, because in the time period between requisition and placement, there are dozens of process steps that are beyond the control of your provider. For example, assume you have a requisition that requires additional approvals (usually from HR or your finance department). Obtaining such approvals adds time to the overall process; how can your MSP reasonably be expected to address that?
More often than not, hiring managers do not act promptly on resume submissions. This usually is the single longest step in the placement process. Again, for the most part, MSPs do not have control over this part of the process.
Break it Down
A best practice is to separate the distinct steps in your fill process and determine who has influence over each part. For example, I have seen some companies break out the time-to-fill metric into four sections -- you may have more or fewer depending on your situation:
1. RFQ Time to Release. The amount of time it takes for a hiring manager to get a submitted requisition formatted correctly and approved by internal stakeholders (HR, finance, etc.) so it is ready to be released to the vendor population by the MSP (internal or external).
This is measured from the moment an RFQ is opened to the moment it is routed through the requisite approvals and released. Many programs streamline this process through the use of templates and front-end spending approvals.
Most often this is the primary responsibility of the submitting company, but some forward-thinking MSP providers do go through the trouble of educating hiring managers on best practices in sourcing contingent labor and actually hold themselves accountable for this part of the sourcing process.
2. Supplier RFQ Time to Submit. The amount of time between the moment the RFQ/requisition is sent out to the vendor population and the first resume response is received. This is a key metric because it is, for the most part, the responsibility of the vendors.
A prompt response here is usually good, but it is also good to review this in light of the submit-to-hire ratio -- the number of supplier résumés submitted to the number of placements. A high submittal ratio means that there is a lack of understanding when it comes to your company's requirements. A low time-to-submit number and a high submit-to-hire ratio means that your vendors could be "shotgunning" your requisitions, or basically submitting candidates who are simply available right now as opposed to candidates who are right for your requirements.
3. Submittal Review. The amount of time between the moment résumés have been delivered to the hiring manager and the time a candidate selection has been made. This may or may not include interview time. Often this is the single most time-consuming piece of the sourcing process as résumés sit in the inbox or other priorities prevent prompt interview scheduling. The hiring company is responsible for making this part timelier.
4. Hiring Process. The process from candidate selection to the time the contingent shows up for work. This number varies hugely by organization, background check requirements, and position type. This is an area that assumes you are jointly responsible with your MSP.
The purpose of including metrics in a contract is to measure incremental performance for your program, and a metric does not mean anything if there is no reasonable baseline to which to compare it. But benchmarks must be looked at on a case-by-case basis.
A benchmark may not take into account your unique requirements, so I am not able to address specifically what a good number would be for your situation. For example; if I said my time-to-hiring-process metric was 35 days, would you think that was a good number or a bad number? If I were running a contingent program for a call center, that number may be horrible. However, if I were running a high-tech ERP deployment project that required comprehensive security clearances and H1B implications, that number may be fantastic.
What time frame is being considered? What are your unique steps in the sourcing process? If I said that my vendors' submit-to-hire rate was 25:1, that number may be good for a high tech programmer, but horrible for a light industrial location.
As I've said in previous columns "best in class" is relative and only by understanding what metrics are important to your end users and knowing what you can control and what you cannot will you be able to build a world class contingent labor program.
Bryan T. Peña is director of Contingent Workforce Strategies and Research at Staffing Industry Analysts. He can be reached at email@example.com.