CWS 3.0: February 19, 2014

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Service-Level Agreements Can Drive Program Success

Service-level agreements (SLAs) are a fairly standard part of contracts today in contingent workforce (CW) program management. They are strategic tools used to govern the program’s value performance. They are key measures that define whether a program is delivering value that is aligned to the needs of the organization.

If deployed with care and purpose, SLAs rate performance based on the program’s goals, initiatives and efforts. Because most CW programs are designed around a handful of key goals, objectives and/or return on investment drivers, SLAs should be reserved to measure the achievement of these strategic program priorities. Incidentally, these few, strategically focused SLAs should also be the only measurement items found in the MSP or supplier contracts to support a clarity of purpose and understanding of program performance. Ultimately, SLAs are formally negotiated between the parties and define the common understanding about service expectations and responsibilities. Often, consequences for non-performance are defined as well and can lead to material and non-material/minor contract breaches.

There are numerous examples of SLA metrics in use today, but unfortunately, too many are being bundled indiscriminately as an endless list of performance requirements. SLAs that are engaged in an unaligned and overused manner create false readings (positive and negative) in the management of the program’s performance. When used discriminately, however, they can help drive program success. Now, one should still track other important program performance issues to support the ongoing day-to-day management of program activities and processes. For example, Staffing Industry Analysts defines program quality in terms of talent, supplier service and overall program operations. To engage three to four distinct metrics in each of these key quality performance areas would result in a boatload of metrics to manage.

KPIs. That’s where the second level of program performance measurements comes in: key performance indicators (KPIs). There is sometimes confusion about the relationship between SLAs and KPIs. While both are metrics, KPIs are simply metrics used to monitor the ongoing activities of a CW program. KPIs, when set correctly, can give an early indication of when a program element and/or supplier is struggling to reach or exceed the agreed upon level of service (SLA). KPIs should be viewed as performance trend indicators, watched on a fairly frequent basis, and leveraged to drive queries in process performance and program improvement analysis.

Control. A key SLA best practice is including metrics the other party has complete control over. For example, “time to fill” would not make a good SLA for a staffing agency because the staffing agency doesn’t have complete control over this metric. They could submit a résumé quickly, but if the engagement manager submits feedback after a long, unmanageable timeframe, that performance metric suffers through no fault of the agency.

A better SLA would be “time to submit” because this is completely in the staffing agency’s control. Another alternative SLA example would be in the area of talent quality. Many program managers like to track hire conversion percentages, but that also is not entirely in the staffing provider’s control. A better talent quality metric might be “candidate slate quality” as a measure of the supplier’s ability to source quality talent to one’s CW program. The supplier has more of a direct control of this service element and the metric measures the depth of the supplier’s contribution/effort. The key take-aways here are complete or majority process/service control and direct measurement of the service value being contributed.

Ultimately, CW program metrics (SLAs & KPIs) should be organized and made visible via an integrated scorecard or dashboard depending on the “system of record” capabilities simultaneously to all appropriate stakeholders on an ongoing basis. Certainly there will be business version requirements for specific stakeholder viewpoints. Also, updates to these “metrics dashboards/scorecards” should be so frequent that Quarterly Business Reviews (QBR) sessions become discussions about program performance corrections and/or future program enhancements/growth, not discovery sessions about problems that have been causing performance damage for the last 90 days.

SLAs need to be strategically meaningful to CW program management. They should clearly gauge the program’s value contribution to the goals and objectives of the business/organization where appropriate. SLA metric portfolios should not be cluttered with KPIs or the CW program management performance will deliver a result that is muddled and misaligned with the organization’s goals.

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