The success of any spend management, sourcing or financial management program largely depends on the enterprise’s ability to set proper goals, identify core business objectives and, most importantly, build an effective means of measuring performance. In the contingent workforce management world, developing performance measurement capabilities is more complex than it’s ever been in the nearly two decades that this alternative labor has been in the limelight.
In Ardent’s State of Contingent Workforce Management research report, Best-in-Class organizations were identified by their top-tier performance across a series of performance metrics. Ardent then utilized this performance framework to help educate readers on:
- The tactical capabilities that play a pivotal role in the Best-in-Class CWM program;
- The strategic competencies that drive ultimate value from CWM initiatives, and;
- The overarching strategies and solutions that will better manage contract talent in the long run.
For enterprises that would like to reach a Best-in-Class level of success in regards to managing their contingent workforce, it is critical that they develop a proper performance measurement plan that includes the following “metrics that matter”:
- Independent contractor compliance. We’ve previously highlighted the importance of independent contractor compliance here on CPO Rising. It goes without saying that this aspect (which remains one of three crucial areas of Ardent’s Contingent Workforce Management Framework) is and should be top-of-mind for the modern executive that is tasked with managing contingent labor. Enterprises that utilize this facet of contract talent (and its more nuanced forms, such as freelancers and consultants) must understand the implications of mismanaging and misclassifying independent contractors, and build an effective means of measuring and reviewing relationships to ensure that they meet federal, state and regulatory standards.
- Quality and effectiveness. The notion of “quality” is never a simple topic in the realm of contingent workforce management, and many companies would agree that measuring the true quality of a contingent worker or service is a complex task. Ardent developed a metric called the Quality Index Score for this reason, which is comprised of various “sub-metrics” that include the percentage of contingent workers that meet predefined goals and the percentage of SOW-based projects and services that deliver on-time and on-budget. Enterprise must start at the CWM category level (traditional, complex and independent contractor) and build out metrics that are aligned to each of these labor types.
- Visibility into contingent workforce from a financial perspective. Much like quality above, this can be (depending on an enterprise’s existing data / reporting capabilities) a nebulous area. However, a mark of the Best-in-Class is how well they are positioned to know and understand the ramifications of contract talent from a greater budgeting and planning perspective. Are spend, supplier, project and budget data all linked to corporate planning and forecasting? Are there systems / programs in place to capture and analyze this information?
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