Anyone associated with staffing services management business models is well acquainted with service-level agreements and key performance indicators. Staffing Industry Analysts inventories a robust list of agreements and performance measurements frequently used and tracked by CWS Council members. Yet many have experienced some frustration with their application and management. That’s because, though examples of what companies look for and track abound, there are several considerations needed to ensure they are driving real program performance and capability enhancement for a CW program. Let’s start with their definitions.
SIA defines service-level agreements and key performance indicators as:
Service-level agreements: A document describing the (minimum) levels of service quality a supplier should comply with. Common examples applicable for the staffing industry are: time-to-fill a job-request, maximum invoice corrections in a given period, and time-to-solve a complaint. An SLA, if applicable, usually is part of a general services agreement or contract.
Key performance indicator: Used across a number of professional industries, this term is defined by a set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their strategic and operational goals. KPIs vary between companies and industries, depending on their priorities or performance criteria. In contingent programs, KPIs include broadly defined metrics like time-to-fill or agency fill rate, to more granular metrics like invoice accuracy or VMS system uptime.
It’s fundamentally important to understand the difference between these two measurement tools, because they serve different measurement roles in managing CW program service performance. Where a KPI measures the ultimate performance levels that the buyer entity is trying to achieve in a process or service, an SLA is the contractual performance level that a service provider is required to produce for the funding (fees) and control it has of the process it is managing.
With this understanding in place, here are some key best practice considerations in the effective use of SLAs and KPIs.
Control. Control can often be derived from these SLAs and KPIs — or least CW program stakeholders believe this to be true. A common mistake made by leaders of CW programs is having too many of these items in contractual documents, or holding them outside of the contract but within rules of engagement documents. Nonetheless, these performance measurements and indicators are expected to be followed by staffing partners. Suppliers often want control or predictability from buyer organizations as well. Suppliers may receive some predictable measurements — SLAs — from client/buyer organizations; most likely simplistic in nature, these SLAs and KPIs have language supporting payment of invoices in a timely manner, but rarely are they in place to hold the client organization responsible for more complicated events.
Scorecards. Since its emergence in the late 1980s, the “balance scorecard” methodology attempts to provide a comprehensive view of an organization/program’s performance, including items such as financial, internal process, continuous improvement, etc. Specifically with CW program management, there has been a movement/adjustment for buyer organizations to begin to scorecard their internal engagement managers and process stakeholders. For example, some of the process steps buyers are measuring could range from how long it takes for the program team or the engagement manager to review a resume to the percentage of requests that are canceled. This strategic approach can help identify individuals or even specific business units where there are challenges to meet or desired program performance levels to exceed. Forward-thinking program managers who are driving their CW programs to elite status are looking at their internal process performance with much more scrutiny and understand that in this challenging and highly competitive talent environment, all rocks must be turned over to help provide an efficient and effective competitive process advantage.
Remedies. Defined as a payment to a contractual party who does not meet specific measurements, remedies are often difficult to manage. As CW programs become more advanced, there are many instances when multiple factors can contribute to a violation or lapse in supporting a measurement requirement, and the potential exists for various stakeholders to negatively impact this situation. Caution: If your buyer organization is keen on remedies, make sure you have considered the possibilities of failure and be prepared to look in the mirror. Incidentally, if remedies are effective, then why not consider focused rewards for exceeding KPI performance levels, with the rewards distributed to specific participants in the process that are delivering that above and beyond performance level?
Fairness. Fairness can be interpreted in many ways depending on your point of view and your role within the CW program. A strong recommendation is to review and analyze SLAs and KPIs frequently to ensure these terms are driving your program forward and upward. Often, SLAs and KPIs are not reviewed on a frequent and consistent basis. Many poor-performing programs will also have too many measurements, and in some cases, they can contradict each other. It is highly recommended that buyer organizations have a strong governance structure specific to data collection, analysis and overall management of measurements. We also recommend these directives closely align with the program’s mission statement and are achievable. To verify fairness, work closely with your top two to five staffing partners to gain their insight for specific measurements you are considering. If more than one of your staffing partners pushes back, there is a strong possibility your measurement strategy is flawed. An “iron fist” approach can harm your program’s ability to perform and deliver the effective performance results you require.
Sophisticated, high-performing CW programs need to pay close attention to SLA and KPI methodology. With all of the technological advances specific to VMS solutions, cloud sourcing and artificial intelligence, the contingent workforce game is changing — and it is changing quickly. Buyer organizations need to review, revise and update SLA and KPI measurement portfolios, and the management of them, with laser focus and structure to ensure these measurements are driving the right behavior and results. Strategically, SLAs and KPIs are based on performance averages, which means some of the CW program’s client base have, on average, received service performances that are up to targeted performance levels. Hence, it might be important to reach out to these CW program customers and learn how to deliver a better service solution and experience for them; the CW program may have high performance averages, but some service performances are theoretically below the targeted performance experience level.