Does your organization use vendors, such as staffing agencies, to meet your company’s overall goals and objectives? If so, then you’ll know just how important supplier performance management is.
Supplier performance management is a business practice used to measure, analyze and manage the performance of suppliers. The overall goal of this process is to alleviate supplier risks, cut costs and drive continuous improvement within your organization.
Simply put, supplier performance management provides in-depth visibility into the risk each vendor may pose to your organization. You can then use these insights to put measures in place, and change your processes, to reduce, minimize or even eliminate those risks.
This is particularly important when it comes to the contingent workforce.
The use of contingent workers, as well as permanent hires sourced through staffing agencies, has risen dramatically in recent years. Organizations use these staffing vendors to access quality talent, quickly and for a good cost.
Managing these staffing agencies and tracking their performance is a crucial foundation of reducing risk and improving ROI.
In this blog, we’re going to take a look at why measuring staffing agency performance is so important, how you can use vendor management software to do just that, and what key metrics you should be looking at.
We hope it helps improve your contingent workforce management program, and if you need further help, don’t hesitate to reach out to our team of experts for more information.
What’s the importance of staffing agency performance tracking?
The importance of measuring staffing agency performance is simple. By tracking your staffing agencies, you’ll be able to ensure that the staffing vendors you're working with are helping your business achieve its workforce goals.
As a result, you can use this information to make sure your organization is realizing true ROI from the staffing agencies you partner with. Meanwhile, you can also use this data to make strategic decisions around no longer working with the staffing vendors who fail to comply with your requirements.
In addition, by creating a strategy around managing staffing agency performance, you’re also setting metrics, KPIs and best practices that your vendors must comply with. By creating requirements and goals for your staffing agencies, your vendors will have a better strategic idea of what your business is aiming to achieve.
Measuring staffing agency performance is all about being proactive in making sure your business is realizing ROI from its staffing vendors.
How a vendor management system helps you track staffing vendor performance
So, how exactly can you measure staffing agency performance? The best way is through the implementation of a vendor management system or VMS.
Most organizations with small contingent workforce budgets are typically managing their staffing agencies using time-consuming and manual methods such as spreadsheets, in-house databases or Sharepoint-like websites.
These unfortunately prevent your business from gaining the visibility and control your organization needs to truly measure staffing agency performance.
That’s where a vendor management system comes in. A VMS puts data and insights at the forefront of your contingent workforce program by consolidating the entire staffing agency management process into one centralized system.
By consolidating staffing vendor information into one location, your business will be able to effectively track, measure and manage staffing agency performance, as well as ensure vendor compliance within your own internal team.
What metrics should you use to measure staffing agency performance?
The use of a VMS will give your organization clear visibility into vendor performance. You’ll have insights into how much you are spending, where compliance risks are and where you can make improvements within your contingent workforce program.
Most important of all, you’ll gain insights into the KPIs and metrics that show the ROI that your staffing agencies deliver to your company. That includes targets such as workforce quality, speed to hire and reducing costs.
With that in mind, here are some of the most important KPIs you can track through your vendor management system to measure staffing agency ROI.
Turnover: This is the number of workers who leave your organization after a certain period of time. This is of course expected in a ‘temporary’ workforce, but high turnover is often an indicator that staffing agencies are sourcing the wrong workers while lower turnover is a sign that staffing agencies are getting it right.
Time-to-fill: How many calendar days does it take your staffing vendors to fill open positions? The longer it takes to fill your open positions, the more your overall business goals are going to suffer as a result. Not only that, but the longer it takes to fill positions the higher the chance that your business is missing out on top talent and losing high-quality workers to your competitors.
Fill rate: This is the number of position orders received by your staffing agency during a specific period of time, compared with the number of job orders actually filled. The closer your staffing agency is to your fill rate number, the better they are at helping your organization achieve its workforce targets.
With a successful staffing agency performance measurement program in place, your business will be able to improve its access to top talent, achieve greater cost savings, speed up the time-to-hire and build stronger staffing agency partnerships.
Want to learn more?
Conexis VMS would love to give you a demo of our innovative vendor management system, designed specifically to be simple, easy-to-use and cost-effective for organizations with smaller contingent workforce budgets.