The popularity of Pontoon’s “SLAs and KPIs to Drive Programme Performance” roundtable sessions at CWS Europe confirms that SLA/KPI management is a hot topic – but often a frustrating one.
After leading three such roundtables, my main impression is that SLAs/KPIs are still the primary method of measuring the success of an outsourced contingent workforce programme – but is anyone really satisfied with them? There is a pressing need in the industry to learn more about improving SLA and KPI reporting to achieve better results and eliminate that prevailing dissatisfaction.
With that in mind, I’ve compiled a list of five key CWS takeaways on how SLA and KPI management can be used to drive better programme performance.
To ensure success, metrics and reporting should be kept simple. Measuring too many performance indicators can become highly confusing and inconclusive without context. With today’s workforce strategies and talent programmes having endless key drivers and impacts from internal and external forces, it is crucial to focus on the core metrics that drive delivery.
Rather than trying to measure everything, companies need to measure smart. As one of the roundtable participants suggested, you need to report on things that you can influence and improve. A specific action plan for your business allows you to drive measure points more accordingly. This saves time and turns SLA/KPI reporting from a frustrating obligation into a source of meaningful and actionable data.
The MSP programme users with whom I talked experienced challenges with the quality of captured data. This is because some standard data points are no longer relevant. For instance, by only focusing on speed to hire, companies miss out on the opportunity to understand the weaknesses across specific stages of the recruitment process.
Bottlenecks tend to happen at the hiring manager stage, often due to a lack of responsiveness. This is why, ideally, SLAs should be used in a dynamic and flexible way to account not just for the outsourced provider but also for the entire supply chain – including internal users and managers. By holding all parties accountable, companies can take a proactive role in driving meaningful change and improvement back into their talent programmes.
Interestingly, it seems that predictive analytics is yet to be a day-to-day feature of external workforce programme reporting. Very few programmes leverage this kind of data to drive workforce activity and deliver business outcomes. At Pontoon, we show our client base how predictive analytics can provide better insights into industry or sector spending, future job role and skill shortages to help plan ahead, support our customers, and minimise external worker attrition.
Different measure points should be used for specific sectors and business areas in alignment with unique business needs. Regarding international programmes and services, SLAs and KPIs should vary across regions. Using the same metrics across the entire business will not produce meaningful results.
Similarly, having the same metrics year-on-year might also be a counterintuitive solution if your business is undergoing dynamic changes. Roundtable participants also believed that SLAs need to be fluid to keep up with the overall business strategy and foster organisational growth.
Not all SLAs and KPIs can be judged equally based on role type, skill requirement, and market movement. With the current candidate shortages, the time to fill is now generally longer than before. These external market conditions must be considered when making methodological decisions on reporting.
In regard to service credits, roundtable participants agreed that they are a contentious issue. Levying financial obligations on suppliers that fail to deliver on approved SLAs is controversial since it is a “stick” rather than a “carrot” method. Such negative conditioning goes against today’s focus on positive reinforcement in business culture.
Since companies often rely on reporting provided by suppliers, there is an element of trust in that relationship. Aggressively advocating service credits can breach that trust, which certainly does not add value to the programme – still, service credits function as a buffer against serious misperformance on the suppliers’ part. When used strategically and communicated in a balanced and non-antagonistic way, service credits can help to drive supplier performance.
Roundtable participants made excellent points about closing roles when managers are not responding. Scenarios like this need to be factored into reporting. Otherwise, they will result in dissatisfaction. Motivating hiring managers to support the programme requires executive sponsorship and a successful change management strategy, with a clear overview of all individual and company benefits.
Participants estimated that 40% of the total time to fill is actually with the business and not the outsourced provider or suppliers. Measures must be taken to fuel process improvements and set up internal best practices to ensure a smoother recruitment process. As I mentioned, this can be incorporated within SLA reporting once the focus is extended from the talent provider to the entire supply chain.
The need for greater flexibility that emerged from these conversations serves as a reminder that SLA and KPIs are retrospective and rather static by nature. They can capture insights about past programme performance but using these insights to make decisions in an ever-changing market is a whole other story.
A more flexible approach to reporting requires companies to leverage the power of predictive analytics and AI-enhanced tools. Aligning past data with current programme trends allows Pontoon’s customers to estimate future demands. Tools like Pontoon’s Demand Forecaster help to meet spikes in demand for talent with a high forecasting accuracy, thus preparing the supply chain for ramped-up needs.
By being more prepared for the future, organisations can spare themselves the dissatisfaction of having to report on SLAs and KPIs that are not aligned with evolving business needs.