5 Metrics to Measure Risk in Your Contingent Labor Program

This is the final post in a 4-part series designed to help contingent program managers understand and implement analytics to support the QECR Performance Framework developed by Staffing Industry Analysts.

The QECR framework is designed to help define and measure the performance of contingent worker programs across four dimensions—quality, efficiency, cost, and risk. Using the framework, you can get a firm grasp on the current state of your contingent labor program and drive improvement toward future goals.

Using contingent labor has obvious benefits—accessing a flexible workforce, increasing your cost savings, and bridging the skill gaps. Although there are numerous benefits to engaging contingent workers, there are also some associated risks.

These risks include the potential for unverified worker backgrounds, inaccurate compliance maintenance, or even misclassified workers. While these are more evident risks, other inconspicuous opportunities for risk exist, too.

When it comes down to adopting a contingent labor program or improving your current one, ensuring you cover all the bases and establish an adequate risk management routine is a must.

Before you can mitigate risk in your contingent workforce program, you need tools to monitor it.

Look no further than your program analytics.

From tracking critical compliance to assessing proper documentation, here are 5 metrics you can use to better measure risk within your contingent workforce program.

1. Protection for Your People

The right risk management practices for your contingent workforce can help preserve the safety of your existing workers.

Just as you probably complete background checks and drug screenings for your full-time employees, you should require the same pre-engagement procedures for nonemployee labor.

By tracking onboarding compliance, you can flag incomplete items and halt the engagement workflow, safeguarding your current people. After thoroughly assessing workers, continue onboarding procedures like granting access to the premises with security badges.

Tip: In your quarterly vendor audit, review compliance to confirm all documents associated with your contingent labor program, like background checks and drug screens, were completed fully, on time, and to your standards. Note vendors that don’t meet these criteria—they could be putting your program at risk.

2. Protection of Your Property

When it comes to property, your contingent workforce program must protect both tangible and intangible assets:

  • Physical property – From laptops to hard hats, physical items can be costly to replace. Documenting information like an item’s current condition and a contractor’s end date ensures protection and timely return of your organization’s property.
  • Intellectual property – Your onboarding process should include completion of confidentiality documents that secure intangible company assets, such as patents, trade secrets, or creative concepts.

For all types of labor, detailed nondisclosure agreements help reduce the risk of workers wrongfully distributing any information or knowledge that qualifies as business or client confidential.

3. Worker Documentation

Once you’ve implemented a strategy to track onboarding compliance, your team must maintain compliance throughout each contractor’s engagement. Contingent labor compliance includes maintaining worker qualifications throughout engagement.

Whether it’s a nursing license, forklift operator’s license, or Project Management Professional (PMP) certification, you must always track and maintain qualification compliance.

Tip: Use a vendor management system (VMS) to streamline compliance measures—track expiration dates, enable real-time expiration alerts, generate progress reports, and store historical records.

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4. Vendor Records

Managing strategic sourcing vendors can become cumbersome and time-consuming as you expand your contingent labor program. The more vendors you engage, the higher your risk.

You can alleviate the extent of risk by knowing what vendor information is vital to track.

As with worker compliance, vendor compliance must be maintained at all times. These data can include contract dates, Certifications of Insurance, payment terms, and diversity status.

Tip: Use a single system to track important dates and numbers associated with your vendors. This allows you to generate reports for total visibility of important vendor data.

5. Contractor Classification

Do you know how many nonemployee workers you have onboard? And what about the various contractor categories you engage?

An accurate record gives you more visibility of your contingent worker population and prepares you to meet federal tax regulations for 1099 contractors and avoid employee misclassification under the FLSA.

Some organizations prefer to use either workers W2’d by their vendors or those engaged as 1099s—some organizations onboard both. Whatever you decide, it’s crucial to account for the exact type and total of nonemployee labor for greater control.

Tip: Use your VMS to track the types of contractors you engage, whether they’re classified as W2 or 1099. You can also engage an MSP to further vet your classifications.

Manage Risk Through Better Metrics

And that’s a wrap on our 4-part series about the four pillars of the QECR framework!

Be sure to review previous posts, which explain reliable metrics and valuable tips to help guide a global assessment of your contingent labor program.
You’ll learn specific analytics that can help you improve the quality of your program, make smart decisions to maximize program efficiency, and gain control over excessive spend.


Meet the Expert
Taylor Ramchandani – VP of Strategy

Taylor Ramchandani is responsible for the management and strategic planning of the VectorVMS vendor management system. Taylor is committed to client satisfaction and to ensuring VectorVMS technology meets the current and future needs of clients and managed service providers (MSPs). She uses market research and in-depth industry experience to create products and services that make extended workforce management efficient and intuitive. Taylor oversees product development, marketing, and business partnerships for VectorVMS and is responsible for driving innovation for contingent workforce management. Connect with her on LinkedIn.