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These Are the 3 Biggest Trends in Workforce Innovation

Keeping up with the changing world requires constant innovation — and this includes hiring. Evolving technology, the shifting generational makeup of the workforce, and a candidate-centric market[...]

February 18, 2020

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Metrics That Matter Most to MSPs

VMSA Live 2016 was an exciting and educational whirlwind of information. Not only did we thoroughly enjoy participating in the event, we took away a lot of valuable insights. For me, with my focus on the importance of relationships between MSPs and their staffing partners, Jim Coughlin’s discussion about the metrics that matter most to MSPs struck a chord. Jim is the creative director for VMS Accelerators. We in the industry know how critical measuring performance is to the success of a program. Yet, we also find ourselves faced with daunting lists of SLAs and KPIs -- the kind that seem to require superhuman achievements.

There’s an old adage: not everything that counts can be counted, and not everything that can be counted actually counts. As staffing professionals, we can help our MSP program managers reach client goals together by focusing on the metrics that really count.

Metrics: The Proof in the Pudding

Designing a flourishing contingent labor program, one that drives the client’s vision and strategic direction, is equal parts art and science. To achieve peak performance, MSPs and their staffing partners must understand the goals of the program, develop a plan to meet those objectives, and then produce a list of key performance indicators (KPIs) against which to measure progress.

Transparency and reporting are essential in MSP programs. For clients considering an MSP, one of the most powerful motivators comes from the visibility and centralization they offer. A client can’t measure what it can’t see. A vendor can’t offer the right metrics without first understanding the overall performance objectives being sought by the MSP. Jim’s list gives us a strong foundation from which to start.

Metrics That Matter

Staffing suppliers measure their performance and generate a lot of performance data for their clients. In an MSP program, however, there are five key metrics we can track to help our MSP partners.

jim coughlin vms acceleratorsSubmittals per Job: According to Jim, this is the number one metric to MSPs. At its core, this measurement is all about demonstrating a staffing supplier’s breadth of coverage. In the last five years, the number of candidates submitted for each job order has increased from an average of 34 applications per open requisition in 2011 to around 59 in 2014. For analysts, the growth indicates a positive correlation between this metric and the overall health of the economy. For MSPs and clients, it validates the power of a staffing curator’s people network. The ability to provide several compelling, skilled and well-matched candidates for a given requisition proves how extensive, or how limited, a supplier’s talent pool may be.

Calculating this metric is straightforward: you can isolate a single requisition and the number of candidates submitted to it, or you can derive an average by dividing the number of submittals by the number of job orders. Jim used the example of 1,100 requisitions with 2,000 submittals, arriving at a ratio of 1.81 submittals per job.

Submittal to Hire: This metric determines the number of candidates who are submitted to the business to produce a hire. For MSPs, this ratio illustrates the overall efficiency of the staffing partner. To calculate the metric, divide the number of candidates submitted to the position by the number of those who are actually hired. For example, if the staffing firm submits 25 candidates to be reviewed against position requirements and five are hired, the ratio is 25 to 5. Simplified, that would be 5 to 1. So we can say that it typically takes five submittals to place one qualified professional.

Also remember that when your recruiters are submitting exceptional candidates who ideally match the skills and qualifications of the role, the lower the ratio will be. A ratio of 3 to 1 would indicate an efficient recruiter who’s a masterful interviewer, screener and champion of the program manager’s needs.

Submittals to Interview: This metric depicts how many candidate submittals lead to an interview. Why is this measurement important? It exemplifies speed and quality. According to Jim, speed and quality are inextricable -- you cannot have one without the other. To think of it another way, we know that the best candidates are engaged first. Their resumes capture the attention of savvy recruiters immediately. There’s also another pressing need: as recent industry figures point out, the most in-demand talent will move on within 10 days if an offer is not forthcoming. So, the sense of urgency is real. Staffing suppliers that strive to provide the highest caliber talent must also act the fastest. More than a war for talent, we really seem to be in a race for talent. And this metric offers a clear picture of how each staffing partner in an MSP program is positioned on the track.

Calculating the metric is easy: divide the volume of submittals by the interviews they produced. If 500 candidates were interviewed out of the 3,100 submitted, the ratio is 6.2 submittals per interview.

Interviews to Hire: This metric is interesting. Essentially, it helps MSPs understand and evaluate candidate control. However, it also helps them identify issues with the interviewing process itself, along with other areas that could be impacting the employment brand and hiring results. For example, an increase in the ratio might reveal inefficiencies with the interviewing team. An MSP could discover that a hiring manager is overly hesitant, refuses to make a definitive hiring decision, and allows a top candidate to slip away. Conversely, a very low number could show that hiring managers are behaving anxiously and extending offers to “panic hires” -- people who might not be the best fits for the role.

The metric is represented in the form of a ratio such as 6 to 1, meaning six shortlisted candidates participated in interviews before one job offer was extended. Measuring this data helps MSPs and their staffing partners determine the overall effectiveness of recruiting efforts, the interview process and the qualifications of submitted candidates.

Total Hires to Submittals: What happens when you divide the number of hires by the total number of submittals? You derive what Jim calls the “close ratio” -- the best indicator of a staffing partner’s performance in the MSP program, as far as metrics go. If 100 candidates were hired in a year that saw 1,100 requisitions, the close ratio would come out to 9.1 percent. And that’s nothing to scoff at. Total Hires to Submittals offers additional benefits as an ongoing measurement: monitoring the change in the metric on a year-over-year basis provides a meaningful snapshot of performance. This data can prove vital in orchestrating continuous improvement initiatives, course correcting identified impediments, or uncovering the strategies that are catapulting the program to success.

If a supplier’s close ratio went from 3 percent to 6 percent between year one and year two of the program, the increase is 100 percent.

Producing and Delivering the Metrics

So now that we know what to measure, we need to consider the frequency and targets. According to Jim, the five key metrics work best when measured:

  • For the last 12 months
  • For the past 90 days
  • By account
  • By vertical market
  • By recruiter
  • For the entire company

Metrics Inspire and Drive Performance, Not Define It

Mark Twain famously quipped, “There are three kinds of lies: lies, damn lies and statistics.” Metrics alone are not the be-all and end-all of a thriving MSP program. When we place too much emphasis on figures, we run the risk of losing perspective. Here’s a great example. On average, Bill Gates and a barista at the local coffee house make over a billion dollars a year. Yet, it should be obvious that the college student whipping up happy faces in the cream of your cappuccino isn’t making close to Gates’ hourly income.

The important takeaway is that metrics aren’t goals or answers -- they strengthen our efforts as benchmarks, indicators and even motivators. As Jim wisely pointed out at the end of his presentation, when considering a metric, “The question is not what should it be -- but rather how can I make it better?” If we keep these lessons in mind, and frame our analysis in this manner, we can help our MSP partners -- and ourselves -- elevate programs to loftier peaks of success.

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