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Supplier Performance Metrics for the Staffing Industry

Posted by Diya Obeid on Mar 15, 2019 5:21:12 PM
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How Buyers Can Spot and Overcome Supplier Performance Metrics’ Inherent Paradoxes

By Diya Obeid, Founder & CEO of JobDiva

Both the staffing industry and HR departments have historically relied on similar performance metrics for measuring the speed and effectiveness of their recruitment lifecycle. One key such metrics had been the number of submittals metrics. Big data has made it easier to locate, qualify and submit more candidates for job openings. Once the increased number of submittals became a given fact taken for granted, scorecards of performance metrics refocused onto the number of interviewed candidates and the numberof hires. Unfortunately, the number of interviews and number of hires metrics have been used to the detriment of the number of submittals metrics. Submittals that do not result in interviews or hires, for no fault of the recruiter or supplier, have been held against these submitting parties. When the ratios of interviews-to-submittals and hires-to-submittals are used to infer the performance of the recruitment lifecycle’s participants – in particular its suppliers, fallacies tend to confuse merit with salesmanship or pure luck.

Today’s most requisition management software packages (referred to as Vendor Management Systems) and most Applicant Tracking Systems virtually track the same submittal, interview and hire metrics among others. A superficial reading of these metrics and ratios could result in reprimanding a good supplier or recruiter and rewarding a sub-standard one.

How this is possible? Consider the factors beyond the control of recruiters and staffing suppliers engaged in the job requisition fulfillment process: Poorly written job descriptions, cancelled jobs that have received submittals, jobs that were filled through relationships outside the requisition process, jobs that received equally qualified first-runners-up who did not get interviewed or hired, and so on.  With these factors in mind, it is easy to see how a supplier’s total number of submittals could be misconstrued as dumping unwanted candidates in the submittal process. The supplier becomes victim to his good deeds of submittal. (No good deed goes unpunished.)

The flattened submittal metrics can and should represent the staffing supplier’s or recruiter’s responsiveness, even without further context. By definition, those who receive a requisition for an opening should respond, and responsiveness is defined by the ability to submit qualified candidates (assuming that the job opening is a reasonable request) regardless whether these candidates are interviewed or hired.  The number of submittals is under the supplier’s control, so, indeed, the supplier should be held accountable when they are not responsive, rather than when they are.

The challenge is in defining quality of submittals received. To determine this, it might be tempting to look to the number of interviews or hires. However, the presumption that the numbers of hires and interviews relative to the submittals can exhaustively describe a staffing agency or recruiter’s performance is a dangerous misconception that causes the purchasing process to wobble and even to collapse.

As everyone in the staffing and HR industry knows, the process of interviewing and hiring a candidate is fragile and can be ruptured for many reasons beyond the supplier’s control or the quality of their submittals (some of these reasons are mentioned above). Meanwhile, purchasing departments still hold the supplier accountable when interviews and hires do not occur, in part because it’s not practical for purchasing and HR departments to stop and examine the nuanced reasons why each submittal didn’t result in an interview or hire.  The supplier is faced with the predicament of having to submit – which is what he is supposed to do – greater and greater numbers of candidates, while this number of submittals is the denominator in both the interview/submittals and hires/submittals ratios. While these two ratios are expected to increase, they are dragged down by the increase of their denominator, which represents the supplier’s responsiveness.

This paradoxical nature of the performance metrics and ratios used by purchasing departments is the cause of significant frustrations among those participating in the competitive purchasing exercise of staffing services and full time placements.

The ideal metric to identify performance should be derived from examining the record of who is buying from whom, rather than the record of the lack of purchase. The right examination will reveal the following: Top-performing suppliers have the following characteristic: their contractors are spread throughout a wider number of hiring managers within an organization.

While these top-performing suppliers may not have the largest number of contractors on billing overall, or may not have competitive ratios of interviews and hires over submittals, they tend to have contractors spread out within the client enterprise. The breadth of their contractors’ distribution is testimony to the fact that more hiring managers chose their candidates rather than fewer; and that could have only been based on merit. It indicates that they are capable of servicing a broader spectrum within the organization and do not need to lean on personal relationships with individual buyers or hiring managers for success. On a related note, the total number of interviews, hires and submittals made to managers whose record shows favoritism to a small, limited number of favorite suppliers should never be included suppliers’ scorecards.

Historically, performance measurements have been a challenge for purchasing departments. They have sometimes reacted by simply adding more metrics to track and more ratios from which to infer value and information. This combination of metrics, numbers and ratios has only increased the likelihood of misconception in a heavily human-dependent process that is already prone to misconception. Simplifying the tools and removing all measures prone to the above fallacies can only improve the purchasing process and enhance its meritocratic nature.

Please also note that tweaking metrics and attempts to cleanse data can be an even greater headache when the following is not in place: a blind purchasing process that conceals the identity of both supplier and the hiring manager. Clear away prejudice from the marketplace, then optimization becomes inevitable, rather than something towards which we endlessly struggle.

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Topics: HR, ATS, Recruiting