Agreeing KPIs with Your MSP

4 min read

What you should measure in an MSP engagement – and what you should not need to measure.

If you engage with a Managed Services Provider you will want to make sure you are getting maximum value and that the MSP is meeting or exceeding agreed targets. Here we outline the kind of key performance indicators (KPIs) that you should put in place. An MSP that has a passionate commitment to service will help you with the fine detail.
First, a brief summary of why you might want to appoint an MSP, because this determines what KPIs are appropriate.


In many areas of business contingent labour has become the norm, or at least an important element of a firm’s HR strategy. Contingent workers can include independent/temporary contractors, seasonal workers, freelancers, consultants, on-call workers and interns across all work disciplines.


The obvious advantage is flexibility: organisations can flex their workforce to meet demand without tying themselves to permanent headcount. The employer can avoid sinking training and benefits costs into workers who potentially won’t stay or perhaps aren’t a good long-term match for the company. In the case of so-called “temp-to-hire” positions, the temporary employee’s time onsite can serve as a trial period in which the business can see if that worker is a good fit – in terms of skill sets, ability and professional work habits before potentially hiring him full time.


However, recruiting a contingent workforce brings with it a number of costs and risks, which is why many organisations turn to a Managed Services Provider (MSP) to keep these under control. In this blog we identified secure talent supply, cost, risk management and process efficiencies as the main drivers that lead an organisation to turn to an MSP solution. An MSP makes it easier to manage these drivers by acting as a single point of contact for managing the optimum number of suppliers (mainly recruitment companies).


Quality talent supply within agreed deadlines

With that in mind, note that an MSP set-up will involve KPIs between the MSP and the client, and KPIs between the MSP’s suppliers and the MSP. In the case of M3S, its suppliers are likely to include Morgan McKinley and several of its competitors – it is up to us at M3S to stay on top of all these relationships in order to deliver on our KPIs with the client. A typical supplier-MSP KPI would be that the supplier should respond to an acquisition request within three working days and provide at least two quality candidates who meet the brief – unless you tell us on immediate receipt of the order that you don’t think you can deliver on the KPI. In this way, if the MSP has four suppliers, it should be able to deliver eight quality candidates to the client within the agreed timeframe. This could then be the MSP-client KPI.


Another metric is what we call “unforced attrition”. This measures the number of candidates who do not make it to the end of an agreed assignment through no fault of the client (e.g. they quit early or they do not meet client expectations, rather than the assignment finishing early or work drying up).


A third metric is “bill-rate compliance”. This refers to the percentage of placements that are below or at the maximum stated rate for the job.


Other KPIs would be even more dependent on the nature of the brief. For example, in the case of “temp-to-hire” positions, there might be an agreed conversion rate.


360° satisfaction

Critically, the MSP should measure the satisfaction of all parties to any hire, in particular the hiring manager/department and the candidate. How well did the candidate align to the initial specification and the assignment? Did the assignment meet the candidate’s expectations? In terms of the hiring process, there should be KPIs around the satisfaction of both successful and unsuccessful candidates: not only because today’s unsuccessful candidates might be ideally suited for a future opportunity but because their satisfaction reflects well on both the MSP and the end client.


The end client is also typically keen to know what successful candidates thought of the role and the assignment as this will help future policy and the pursuit of broader HR objectives.


Ultimately it is the relationship that counts

Finally, we suggest choosing the KPIs wisely based on your priorities and keeping the number limited: you don’t want to be checking dozens of data points. There are certain “givens” that do not (or should not) require a KPI: for example, pre-screening and background checks should ensure that every candidate is eligible to work and is compliant with the client’s hiring policies. The KPIs should also be easily recorded and trackable with software.

Ultimately what matters is building an atmosphere of trust on all sides.

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