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Labour hire and Key Performance Indicators (KPI’s)

​An important element of a successful relationship is to establish the desired outcomes both parties are seeking from the relationship. It's suggested that you and your management team define your requirements ensuring that these are consistent with production requirements.

Once you have established a core list of measurable KPI’s to ensure your labour provider is adhering to the service delivery standards you have agreed on, you should look for an incentive and/or penalty scheme if the provider is unable to maintain a required level of service.

The Role of KPI’s

Defined and speedy response times along with quality, effective, and reliable workforce management are characteristics that HR teams and line managers alike value most in a labour hire relationship. Yet, few employers are actually aware of the level of performance they can expect from their labour hire provider. The majority of employers surveyed, indicated that they do not have or are not aware of established performance guidelines or commitments.

Key Performance Indicators are an essential ingredient to an effective relationship between the labour hire provider and employer yet more often than not, labour hire organisations use KPI’s as a marketing tool and do not follow through with key measures around performance. KPI’s provide the basis for setting and managing expectations for both the employer and labour hire provider.

Benefits of KPI’s

KPI’s ensure that the labour hire provider (and that of the outsourced workforce) have committed to a level of performance and the terms around the contract can be managed accordingly and consistent with the expectations of the employer. It has been found that employer/labour hire relationships covered by KPI’s are more likely to receive better service and quality of staff than employers not covered by KPI’s.

Establishing the right KPI’s

KPI’s offer significant benefits to both the labour hire provider and employer by helping them set and manage the expectations of both organisations and critical for the employer to achieve value and return on their human capital investment. Moreover, once the labour hire provider is positioned to meet the service delivery requirements of the employer under the KPI schedule, the experience should be far more positive with improved deliverables achieved. The KPI’s can be implemented as informally as a performance target of as ridged an SLA agreement with penalties imposed with benchmarks are not achieved.