How to Track Your Independent Contractor Workforce: 4 Metrics You Can't Ignore
Learn the four types of data that can help your organization successfully manage independent contractors.
When utilizing full-time (W2) employees and independent contractors (1099-NEC) one of the key differences that has to be considered are the metrics and data sets used to track each segment of your workforce. It's likely that your human capital management (HCM) system has a 360-degree view into full-time employees, including background checks, qualifications and performance reviews. But having this same visibility into your independent contractors may not be as easy, and can be due to multiple variables, such as:
- Multiple stakeholders managing contractor relationships
- The remote nature of most contractor relationships
- Off-cycle work assignments
- Disparate systems and manual processes to track contractor qualifications, documents, etc.
With the rapid growth of the independent contractor workforce, it is imperative for businesses to manage contractors with the same level of rigor and attention as their W2 employees. Having real-time visibility into your contractor workforce can help mitigate potential legal and financial risks while also improving productivity and efficiency. Here are 4 types of data that organizations should consider tracking to successfully manage their independent contractors:
Talent pool assessments
Any organization utilizing a growing number of independent contractors will want to have the ability to drill down into their workers' profiles. In order to do so, it's recommended that organizations have a process in place to collect and store applicable information during onboarding. In addition to a worker's data such as their full name, address, etc., these could include:
- Most recent background checks
- Most recent drug tests
- US tax IDs
- Licenses
- Certifications
- Location
- Skillsets
Having a centralized, searchable repository to track standardized worker information is crucial. The ability to filter your talent pools for these specific details can help an organization identify the right worker for the job that much faster. In addition, running reports on specific metrics allows a business to get a baseline of their contractor workforce. For example, having the ability to report on the distribution of workers across particular regions allows a business to see where they may need to target future recruitment efforts.
Contractor onboarding statuses
If your organization is constantly recruiting new workers, having real-time visibility into their onboarding status is a must. Before a worker can be deployed for work, you must ensure they meet your requirements. Here are some common onboarding milestones to track:
- Tax IDs have been verified
- Bank accounts have been verified
- Signed contractor agreements or NDAs
- Fulfilled business requirements such as:
- Possess insurance coverage
- Proof of certifications and licenses
- Passed skills assessment test
Having real-time insight into the number of workers who have completed these onboarding tasks (or the entire process) is essential for organizations looking to get work assigned in a timely manner. Lack of visibility into workers' onboarding progress can delay project timelines and impact an organization's service level agreements (SLAs). Furthermore, being able to track and report on onboarding statuses can help ensure workers meet your requirements before they start the work.
Work assignment statuses
The ability to see the real-time status of work assignments is crucial for an organization that is working with contractors, especially if they are representing you at a client site. An organization should have insights into work assignments to assess risk and keep a pulse on the business. Some examples include:
- Assignments that do not have a worker assigned to it
- Assignments that have been assigned to workers but not yet started
- Assignments that are in progress
- Assignments that have gone past their SLAs
- Assignments that have been invoiced but not paid
Spend analysis
To make strategic business decisions and forecast for future needs, you also need the ability to analyze spend and pricing across assignments, clients, and contractors. Furthermore, you'll want a pulse on important efficiency metrics like average time to completion (by project, client, contractor). Here are some common spend reports within the WorkMarket platform:
- Assignment price year-over-year (YoY) by client or type of project
- Total spend year over year by client
- Talent spend and average price by contractor
How can technology help?
These are just a few ways to efficiently manage an independent contractor workforce. However, you will need automated, scalable processes to collect and analyze all the worker, onboarding, and work assignment information. Trying to gain insights from manual processes or disparate systems will be labor-intensive and more likely to contain errors. That's why many businesses are turning to purpose-built technology to gain the visibility they need to manage their independent contractors.
WorkMarket by ADP is an independent contractor management system that helps businesses manage their contractors, 1099 workers, and freelancers efficiently and compliantly.
Learn how WorkMarket can benefit your business.
The information provided in this article is for informational purposes only and not for the purpose of providing legal or tax advice. The information and services WorkMarket provides should not be deemed a substitute for the advice of any such professional. Such information is by nature subject to revision and may not be the most current information available.
