Why Don’t You Know How Many Contractors Are On Your Site?

Many of our clients have no idea

One of the key steps we take in assessing head counts at a client site is to look at their contractor utilization strategy. Steady-state contractor utilization can vary significantly from one company or site to another. However, all our clients do use some long-term contractors as part of their workforce. The process for identifying the actual number of long term contractors used varies for each client. A small number of clients can easily provide their contractor utilization data.

We have worked with clients with site headcount reports that include detailed contractor reporting data. However, most clients have no idea how many contractors they use. In the latter scenario, we often use financial data to determine the number of contractors that our clients use. It can be a laborious process. This situation typically arises because our client thinks of contractors more as financial “line items” than as individuals.

You can only manage what you can measure

One of the key jobs of management is to ensure the capacity of their organization is sufficient. Without sufficient organizational capacity, your organization will be unable to perform your mission and doomed to fail. Contractors contribute to organizational capacity. The degree to which those contractors support organizational capacity depends on the contractor utilization strategy employed.

Organizational capacity is underpinned by the skills and training that individuals provide. Therefore, understanding exactly how many such individuals are supporting your organization is important. In our experience, the more managers think of contractors as “line items,” the more likely they are to have an insufficient understanding of their overall organizational capacity. Managers who lack thorough grasp of their organizational capacity, are destined to fail.

Furthermore, contractors are still an element of total O&M costs, whether you consider them part of your headcount, or as “line items.” Like any other cost element, contractors utilization should be properly managed.

What can you do?

It starts with asking the right questions of the right people. Try starting with managers in HR and Finance. Ask them how easily you can identify the number of contractors on site for a given period. Answering this question may be easy or difficult depending on the HR and accounting systems you employ and the data that you collect. Some changes may be required to get you the information you require, but ultimately, understanding the number of contractors you are using is critical information.

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