Measuring Actions (Not Documents) for Better Trade Partner Engagement
When evaluating trade partners, measuring actions is more effective than intentions.
Very few companies can carry out their work independently. External organizations, third parties, and all manner of specialized contractors allow even relatively small companies to complete large and complex projects.
Managing all of these collaborations, however, is a significant task in and of itself - one that should be taken seriously. Building strong relationships with the right trade partners is an essential step to ensuring timely, effective, and safe operation.
Establishing those relationships starts right at the beginning, with a rigorous selection process. As a rule, companies are diligent when hiring employees. There should be a similar level of care when bringing on contractors and subcontractors.
This means, in part, evaluating the safety performance of potential vendors. Which, in turn, means knowing which variables should be measured and given extra weight in the selection process.
Before getting to those, let's consider the data that is typcially collected and measured when assessing candidates - and why they are not sufficient when taken on their own.
How do you assess the safety performance of potential or current trade partners?
If you're like most companies, that will primarily involve collecting basic lagging indicators of safety. You'll assess a vendor's total recordable incident frequency rate (TRIFR) or their lost time injury frequency rate (LTIFR) and take it as a good approximation of safety performance.
(Learn more about the Lost Time Injury Frequency Rate and How to Measure Yours)
Those measures are certainly important and informative, but they will only give you a partial picture. And when they are taken on their own, they can be misleading.
Usually, there is an acceptable range in these values defining whether a vendor can be used or not. But these metrics provide, at best, a rough snapshot of the overall performance in a single category, stripped of any meaningful context.
This is particularly a problem when evaluating smaller companies. Statistical measures that correct totals to 100 person-years create the impression that the incident rate is higher for companies with fewer employees. For instance, one in three workers getting injured over the course of a year is an alarmingly high rate. In a very small operation, however, this high percentage might represent a single incident.
Again, lagging indicators of safety performance aren't without merit. Sometimes, they're the best yardstick available. But it's important to understand their limitations as a predictive tool.
Evaluating Vendors Using Proactive Metrics
Lagging indicators highlight safety incidents without tallying the positive actions a vendor has taken to ensure safer working conditions. That's a major oversight.
Adding a review of the safety plan is another good step, but it's also not sufficient. Plans demonstrate intentions. But if you want to know how safe a vendor really is, you need to see actions.
Proactive metrics paint a better picture of the activities and resources an organization dedicates to safety. Examples of these include:
- An active hazard assessment program
- Inspection programs
- Training sessions
- Permitting processes
- Pre-task plans
- Preventative maintenance programs
- Facilitated communication
All of these activities generate documentation, statistics, and trends that can be used to determine how well a safety management system is implemented and to what degree safety is “owned” within the company.
Measuring Trade Partner Engagement
The key to good vendor evaluation is measuring participation and engagement in safety processes by your partner organizations.
Deciding what will be done and how it will be monitored is important to building the relationship between a general contractor and a trade partner. There should be clearly-defined performance objectives and a shared understanding of how these will be measured.
The upshot of this effort is that general contractors and service providers have an opportunity to grow together. There is agreement on the must-haves, a common understanding of where to apportion efforts in the safety program, and expectations that are clearly conveyed. With an established track record of performance, an organization can have confidence in their trade partners and thus be released from the cycle of evaluating new partners from square one and the stress, uncertainty, and risk that come with it.
Growing with suppliers orients an organization toward continual improvement, which should be the headline goal of every safety management system. Establishing and cementing those relationships should include demonstrable performance metrics in line with your benchmarks and specified goals. Outsourcing work is too often seen as offloading risk, but it’s important to remember that your trade partner's success is your success as well: incidents cost time, money, delays, damage and overall inefficiency on your projects. Not to mention the key mandate of a safety program is to prevent harm to workers, and a subcontractor is still a worker who deserves to go home safe at the end of the workday.
(Learn more in Why Contractor Qualification Shouldn't Stop at Prequalification)
The “lowest bidder” selection model is the enemy of strong vendor selection and supply chain risk management. The lowest bidder is often the lowest for a reason, such as a lack of experience or a poor track record on safety.
Weighting the cost potential over safety is asking for trouble. Many basic models of quality management identify this practice as a big risk in and of itself – it’s a way to shackle your organization to a continuously overturning roster of contractors. More likely than not, you end up continuously putting out fires instead of establishing smooth work processes with reliable trade partners.
There is another benefit to moving past the lowest bidder selection model. As a general contractor, the onus is on your company to demonstrate overall performance and quality, and that performance is made possible thanks to strong trade partner relationships. Accurately evaluating trade partner engagement positions you to win contracts the way they should be won - on quality, not price.