Mitigating Risk by Making Informed Hiring Decisions
Risk is a normal part of doing business. The risk organizations face is compounded when companies hire contractors to perform work rather than using their own internal employees. Organizations increase their risk even more when there is not a standardized and consistent method for evaluating contractor health, safety, and procurement information. Managing risk is the most important task while assessing the safety and viability of a contractor. The safest hiring decision is made when a company is able to gather all appropriate data and synthesize it into a usable format. Although risk may not be completely eliminated, it can be effectively managed.
The decision making processes involved in contractor management are only as good as the tools used to gather and analyze the data. The use of third party software and other tools are invaluable to any company looking to hire and retain safe and qualified contractors in a high risk environment.
There are two major considerations when managing contractors. First is deciding on the criteria for evaluation and second is developing an effective management process to evaluate this criteria.
Historical data, or lagging indicators, is taken into account when evaluating a contractor because past safety performance is assumed to be indicative of future performance. These key performance indicators can include the contractor’s fatality rate, their total recordable incident rate or total recordable frequency (TRIR/TRF), as well as insurance indicators with an experience modification rate (EMR) or their Worker’s Compensation rate.
Improving safety performance is what the ongoing monitoring and evaluation of a contractor’s safety data is all about. These leading indicators can include safety and training programs, on-the-job and post job evaluations and audits. Ensuring that contractors are developing and maintaining safety programs and policies that can adequately prepare them for potential hazards is crucial in determining whether or not a contractor is dedicated to safe work practices. Training employees on these safety programs is also a necessity to ensure they translate these programs into their work environment.
By having a standardized contractor prequalification process in place, followed by performance monitoring and evaluating, Owner Clients are able to decrease exposure to high risk situations by making better hiring decisions. In turn, contractors and Owner Clients alike are striving to create safer work environments.
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