How best-in-class contractor management can protect your business

Hiring contractors is a necessity, but there are risks involved for employers and workers. Companies must be proactive to prevent incidents, accidents and reputational damage

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Contractors play an integral role in the delivery of projects big and small. A survey by ISN, a global contractor and supplier information management firm, revealed that outsourcing work to third-party contractors was a trend that was likely to increase for approximately half of the companies surveyed across 20 different industries. In addition, a third of respondents said that over 40% of all work performed was completed by contractors and sub-contractors.

Whilst contracting out work is essential to many businesses to supplement their own staff and to carry out non-routine or specialist activities, there are risks involved that can damage the health and safety of workers contractors, and the reputation of businesses and their bottom line. ISN says companies must establish a process to safeguard contractors, their operations, assets and employees long before third parties are chosen. This begins with the creation of a pre-qualification scorecard to determine which health and safety requirements must be met for a company or individual to be hired. This scorecard can then be used to monitor contractors on an ongoing basis and be tweaked to stay in line with industry standards. ISN’s database of 80,000 contractors can then be used to assess and compare credentials.

Once scorecard-compliant contractors have been identified and hired, companies should then manage contractors and subcontractors and effectively and establish clear guidelines from day one. 

“You need to start by putting a clear communication strategy in place,” says Joe Schloesser, vice-president at ISN. “This should incorporate both your internal employees and your contractors, so you can clearly define your goals and responsibilities as a company. There also needs to be a platform or a place where contractors can go back and reference that information.”

Contractor handbooks, on-demand video training, workshops and one-on-one meetings are some of the methods used by ISN clients when working with contractors. Engaging workers with pre-job meetings, frequent check-ins and other communication mechanisms are also essential for companies to survey individuals and develop a safety culture – the perceived freedom of contractors to report health and safety problems at source and, if necessary, halt work without the fear of being reprimanded.

“It’s imperative to understand their perceptions of how they feel about the work environment, processes and practices that you have in place and that their company has in place,” adds Schloesser. “Building trust and erasing grey areas significantly reduces risk.”

But even scorecards, pre-qualification assessments, clear communication strategies and a good safety culture is not always enough to eradicate the risk of serious injuries or fatalities. Data from the HSE shows that 135 workers across 14 industries suffered fatal injuries at work in 2022 and 2023. Falling from height (40 people), being struck by a moving object (29 people) and being struck by a moving vehicle (20 people) were the three most common causes of death. The risk of injuries and fatalities to sub-contractors could be greater, too. While little data is available in the UK, a 2021 study in South Korea found that subcontractor employees were significantly more likely to experience health problems than the employees at parent firms.

To minimise this risk, continuous monitoring must be applied throughout the duration of projects. While lagging indicators, such as incident rates, injuries and fatalities can be used to monitor, measure and manage contractor risk, emphasis should be placed on leading indicators as well. These are data points that can help to predict the risk of incidents occurring before they happen. These can be gathered through boots on the ground observations carried out by the hiring organisation to improve hazard awareness, communication and engagement with contractors and investigation and reporting of potential risk factors.

Putting procedures in place to enable contractors to provide live feedback is also critical. “Organisations hiring contractors must collect rich, usable data from their partners to monitor their performance and help them to improve,” says Schloesser. “Some of the companies we work with have implemented simple solutions such as digital anonymous feedback tools so that contractors can provide that feedback straight away and management can initiate change swiftly.”

One ISN client of more than 10 years – a large utilities company - showcases how contractor management best practice can be put into action. The company set a goal to focus on leading as well as lagging indicators, resulting in the creation of a new pre-job briefing and training programme called ‘job brief mastery’. 

To create a culture of continuous improvement, it then carried out a reassessment of its practices, leading to three main improvements: 

  • More engagement and participation from contractors from the initial assessment onwards
  • The identification of sites that could have better awareness of and pay more attention to previously determined areas of opportunity
  • The expansion of annual safety symposiums to individual sites

After the reassessment, a ‘good catch’ programme was implemented (this refers to the identification of risk factors that could have resulted in injuries or fatalities involving contractors), which involves a panel of employees reporting good catches to a panel of leaders who review and reward the selected good catches with a small cash prize. Employees are encouraged by this programme to report and recognise good catches and have a constant focus on safety throughout the day. What is essential, beyond prizes, is that workers are involved in the reporting and the development of corrective actions.

For businesses pursuing gold standard contractor management practices, a centralised hub serves as the engine to power a robust programme. The system should be efficient in qualifying, monitoring and scoring contractors companies. Scorecards should be transparent to contractors, so they can work to improve and be measured fairly. It is also critical that the system collects and qualifies worker competency, qualifications and training. Finally, this data needs to be integrated into other business processes as a control to support job planning and measure performance. 

Working to implement these steps will ensure a strong foundation for any business. The output of such efforts will be the establishment a best-in-class contractor management programme that takes ownership of health and safety and safeguards the long-term health of sub-contractors and the wider business.

To find out more about best-in-class contractor management visit ISN