The ROI of Streamlined Contractor Qualifications and Management

The Hidden Costs of Ignoring Contractor Management

When an organization’s compliance function is effective, its success is oen quantified by what didn’t happen: lawsuits, damage to reputation, lost business, legal sanctions and so on. The absence of any compliance-related incident oen makes management complacent about compliance.

As a result, some of the function’s budget may even be reallocated to fund activities that are perceived to have a better impact on shareholder value and earnings. However, with focus on anti-corruption laws and workplace safety policies intensifying globally, such a stance carries significant risks.

What makes the compliance function more vulnerable to cost cutting is the lack of targeted metrics for success. Creating metrics for quantifying the effectiveness of a compliance program demands analysis of the results gathered from internal audits. Companies need to regularly track their compliance management initiatives and benchmark the results against their competitors. Such steps can transform compliance into an effective function that relies on actionable data for informed decision-making.

Companies should look at compliance as an opportunity to enhance business capabilities – and invest to achieve these goals. Compliance spend needs to be strategically aligned to high risk areas. One of these areas is the relationships that an organization forges with third parties such as suppliers and contractors.

While many organizations are cognizant of the value of scoring their customers and leads according to the potential revenue each represents, very few will segment third-party contractors in terms of the potential risks they represent. What’s more, at most companies, contractor qualification and compliance is oen still managed through disparate systems with limited visibility and flexibility, or worse, manually on paper files or Excel spreadsheets.