HR Metrics: Contractor fill rates

So you probably have a specific number of independent contractors, consultants and agency employees within your organization.  You also probably have not really given much thought around what percentage of your total population these contractors represent.  The reason this is important is because this percentage actually impacts the organization’s ability to scale and respond to economic fluctuations and M&A activity.

Lower percentages of contractors means that in an economic downturn, the organization’s ability to quickly cut costs is hampered.  Alternatively, in high growth scenarios, employers which utilize more contractors have an ability to scale upwards more quickly.

This obviously comes at a cost – the more contractors you have, the more it costs as these are usually higher cost workers (due to fees paid).  There is probably an optimal contractor fill rate somewhere between 5-25% depending on how susceptible your organization is to growth fluctuations.