Things are changing – organisations are having to look at new ways of filling their talent gaps.
Where they once had contingent workers engaged on a time-and-materials arrangement, more and more companies are switching to statement-of-work (SOW).
This change has been getting a lot of attention recently.
As with anything, there are pro’s and con’s on both sides of the argument – engaging contingent workers on a T & M basis has a raft of benefits – it’s quicker for a start and it’s more flexible – many companies would, given the choice, always plump for T & M.
Indeed, where SOW isn’t really definable, T & M is the best option, because it’s easier to monitor and report against. That said, there are situations where statement of work arrangements are far more attractive.
In times past, SOW was a project-based deliverable that was usually completed by large companies – but this isn’t the case any longer. A statement of work is a document that captures the work products and services that include activities and deliverables that are to be supplied under contract or as part of a specific project timeline – although it’s not limited to that.
This is in stark contrast to a typical contingent worker arrangement, which is billed per unit of time worked and is based on agreed prices and deadlines or milestones that have been previously identified.
SOW as a concept is well established, but, until now, has been primarily utilised by consultancies and system integrators – outside these organisations, SOW is rare and infrequent. Pioneering a different way of working, Gibbs Hybrid has been operating this model successfully with customers for many years, realising benefit while providing cost control to the purchaser in tandem with its contingent resourcing.
Determining whether SOW is right for the purchaser is ultimately about risk appetite. One of the key criteria for assessing this is how robust and clearly articulated the governance model is, to monitor and control the risk profile. For example, suppliers will offset the risk they carry for SOW by ensuring the purchaser has a decision making framework that can provide clarity and agree to the work being carried out; this process alone can be burdensome to the purchaser. Walking the right risk tightrope can produce benefits for both the supplier and the purchaser.
Lastly, SOW is a useful weapon in the armory when combating increasingly complex legislation that surrounds non-permanent workers and tax compliance. Indeed, proper classification of workers has never been more important – especially with the introduction of IR35 later this year.
Genuine SOW arrangements might help to mitigate a lot of risks a company could find itself exposed to when engaging contingent workers. Organisations must adapt their contingent worker programmes to ensure risk-free operating environments in order to thrive.