Inclusion of statement-of-work in a contingent workforce program has been a hot topic for some time now, reflective of the natural maturation of programs. In working with many buyers over the last several years it has become very clear to me that an SOW strategy that is poorly addressed is where program managers set themselves up for failure.
In order to be successful in including SOW in your program, I suggest keeping the following concepts in mind:
Don’t assume you have the solution every time. Just because SOW is not incorporated in the contingent workforce program does not mean it is not well-managed. Many companies have a very tight and rigorous capital approval process that holds statements of work to a defined set of criteria that constantly measure success or failure against predetermined goals. Also, it’s not uncommon for SOW to be well-managed outside of a program group, we assume that just because an engagement manager may not necessarily have sourced through appropriate channels that they’re not negotiating appropriate contracts. But often, we see hiring managers negotiate very competitive deals in relation to the market. If you go in assuming that you’re going to do better in managing SOW right off the bat and you don’t, you set yourself up for failure and you open your program’s legitimacy to question.
It’s about the governance. As I mentioned, many companies have guidelines that determine how capital dollars are spent and how SOWs are approved and processed. The successful program owners understand this process and incorporate talent-focused business rules into the governance strategy. But some program managers fail to consider this and assume SOWS can be measured like time and materials and supplier performance. By understanding your corporation’s governance rules and policies you can swim with the tide as opposed to against it.
Competition and transparency are vital. Statement-of-work pricing can be incredibly opaque. Often, companies are creating something new to address a specific company need or developing a program that’s never been done before. That creates uncertainty. To address this uncertainty, suppliers need to create an appropriate pricing methodology. Any pricing methodology worth its salt is going to incorporate some key concepts of competition and transparency.
You have a part to play in this. Your SOW program must have an appropriate level of market competition that ensures providers are giving you their best rates and with transparency to underlying rates and assumptions for effective comparisons against other bids.
It’s a mistake to assume that an effective SOW program can function without competition. This can be easier said than done. But to the greatest extent possible, maximizing appropriate competition while maintaining supplier incentives is a delicate dance that requires a sophisticated sourcing strategy but is attainable.
There is significant value to including SOW in your contingent workforce program. That is without question. But to make sure that your solution stands the test of time, it’s important to remember the basics. If you build a program based on the correct foundation you truly set yourself on the path to success.