There is no question that the world of work is changing. With artificial intelligence (AI), blockchain and robotic process automation (RPA), to name a few, technologies are disrupting the industry in radical ways. When you factor in the retirement of Baby Boomers, the advancement of Millennials into management positions and the proliferation of globalization, the face of the workforce is profoundly different. In addition, over the past 40 years – more so over the past 20 – the concept of working at one company for a person’s entire career has become completely foreign. You would be hard-pressed to find someone who graduated from college any time after 2000 who is still with the same company they initially joined. It’s not your father’s – or dare I say, grandfather’s workforce anymore.
Perhaps the biggest change to the landscape of all is that over 41.5% of the workforce is represented by contingent workers, which brings its own set of challenges. This particular dynamic can have legal implications, making it more important than ever to begin those relationships with clearly defined expectations. With such a large portion of the workforce considered “non-employee” (which includes independent contractors, temp labor, freelance personnel and other gig economy workers), it is more critical than ever to carefully frame expectations.
One way to do this is to use a statement of work (SOW). Typically used for supplier agreements, an SOW has been called “the heart of every supplier contract.” It outlines expectations, describes the extent of the work, defines timelines and identifies key metrics that will be used to measure results. Using an SOW is important for both parties, as it puts structure around the work to be performed and clearly outlines what is and what is not in scope.
Whether you are the company bringing someone on board to help, or a small business selling services, these SOW best practices for supplemental staffing will make sure you protect your interests:
- SOWs should be supplier-focused and describe the “what” and not the “how.” An SOW is a supplier-focused agreement, so make sure that the language clearly and definitively details what services the supplier—not the customer/client—will deliver. However, it is not necessary to use the SOW to explain how those services will be delivered.
- SOWs that are clear and detailed can mitigate risks. Use an active voice, correct grammar and precise language when writing SOWs, and avoid using industry jargon. Having a well thought out and detailed SOW mitigates risks and protects against fines, penalties, lawsuits and other liabilities.
- Governance should be clearly defined. Be sure that you understand exactly what services will be provided, with a plan for regular oversight and metrics included that will help you measure the results. If you don’t know how to manage certain deliverables, don’t contract for them.
- Language that doesn’t provide clear responsibility should be avoided. When SOWs appear to include joint responsibility, in essence it means that no one is accountable. Provide language that makes it very clear what the supplier is responsible for delivering.
This article was written primarily for situations in which supplemental staffing, or “pay for effort” work is required. However, statements of work are frequently used in services procurement, including “pay for unit-of-service” (i.e., managed services), “pay-for-result” (i.e., outsourcing) and “pay for outcome/solution,” (i.e., vested outsourcing), in which the SOW is part of a larger Master Services Agreement (MSA) that includes additional terms and conditions. The MSA is generally the governing document that guides the entire relationship with an outside vendor, while the SOW is specific to one project or body of work.
At the end of the day, an SOW should be robust yet simple as it will be the foundation for an effective long-term working relationship between a supplier and an organization. With such a radical shift in the workforce landscape, using tools like SOWs can help companies be clear and deliberate in their communications, expectations and agreements with a growing contingent workforce.
For more information on SOWs and best practices specifically as it relates to service procurement, consider taking the SIG University Certified Sourcing Professional course.
Sarah is a seasoned marketing leader who has spent most of her career triangulated around the professional services industry, helping individuals and companies overcome obstacles, powerfully tell their stories, and solve complex issues. Sarah is the founder and CEO of Cantaré Creative, and head of marketing for The Trium Group. Before joining Trium, Sarah was the CMO of SIG. She started her marketing career at A.T. Kearney, where she ran the marketing for the Procurement & Analytic Solutions unit. Prior to that, she served as a manager in A.T. Kearney’s financial institutions group, consulting primarily on topics that ranged from strategic planning to procurement cost reduction to back-office operations. Before joining A.T. Kearney, Sarah was in business development at one of the largest commercial banks in the country.
Sarah has an MBA from the Anderson School at UCLA and a BA from Furman University. As a mother of four, she is passionate about issues surrounding women, children and education, and serves on numerous related boards. Outside of work and volunteering, Sarah loves traveling, spending time with family and friends, and accidentally singing as part of an occasional classic rock cover band.