How Statements of Work Build Organisational Agility in Uncertain Times
The traditional ‘9 to 5’ working day in an office setting is increasingly becoming a thing of the past. This is due to the sharp rise of the gig economy – whereby workers are earning income outside of traditional, long-term, employer-employee relationships – which has seen exponential global growth since the beginning of the pandemic. Today, there are over 150 million engaged gig workers in North America and Western Europe, and this number is expected to double by 2023.
For organisations managing this expanding contingent workforce, a Statement of Work (SoW) is a vital tool to help provide value, shift risks and control costs. We’re exploring the reasons why an SoW is crucial in helping businesses thrive in a post-COVID-19 world.
Access skills, pay for tangible outcomes
In the last year, the global economy has seen the biggest digital transformation and reallocation of skills since World War II, shifting from aviation and hospitality to driving, retail, healthcare, IT and cybersecurity at an unprecedented scale. As employers respond to the rapidly changing landscape and take on more gig workers with specialised skills that will fit their immediate needs, many are adopting SoWs. These are legal contracts that outline work to be completed in the form of deliverables and milestones, with clearly set timelines and respective payment schedules and parameters. Ultimately, SoWs help to minimise risk for both the employer and employee, by clearly defining the scope of work.
In the hybrid workplace, accessing the skills you need now, while also driving compliance, shaving costs and mitigating risk is a careful balancing act. SoWs enable organisations to focus on tangible outcomes or outputs from the worker, which in turn removes the spotlight from an individual’s skillsets. That means skills can be accessed quickly and with more flexibility, which increases overall efficiency and reduces costs. It’s therefore no surprise that companies have increased their annual spend, with the US investing at least 60% of its budget on contingent talent and other countries increasing service procurement spend at a slower pace.
Kayleigh Kuptz is the co-founder and COO at Deployed, an SoW authoring platform, who says, “The ‘job for life’ is dead. You don’t hire for people anymore; you hire for services and outcomes and a Statement of Work provides that flexibility and that agility.” According to Kuptz, companies that develop and implement SoWs can identify exactly what work needs to be done and look for the people can do the work most efficiently. This makes more sense as hiring needs shift from permanent staff members with fixed job descriptions to flexible, service-based, output‑based work.
Emphasise collaboration, not location in your search for talent
We’re in the age of collaboration, in which a variety of specialists work together to bridge the gap between the skills you have and the ones you are lacking. Equally as important, the mass shift to remote working has removed physical location as a barrier to accessing the best talent. But with workers often spread across regions with different managers and budget categories, there’s potential for confusion and disorganisation. That’s where SoWs come in: they help teams work together seamlessly to avoid scope creep, improve communication and ensure accountability every step of the way.
“Success in leadership and business begins with clarity,” says David Dye, a leadership and employee engagement consultant at Trailblaze Inc., a consulting firm in the United States. He notes that the clear roles, outcomes, and expectations outlined in SoWs ensure that workers know what to expect from the employer, as well as what is expected from them.
Reduce risk and avoid compliance issues
The pandemic undoubtedly had an impact on every business, whether large or small. However, some organisations used creativity and adapted to the changing landscape much more quickly than others. Financial services company Achiko was in the midst of expanding into buy now, pay later services on its mobile payment app when COVID-19 hit and disrupted the market. That’s when they pivoted, leveraging their technology to launch Teman Sehat (Health Buddy), an app which offers incentives for people to get tested for COVID-19 and manages the booking, payment and record keeping of test results, which can be used for workplace check-ins. Achiko has tapped into a booming market – the adoption of telehealth has exploded in the last year, from 11% of consumers using it in 2019 to 46% in April 2020.
To succeed with these significant shifts, companies have depended on quickly accessing new teams with specialised capabilities. Having an SoW in place enabled them to not only focus on the outcome but also to minimise the risk of misclassifying employees, and to avoid mistakes with benefit plan eligibility and compensation.
An SoW also helps to reduce large overhead costs and mitigate exposure to non-compliance with employment laws or tax regulations. For example, SoWs can help HR and procurement professionals more effectively manage the recent private sector rollout of IR35, the legislation designed to tax organisations hiring ‘disguised employees’ at a rate similar to those who are in full‑time employment. Assessing the status of a contingent worker before hiring them is an essential requirement, which could quickly become a headache for employers. However, if there’s a clearly defined SoW in place, determining a worker’s IR35 status and ensuring the appropriate amount of tax is deducted could become the responsibility of the outsourced agency, rather than the end hirer.
The importance of choosing the right managed service provider
One in four SoW projects carried out by suppliers are not completed on time or on budget. This usually happens when the parameters aren’t clear or when there’s limited visibility of SoW activity in the organisation, coupled with limited data about cost savings. That’s why it’s important to work with a managed service provider like TAPFIN that understands how to optimise buying channels, manage project scopes, provide actionable insights and drive quality through advanced reporting during the entire SoW process.