The Enigma of the SOW

The hottest acronym in the staffing world seems to be that of the almighty SOW, or statement-of-work. While staff augmentation provides a steady flow of headcount for an agency, it can often be riddled with compliance mandates, mark-ups, not-to-exceed rates and tenure limits — the bane of the staffing agency, as it snips revenue. The SOW, on the other hand, offers many benefits and avoids some of the tenets above. However, it is largely misunderstood and at times, poorly executed and inaccurately sold. SOW is merely a header on a piece of paper.

Each of us is effectively on an SOW, so to speak. We all have deliverables, expectations, goals and a clearly defined scope of responsibility. How our performance is measured is the question.

Before discussing an SOW, we must first have a clear understanding of the two forms of delivery in which staffing or consulting services are provided.

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Staff Augmentation: Work performed by a non-employee that could be performed by an employee at the client; controlled by the client. This is the proverbial time and material engagement. The engagement has a named resource, an hourly bill rate and scope of job duties. This type of engagement has service warranties and would be ripe to be fulfilled through a VMS.

Services: This is where the SOW comes in to play. Like hiring a company to roof your home or using a lawn care treatment service, you don’t care who does the work, so long as it gets done. This engagement has all the features of a product warranty: clearly defined deliverables, milestones and a promise of a product. This is something the client has no day-to-day control over and the firm determines the amount of resources assigned for a fixed fee. Therefore, the piece of paper titled “Statement of Work” is required. You need the real estate on the paper to outline deliverables, scope and milestones. With a VMS in place, you merely load the worker in the tool.

Services on a statement of work and staff augmentation each offer different value to a client. You can control the work with staff augmentation and ask for a refund or a replacement if the work is not being done satisfactorily. But if the client doesn’t have time for that or it’s not the client’s core business — say outsourcing food service — there’s services SOW. You only release payment upon proper execution or secure a refund and rework.

With some projections showing nearly 40% of the global workforce being contingent by 2030, it is essential for both the client and supplier to hone their staffing lexicon. Staffing models like the two above are here to stay and using an SOW template for all engagement can open both parties to risk.

MORE: Successful SOW management: Key concepts to keep in mind

 

 

Nicholas Wennerström

Nicholas Wennerström
Nicholas Wennerström, PHR, SHRM-CP is head of global contingent workforce at Zebra Technologies.

Nicholas Wennerström
Nicholas Wennerström, PHR, SHRM-CP is head of global contingent workforce at Zebra Technologies.

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