Contingent worker, temporary labor, independent contractor, freelancer, consultant, are just a few examples of what is considered to be a “non-employee” worker today. According to Christopher Dwyer from Ardent Partners, during his webinar entitled, “Secrets to Mastering SOW Management”, currently the American workforce is 32% non-employee workers with the expectation that by 2018 this number will grow to between 45-50%. As this population of the workforce continues to increase, the uniqueness of the spend and the challenges of management become even more apparent. Contingent labor spend touches every line of business and impacts the bottom line from very tactical to highly strategic areas of the business.
As this non-employee workforce continues to grow, so does the need to manage Statement of Work (SOW). In order to reach total talent management, the focus needs to start with SOW management. Some of the many challenges that exist with Statement of Work include, understanding where the money is being spent (department), which suppliers the money is being spent with, what projects are being completed and on what timeline, and who the actual workers are. All these questions can be answered by taking a step back and looking for a holistic program management solution for the contingent workforce.
A strategic plan must be developed and buy-in from leadership must be achieved before any forward progress can be made. Typical obstacles to gaining executive buy-in include, SOW viewed as low priority, Procurement lacking involvement in more strategic areas, and a lack of understanding of the value of managing SOW holistically. To overcome these challenges, education is imperative to success.
One of the major benefits of a SOW management is the relief of administrative burdens on hiring managers. SOW management leads to streamlined negotiations with suppliers and decreased interviews for the hiring managers. This allows them to more effectively perform their core job functions. Secondly, the addition of SOW management drives long-term value, creating visibility and spend forecasting that is easily accessed. Usually done through a third-party technology, SOW spend is centralized and contained in one record keeping system. Along with having a system of record, savings can be achieved by the addition of expense management, proper monitoring of milestones and deliverables to keep projects on time and developing solid upfront budgets.
Compliance is another major concern surrounding the growing contingent workforce. Through full management of the contingent workforce, compliance can be closely monitored, achieved, and have benefits that are two-fold. From a resource perspective, the business will be able to identify who and where the workers are. The ability to identify contingent workers and where they work increases the ability to track company resources, such as laptops, as well as the control of access to internal systems and facilities. By ensuring consistent on and off boarding practices, companies have the ability to confirm all items are accounted for and accesses are turned on and terminated appropriately. By adding a managed program to your organization, a clear division is developed between the contingent worker and your organization. This separation decreases the risk of co-employment concerns and the financial implications that surround it. Additionally, from a contract management perspective, all contracts will have standard terms and conditions. This will allow for quicker ramp up time and get the project producing results in a more streamlined manner.