When it comes to statement of work (SOW), procurement teams are increasingly realising that bringing on board the best talent on a project-driven basis enables organisations to not only reduce spend, but also ensure that projects are completed in a timely manner. However, selling this solution to skeptical hiring managers can be challenging.
For some hiring managers, moving away from the comfort of familiar recruiting processes can feel like too much of a burden. Many feel – or are told by their current recruitment partners - that they’ve nothing to gain from changing the way they source and engage talent. However, this isn’t the case.
Procurement leaders are best placed to support hiring managers to change their buying behaviours, by reminding them on the risks surrounding rogue recruiting and how procurement teams can support their hiring activity. If you’re grappling with how to get hiring managers to buy in to statement of work, here’s what you need to know.
The benefits of statement of work (SOW)
In the UK, since the extension of IR35 rules into the private sector, statement of work procurement has risen in prominence as businesses increasingly look to mitigate against liability by bringing on board top talent on a project-driven basis. However, a significant number of businesses are failing to fully capitalise on the of potential this way of working.
Outcome-led SOWs have the benefit of letting procurement teams simultaneously reduce spend and ensure projects are completed on time and to the required standard. However, while the theory behind this model is infallible, in practice, success relies on buy-in from the entire business.
Change is difficult
In my experience, procurement teams often have solid processes in place around recruitment generally, but this isn’t always well-communicated in the organisation. Meanwhile, hiring managers don’t necessarily have the skills (nor previously needed to) or experience to manage buying processes effectively and are often reluctant to ask for help for one reason or another. But, change is difficult, and many mistakenly believe that they’re already at the top of their game when it comes to identifying, securing and negotiating terms for talent.
In addition, many consulting companies are rather adept at manipulating hiring managers to believe that they’ve nothing to gain from exploring other talent management options. They’re good salespeople and will often do work on the hiring manager’s behalf – which is inevitably built into margins.
Educating hiring managers
Against this backdrop, it’s advised that procurement teams tighten the reins and move towards centralised and standardised practices while also advising on where statement of work is appropriate. There needs to be clear and consistent processes, for example, around supplier selection, rates, terms and conditions, milestone setting and payment approvals – and, crucially, this needs to be communicated internally.
It’s always a good idea to have an education piece around where the ‘guard rails’ are. Within a formal structure, it’s important for hiring managers to consider engaging with suppliers, where they can negotiate and where there are caps on margin percentages. Hiring managers who are unaware of the benchmarks are likely to agree to unfavourable terms – and, once agreed, it is hard to claw your way back.
In addition, procurement professionals need to understand that hiring managers may simply not understand how to move to outcome-based contracts with transitional and final deliverables, so there needs to be a level of training and extra support around this too. If a hiring manager has engaged a supplier to deliver something, a milestone isn’t reached, but they invoice anyway, many will feel obliged to pay because work was done. This is where procurement can step in and offer guidance around these difficult conversations and when it is necessary to go back to the contract and apply penalties.
As a senior procurement professional, it’s easy to take for granted, as a true expert in your field, that your colleagues are operating at the same level. Remember, internal hiring managers are not, in essence, talent management professionals. As is often the case in business, individuals who are at the top of their game are moved up the corporate ladder until they inadvertently find themselves with responsibility for a team and purchasing. Procurement professionals are needed to help train and advise these accidental hiring managers.
Just as procurement can support hiring managers when it comes to statement of work solutions and talent management more generally, a great managed service provider (MSP) can support procurement teams as well.
Engaging an MSP to manage statement of work procurement underpinned with an advanced applicant tracking system (ATS) and vendor management system (VMS) is almost always the most efficient option – and communicating the value of this route internally (and getting buy-in from the rest of the business) is key to success.
External specialists can bring benefits across four key areas: scoping and sourcing; management; strategy; and spend. However, choosing the right MSP to partner with is key, and those which can deliver both expertise and a cutting-edge technology platform are best placed to optimise the potential of SOW programmes. That said, never be dazzled by a shiny tech-based solution: remember people need to always remain at the heart of services procurement.
Initiating culture change
Procurement professionals have the ability to be instrumental in initiating a culture shift within their own teams and beyond. Doing so is crucial if we are to overcome the historic ‘us vs. them’ mindset, which can still be prevalent between some procurement professionals and in-house talent acquisition teams.
Today, procurement has become largely devolved within many large organisations, with individual hiring managers taking responsibility for purchasing decisions. This has created a culture in some businesses where procurement leaders routinely accuse others in their firm of ‘rogue’ or ‘aberrant’ spending.
To remedy this, procurement teams may want to ‘delegate-down’ spend authority to ‘the coal face’, and pass along the skills and tools that hiring managers need to manage resources wisely. Procurement also have the power to set the guard rails.
Bear in mind that hiring managers have a lot on their plates and are often not experts in specialist areas such as compliance and the mitigation of security risks. When it comes to SOW in particular, if hiring managers go rogue there is a real compliance concern.
By using a centralised VMS provided by an MSP, forward-thinking organisations can overcome this historic stalemate – especially when it comes to SOW services procurement. By moving all SOW spend into a VMS, all departments involved can finally gain visibility over what’s being spent. New project briefs are also made by project managers within the system, bringing a level of transparency to the buying process that procurement could previously only have dreamt of.
Essentially, in order to do things in a better way or smarter way, collaboration across the business is vital.
How to get hiring managers to buy in to statement of work: five top tips
For procurement teams looking at how to get hiring managers to buy in to statement of work, it’s essential that you:
Educate hiring managers. Never assume a level of understanding. Hiring managers are seldom recruitment and compliance professionals. Begin by explaining what a statement of work is, what the benefits are, what your internal processes are, and how you can help
Have compassion. Empathise with your internal hiring managers to avert an ‘us vs. them’ scenario. Show that you understand their workload and reiterate that procurement is there to support them
Be available. Provide hiring managers across your organisation with a clear way to contact you and create a culture of collaboration
Highlight the risks without the guard rails. Ensure that hiring managers know why processes are in place from a compliance perspective and the risks the organisations and individuals face if they ‘go rogue’
Lean on your MSP to help answer hiring managers’ questions. We’re here to help.
As true experts in their field, procurement professionals are able to lead on improvements to both processes and culture for the benefit of the entire business. And in a Covid-hit world, effective SOW has never been more crucial.
Through engaging hiring managers to drive SOW solutions, both parties can work together towards a common goal. Communication is key, and while it’s a smart idea for procurement teams to ensure that the right meta processes are in place and communicated, they need to also consider offering hiring managers the autonomy to manage contracts as far as they feel comfortable within agreed parameters.
Statement of work can be an ideal solution amid an increasingly complex legislative landscape – and a world where niche and specialist skills are becoming ever scarcer. What’s more, for work packages which lend themselves to SOW solutions, procurement professionals can turn to statement of work procurement to help mitigate against risk in several areas, not least in terms of worker classification.
And just as hiring managers should learn to lean on their procurement teams to manage SOW successfully, procurement professionals can also rely on the support of their MSP partner. Working with an experienced MSP is the best way to make sure that terms and conditions and rates of SOW projects are favourable.
By capitalising on a specialist provider’s market intelligence and supplier management expertise, procurement professionals can gain valuable insights which can both inform initial agreements and provide insight and analysis throughout the project and beyond.
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