Is Outcome-Based and Performance-Based Working the Future?

What is it and, why should we care about recruiting talent to provide services in these ways of working?

A growing trend is emerging. How we work and engage with providers of ‘talent-based’ services, but what does this really mean?

Outcome and Performance based services (which can be interchanged freely) are a common reference to how organisations procure and intend for tasks and work to be measured and delivered.

Firstly, lets quickly clarify what we mean by ‘talent-based’ services.

We can include within this definition any organisation that primarily provides skilled and experienced resource (people) to undertake a number of activities BUT who are not on the ‘hook’ for the quality or validity of what is being produced or delivered.

As we move further towards future economies like the Gig and Freelance ways of working, along with traditional independent consulting and contracting there is a view we need to provide more accountability and in turn more validity of successful completion of tasks. This is the basis of Outcomes and Performance services – to provide more measurable, accurate and trackable ways of working and rewarding.

These types of engagements are certainly not new. They have been in use for many decades by traditional Consulting, Professional Services and Managed Services organisations to contract and deliver their underlying offering, namely the project or programme of work to be completed.

What we have observed over the past decade is how the talent sphere, driven by things like legislation change in the UK (IR35 anybody?) and more recently COVID-19 we’ve seen a shift towards working and engaging with traditional talent in more agile and flexible ways. Remote working has created more need to manage how we best utilise expertise, introducing more demand for reporting and governing quality in more defined ways beyond simply ‘touch and feel’ of talent being provided.

This is not about managing the person but rather ensuring the outcomes. After all, worker output is all well and good but defined outcomes are better. We should not focus too much on what people are doing or how they really do it but rather focus on the quality of what they produce being the real measure. There are of course some caveats to this like culturally enabling these ways of working and quality should not indirectly mean a significant increase in time or cost to deliver the 'outcome'.

Commonly, Outcome and Performance based services are contracted through a more structured service agreement and will usually have a Statement of Work (SOW) being utilised as the framework for defining what needs to be delivered (the Outcome) along with how it will be measured, tracked and rewarded (the Performance). Again, SOWs are not new, but as we move ever increasingly towards ‘hiring’ (either people or organisations) against a defined set of targeted goals they will increase in popularity.

SOWs can be a very robust vehicle to provide services against, they are inherently designed to define what needs to be provided based on outcomes and not skills. When done correctly SOWs are very effective at driving behaviours across the whole supply channel – that is a topic for a future article however…

So, how do we shift the way we hire and engage with individuals, contractors, consultants and organisations to a more Outcome or Performance Based approach?

Well, the good news is it’s not too difficult, subject to the business culture in place. Ultimately the biggest shift is away from hiring individuals to do ‘some work’ and instead assessing and defining exactly what you want to achieve. This shouldn’t actually be too difficult, otherwise how have we determined to hire skills in the first place?

Once we’ve determined what needs to be delivered (the tasks and outcomes) we now need to define the quality metrics we are happy to sign-off against (the Performance element) which we will contract against (through the SOW and service agreement). The key factor to consider here is governance, how will we measure and track what is being delivered, the quality / validity and progress, along with commercial reporting against budget.

There are a number of ways to do this. Manually, by using existing internal process and people is the usual first choice but is this the optimal use of time and resource? It certainly may not scale well if you have many engagements in flight. Alternatively, you could try and adapt or repurpose existing technology to try and ‘automate’ some of the processes and actions that need to be captured, in our experience not very simple and often falls short of expectations.

There is now another option, SOWaaS® which is a full lifecycle software platform which is designed specifically to simplify and significantly improve and automates the process of governing Outcomes and Performance based services, including capturing and creating accurate contracts of service, including SOWs across the whole supply channel.

In closing, the future of working and talent deployment is evolving and Outcome & Performance based services provide organisations across the whole supply channel with a robust, tried & tested option to shift how they procure and deliver services from purely skills based to a more definitive, measurable and accountable method of ensuring success.

Don’t hesitate to reach out to us over at www.sowaas.com or follow us on LinkedIn, we’re truly passionate about all things SOW and the opportunities they provide to any organisation.