The term “Win-Win Situation” is often used in business to imply an arrangement that helps both parties involved. However, in many business arrangements today there is also a 3rd member that needs to be accounted for. I’m speaking about the Independent Consultant/Contractor (“Lone Eagle”) and the Micro-Business (a small business with less than 10 employees) who are the often the ones delivering the services to the Client through the Prime Vendor. The interests of the Lone Eagle and Micro-Business in such arrangements are at best low priority and at worst outright ignored. When it takes “3 to Tango”, then a “Win-Win Situation” is not enough.
Lets consider a very common arrangement where the Lone Eagle or Micro-Business is providing a service to a client through a Prime Vendor serving as a pass-through. What we see in such arrangements is the classical “Win-Win Situation” where the Client is obtaining the services it requires and the Prime Vendor makes out nicely with a sizable markup (often in the range of 25% to 50%) to the Lone Eagle’s or Micro-Business’ hourly rate. The Prime Vendor’s sizable markup is in effect solely for the purposed of serving as the bridge between the Service Requester (Client) and the actual Service Provider.
I would argue that such a markup is excessive for serving as a mere bridge. In these cases, the Lone Eagle and Micro-Businesses don’t really obtain much if any tangible value from these pass through vendors. These Prime Vendors are not carrying any of their sub-contractor’s liabilities or providing any benefits such as Health/Dental Insurance, Vacation/PTO, Holidays, FICO, State or Local related taxes or insurance. The Lone Eagles and Micro-Businesses have to either provide for themselves or forego these benefits all together.
No one is saying the Prime Vendor shouldn’t be rewarded or undeserving of a fair compensation for serving as a bridge. But does it have to be so high? These marked-up pass-through dollars collected are mostly profit and for doing what?
No one doubts that in these arrangements, the big winner is the Prime Vendor. And it is also a nominal “Win” for the Client, who obtains the service it requires at a fee they have agreed to pay. Truth is that the fee could be lower if the Prime Vendor wasn’t adding such a large markup. Regardless, we can consider the Client a winner for getting their work done by a well-qualified Lone Eagle or Micro-Business.
So who is left out? In good conscience you can’t consider this “Win-Win” arrangement as sufficient when the 3rd member of the tango is an essential component. In essence, the power rests with the Client and the Lone Eagle / Micro-Business and they must insist on a “Win-Win-Win Situation”. The Prime Vendor markup should be rational and allow the Lone Eagle / Micro-Business to obtain a better hourly rate. If the Lone Eagle or Micro-Business is in fact obtaining the rate it desires from a Prime-Vendor for passing through services, then the Prime Vendor needs to resist the temptation to markup its hourly rate at a level that is disproportionate to the value and services it is rendering to the Client in such an arrangement. This allows the Client to pay less for services and / or reap the benefits of added quality and service received from a better compensated and motivated Lone Eagle / Micro-Business.
As the number of Lone Eagles and Micro-Businesses have dramatically increased in the business sector, their interests are paramount to ensuring that the Client obtains maximum output for its investment. I’m proud that my company PMOrchestrator has recently introduced a new service called Conduuit that addresses and delivers Win-Win-Win Situations. I would urge Clients in need of expertise, as well as the Lone Eagles and Micro-Businesses ready to engage interested Clients to contact us and find out more about this service. It’s not just a matter of better quality, service and savings for the Client, or better compensation for those who actually perform the work, but a matter of fairness.
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