Issue 32 December 2015
RECRUITMENT MATTERS The View and The Intelligence
2015 in Review
Legal update and the IRP
Events and training
Golden rules for the industry p2-3
We look back on the year p4
Conduct regulations and IRP fellows p6-7
IRP Awards and more Greg Savage
BUSINESS IS £31.5 PICKING UP 9% RECRUITMENT
UK RECRUITMENT INDUSTRY IN 2014-15
MARKET GROWTH IN 2014-15
INDUSTRY WORTH £31.5 BILLION The ‘golden age of recruitment’ has arrived in style, with the UK industry booming. The ‘2014-15 Recruitment Industry Trends Survey’ has found the UK recruitment market is now worth £31.5bn, up £1.8bn on the previous year. It’s also £4.5bn larger than the market was before the last recession. REC chief executive Kevin Green says the UK market is in the best shape it’s been in for 20 years.
@RECPress RM_DEC_15.indd 1
“People often ask me if recruitment’s a big industry. We’re bigger than plastics, we’re bigger than fashion, we’re bigger than electronics, we’re bigger than toys,” he says. “As an industry we need to punch our weight and talk about the value we bring to the economy.” The report predicts the industry will grow a further 9% in 2015-16 and 8% in 2016-17. Permanent revenue rose
11.5% this year to £2.9bn, with temporary and contract revenue up 9.5% to £28.5bn. It’s the second highest rise permanent business has seen. “We have got as good an environment to operate a recruitment business as you can have,” Green says. Permanent margins have also risen. Eight per cent of fees charged being more than 25%, up from 2% in 2013-14. But the story is different for temporary and contract margins. Seventeen per
cent of recruiters received fees under 9% for temp and contract roles. A little more than 45% of recruiters were paid 10-14% in fees. The full report is free for REC members and can be downloaded at rec.uk.com/ research
www.rec.uk.com 11/11/2015 15:02
Leading the Industry
The skills squeeze is impacting on the UK market, says Tom Hadley, REC director of policy and professional services
Three golden rules for 2015, says Kevin Green, REC chief executive
It’s great news – the UK recruitment market is bigger than ever before at £31.5bn, according to our new Recruitment Industry Trends Survey. That’s a £1.8bn increase in the last year, and £4.5bn more than in 2007/08. It’s especially encouraging to see a significant uptick in margins for perm recruitment. With opportunities to make more money all around us, here are three golden rules that winners in our industry follow in order to take advantage of the growing market. 1) Does your business have a really clear vision, strategy and plan? In my experience many recruiters get confused between the three or perhaps have one without the other. Your vision is your purpose: why do you exist and why you are different? It should be an aspirational message that excites clients, candidates and staff. Your strategy should articulate how you are going to deliver your vision. Which markets will you operate in? When you will invest in technology and brand development? Finally, your annual plan should define your targets, activity and budget for the year ahead. 2) You need leadership and talent in abundance. My message to budding entrepreneurs is that your job is to bring in people who are better than yourself. If
FOUR IDEAS you can achieve this you’re likely to have a business which has significant value, whether that’s to your own management team or to an outside investor. In a recruitment business your team leaders are key to unlocking superior performance because they manage your fee earners. So they need to be great coaches, motivators and listeners. Ask yourself: have you got the depth of leadership you need to get to the next stage of your journey? 3) Invest in your business ahead of the next phase of growth. To take your organisation to the next level you usually have to do something different, whether that be adding new skills, more resource, new technology or new marketing approaches. So the revenue generated by the business needs to stay within the business to fund these investments. Finally the REC is here to help your business grow and be successful – that’s why we created the Scale Up campaign and have partnered with Elite leaders. For more insight, our podcasts with recruitment leaders are a great source and you can download these for free at www.rec.uk.com/scaleuppodcasts
2 RECRUITMENT MATTERS DECEMBER 2015
You can follow Kevin on Twitter @kevingreenrec
With the skills squeeze threatening to stifle business growth and suffocate the UK jobs market, here are four ways that we are trying to make a difference. 1. Building the bridge – Developing and updating practical skills is one of the biggest challenges. This is why we were delighted to be a lead partner on the government’s WeCan initiative which encourages employers to provide work experience opportunities. Helping the next generation to visualise the world of work is at the heart of our Youth Employment Charter and has resulted in hundreds of REC members building links with local schools and colleges. 2. Enlarging the talent pool – Addressing candidate shortages must involve reaching out to under-represented groups. A key element of the formal partnership agreement between the REC and the Department for Work & Pensions (DWP) is to work together to radically increase the number of disabled people in work. The recent RIDI awards played a huge role in showcasing our industry’s contribution. 3. Driving the good recruitment agenda – Employers need to adapt their hiring strategies to reflect the increasingly candidate-driven market. The core aim of our ongoing Good Recruitment Campaign is to engage businesses in a debate around what good looks like and to promote the role that recruiters can play in helping their clients to review selection processes and criteria. 4. Influencing skills policy – As well as working constructively with ministers and key government departments, we are engaging on a regional level with Local Enterprise Partnerships (LEPs). The focus on devolution and ‘northern powerhouses’ makes it important for us to have a strong regional voice. Recruiters are uniquely placed to ensure that local-level skills strategies reflect evolving skills needs. Jobs transforms lives, which is why our industry is committed to helping more people develop awareness, clarity and aspiration with regards to work opportunities. Addressing the skills disconnect is crucial to business growth and is also a cornerstone of our underlying mission of helping to build the best jobs market in the world. You can follow Tom on Twitter @hadleyscomment
The success story which has come to categorise the UK jobs market is rapidly being overshadowed by the growing threat of skills shortages As highlighted by trends in the REC and KPMG Report on Jobs, the UK labour market is entering a new phase. Since stagnating in June, hiring activity is being noticeably constrained by a lack of suitably skilled candidates. The pool of available skilled workers shrank yet further in September, resulting in the slowest rise in permanent placements for two and a half years. The pace of increase of temporary placements was also the weakest reported in the past 29 months. This ties in with findings from the annual CBI/Pearson survey of 310 companies,
STILL GROWING SLOWING I have been talking for some time about how the welcome revenue growth recruiters have been seeing has been slowing. This downward trend has unfortunately continued in July, with median RIM recruiter revenue growth slowing to only 1.4% in September (Figure 1). Additionally a quarter of RIB members are seeing revenue growth of over 13% – a significant slowdown from the more than 30% in the summer.
which together employ over 1m people. The 2015 survey found that 65% of firms expect to need more skilled workers in the year ahead. This demand is particularly pronounced in high-growth sectors including construction (73%), manufacturing (69%) and engineering, science and technology (52%). The lobby group EngineeringUK has already issued warnings about Britain’s current annual shortfall of 55,000 people with key engineering skills. The Federation of Master Builders (FMB) reports that 60% of small construction firms are struggling to hire bricklayers, whilst more than half struggle to find carpenters. An anticipated shortage of drivers and distribution workers has also remained a constant theme throughout 2015 in the REC’s JobsOutlook report, causing particular alarm in the run up to Christmas. Research from O2 suggests that by 2020 the UK will need
OF FIRMS EXPECT TO NEED MORE SKILLED WORKERS IN THE YEAR AHEAD THIS DEMAND IS PARTICULARLY PRONOUNCED IN HIGHGROWTH SECTORS INCLUDING 65% OF SMALL CONSTRUCTION FIRMS ARE STRUGGLING TO HIRE BRICKLAYERS, WHILST MORE THAN HALF STRUGGLE TO FIND CARPENTERS
2.3m digitally-skilled workers, highlighting the growing technology talent gap in the labour market. The UK manufacturing sector is also predicted to require 1m more workers by 2020 to replace those retiring or leaving. According to the British Fashion Council, 60% of workers in textiles manufacturing are over the age of 40, exposing a pressing need to encourage younger people into UK fashion manufacturing. Skills shortages are taking their toll. Research conducted by Everline and the Centre for Economics and Business
Figure 1: Recruiter turnover growth
30 20 10 0 -10 Oct 13
Additionally a quarter of RIB members are now seeing revenues FALLING by more than 10% on a year ago. This extreme divergence in revenue growth demonstrates the importance of benchmarking performance against
ENGINEERING, SCIENCE AND TECHNOLOGY
Research suggests the UK economy is losing out on £18bn a year as a result of the 520,000 vacancies that small businesses cannot fill due to a lack of relevant skills. This figure is only set to rise. The onus is now on recruiters, employers and the government to find a way of equipping the British workforce with the skills it so desperately needs.
On a more positive note, although RIB member turnover growth slowed to only 1.4% in September, net disposable revenue was growing significantly faster at 5.1%, and the top quartile of RIB members are still seeing NDR growth at around 30%.
40 ■ Upper Qtile ■ Median ■ Low Qtile
73% 69% 52%
SKILLS ARE NEEDED MORE THAN EVER BEFORE
other recruiters to maximise performance. The slowing revenue growth is clearly related to a slowing in the UK labour market, with growth in vacancies slowing from over 25% a year ago, to 7.7% this September.
Chris Ansell is chief financial officer at Recruitment Industry Benchmarking (RIB). The RIB Index provides bespoke confidential reports on industry trends. See www.ribindex.com; firstname.lastname@example.org: 020 8544 9807. The RIB is a strategic partner of the REC.
RECRUITMENT MATTERS DECEMBER 2015 3
The BIG talking point
THE REC IN REVIEW 2015 marked another strong year for the recruitment industry. Here’s what shaped members, the industry and policy over the past year
Membership: The REC launched Scale Up, its flagship campaign, designed to help recruitment businesses make the most of the economic upturn. Policy: An REC survey found almost 40% of recruitment agencies thought attracting workers aged 55 and above
required more thoughtful advertising. Industry: Eighty per cent of employers planned to take on permanent staff within the first quarter of 2015, and only 7% intended to reduce their numbers, according to the REC’s first JobsOutlook survey for 2015.
Membership: 193 recruitment agencies were denied REC Membership in February for failing to pass the REC’s compliance test. Industry: REC chief executive Kevin Green rejected claims the industry was unregulated and too profits focused. “The majority of temporary workers have weighed up the options and made a positive choice to work in this way because it suits them best,” he wrote. Policy: The REC offered support to education charity WorkTree’s school Ambassador Pack, designed to promote recruitment as a viable career option for young people.
4 RECRUITMENT MATTERS DECEMBER 2015
Membership: execappointments.com joined the REC’s Business Partnership scheme, offering members a new channel for sourcing top executive talent. Industry: The REC called for more government investment in STEM industries: “It is in these sectors where we will need even more people now investment has been confirmed.” Policy: The REC launched plans for an Older Workers Pledge to be developed alongside Age UK.
Membership: The Good Recruitment Campaign celebrated its first birthday. The first anniversary was marked by the launch of the new GRC online hub plus a number of new signatories. Industry: The month’s KPMG/REC Report on Jobs found permanent staff placements rose at a similar
pace from the start of the year, with temp placements slightly down on the record high recorded in February. Policy: The Policy team produced a breakdown of every major political party’s manifesto in the lead up to May’s general election.
Membership: More than 260 students sat May’s Level 3 Cert RP exam, with a pass rate of 74%. Industry: The REC’s Director of Policy Tom Hadley responded to criticisms by NHS England chief executive Sir Simon Stevens that agencies were “ripping off ” the service. “The overwhelming majority of NHS trusts manage their agency spend through framework agreements which cap prices.” Policy: REC chief executive Kevin Green said the new Conservative government would mean a stronger focus on the UK’s place in Europe and immigration’s effects on the labour market.
Membership: Bespoke Recruitment director Simon Noakes was elected chair of the REC at June’s AGM, replacing Neil Smith. Industry: The June 2015 edition of the REC/KPMG Report on Jobs showed growth in starting salaries and in temp billings, but growth of permanent placements began to ease. Policy: The REC responded to Secretary of State Jeremy Hunt’s proposals to reduce agency spend in the NHS. “[Hunt] is scapegoating agencies for the NHS’s own mismanagement of workforce planning,” said REC director of policy Tom Hadley.
Membership: Specialist sector guides were produced for the first time, offering members details on the latest industry trends. Industry: The REC releases its ‘Planning for growth: attract
and retain talent for your recruitment business’ report. It found that 52% of recruitment consultants and managers received a pay rise in the year ending April 2015. Policy: The Good Recruitment Campaign continued to grow with EY, River Island, Jaguar Land Rover, Johnson & Johnson, Wincanton, SAB Miller, Leeds NHS Trust and WaterAid and signing its charter.
Membership: Exams were taken in more than 15 locations in the UK and overseas, including Dubai, Jersey and Kazakhstan. More than 260 candidates sat the Level 3 Cert RP exam. Industry: August’s JobsOutlook survey found that 98% of employers intended to maintain or increase their use of temps over the following quarter, as demand for staff continued to rise. Policy: The REC is announced as a lead partner on the government’s WEcan campaign, designed to help young people
prepare themselves for jobs in the future.
Membership: The REC announced the launch of ‘Jobs transform lives’ a new way of talking about the important work recruiters do in transforming workers’ lives. Industry: A strategic alliance between the REC and Elite Recruitment Network was announced, with Elite’s suite of managerial and leadership courses now forming part of the REC’s corporate offering. Policy: The REC announced a relationship with the Freelancer and Contractor Services Association (FCSA). All umbrella companies holding REC business partner status would now need to have FCSA membership.
Membership: There were overwhelming reviews from members for the REC’s Greg Savage Masterclasses, held as
part of the Scale Up campaign. Industry: The REC/KPMG Report on Jobs found that growth for both permanent placements and temp billings began to slow in October, but salary growth continued heading into November. Policy: The REC rejected claims made by the National Union of Teachers that agency teachers don’t have access to sick pay, maternity pay or pensions. It also explained agency fee structures in the education industry.
Membership: Members celebrated a successful year with the awarding of the annual IRP Awards in London. Industry: The REC’s 2014-15 Recruitment Industry Trends report found the recruitment industry grew to £31.5bn in 2014/15, with an 11.5% increase in margins for permanent placements. Policy: The REC welcomed changes to the UK’s Tier 2 Skilled Migrant visa, which saw nursing placed on the Shortage Occupation List.
RECRUITMENT MATTERS DECEMBER 2015 5
SKILLS SHORTAGES AND THE CONDUCT REGULATIONS By Lewina Farrell, solicitor and head of professional services at the REC Recruiters are in the business of finding the right people for the right job and so are keenly aware of any skills shortages in their sectors. However, when recruiting either for permanent or temporary roles, recruiters must know what they are required to do by law if they cannot attract individuals with the right skills within the UK and wish to extend their search overseas.
THE CONDUCT REGULATIONS: Employment agencies (EAs) who introduce work-seekers for direct engagement by a client, and employment businesses (EBs) who supply temporary workers are required to comply with the Conduct of Employment Agencies and Employment Businesses Regulations 2003 when engaging with both clients and work-seekers. Regulation 19 provides that neither an EA (when introducing an individual to work with vulnerable persons) nor an EB, can introduce a work-seeker to
a client unless it has obtained confirmation that the workseeker has the experience, training, qualifications, and any authorisation which the client considers are necessary, or which are required by law or by any professional body to work in the position which the client seeks to fill. So what happens when a recruiter cannot find a candidate with the right skills and qualifications in the UK? Can they simply advertise overseas? In short, no. Regulation 27A (Advertising in other EEA states), which took effect in January 2015 prevents an EA or EB from advertising a GB vacancy (ie. a vacancy in England, Scotland or Wales) in another EEA state without either advertising that vacancy in English in Great Britain (a) at the same time or (b) in the 28 days ending with the day on which it advertises the vacancy in the EEA state. Though Regulation 27A has been in place for only a few months, BIS are consulting on further changes (the consultation
closes on 23 November). They wish to extend Regulation 27A to reduce the scope of recruiters to fill vacancies in GB with people from anywhere overseas without first advertising them in GB. Interestingly the consultation states that those who advertise via the Government’s Universal Jobsmatch will comply with the new regulation. It will still be a defence to say that it would be disproportionate (based on reasonable grounds) to advertise in GB in English – the consultation uses the example of translators. We expect the proposed amendment will take effect some time in 2016. Further amendments are being proposed to the Conduct Regulations though they are outside the scope of this article. Pleased see www.gov.uk/government/ consultations/recruitmentsector-changes-to-theregulatory-frameworkincluding-stopping-eea-onlyrecruitment for details.
RIGHT TO WORK IN THE UK: Having sourced the right person, the obligation to check whether an individual has the right to work in the UK differs depending on whether acting as an EA or an EB. When acting as an EA, legal responsibility lies with the client to employ only individuals with the right to work in the UK. If the individual is an EEA citizen s/he will have the right to work in the UK. If a nonEEA citizen, the client who is the prospective employer must sponsor the candidate. Importantly neither EB’s nor umbrella companies can sponsor temporary workers to work in various roles with various clients. Further information is available on the REC legal Guide at www.rec.uk.com/ legal-resources/legal-news/ Home-Office-statementtier-2-visas/Home-Officestatement-Tier-2-visasMay-2015.pdf and in the Sept/ Oct 2014 edition of the Legal Bulletin.
BEST SOFTWARE INTEGRATION YET REC Business Partners, Voyager Software and ISV Group have integrated their CRM and skills testing platforms to provide the most advanced search and selection technology on the market. Launching in October 2015, the seamless integration provides more functionality than previously seen, enhancing recruiters’
6 RECRUITMENT MATTERS DECEMBER 2015
ability to successfully place candidates. From this month, recruiters using Voyager’s Inﬁnity software can access ISV’s FastPath skills testing platform directly from inside the front ofﬁce recruitment system. Consultants can administer tests directly from inside a candidate record with results also reported and stored within
Inﬁnity. Recruiters have access to the full FastPath library of skills tests covering topics ranging from literacy and numeracy through to commercial driving and the Microsoft Ofﬁce suite. There is more functionality in this Voyager and ISV combination than has been seen before between a recruitment database and skill testing
provider. Recruiters have the ability to search their entire database of candidates for test results that meet the client’s requirements, candidates can be shortlisted, and Inﬁnity can set review and expiry dates for tests so consultants don’t need to spend time chasing candidates. For more information, visit voyagersoftware.com
BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS
Sarah Gordon is an associate director at Sammons Pensions and an honorary fellow of the IRP
Tony Taylor is an HR consultant and honorary fellow of the IRP
WHAT I KNOW
What makes a good recruiter? It’s a real passion for recruitment and an understanding that what we do changes peoples’ lives and transforms businesses.
Good recruiters see the whole person Successful recruiters understand how decisions made during the process have a profound effect on people. For the candidate, it’s not about a change in job, it’s about a change in careers and lifestyle. Recruiters should never forget the effect they had on the candidate and their family.
What is the most important tool in a recruiter’s toolkit? Listening. Most recruiters are incredibly good at talking, but the best recruiters listen to what’s said and what’s not said. If you’re probing a candidate on reasons for leaving a job, what they’re not telling you is the whole story. What are some major challenges facing recruiters? One of my personal bug bears is time to hire. A lot of clients are still taking their time, which doesn’t work with candidate expectation of a quick turnaround. Some wait two to three weeks. It’s a huge challenge for recruiters to manage. We want things to move very quickly because time does kill deals. What are you most excited about? There is so much happening in the world of technology in terms of getting big data. The more info you have in the current economy, the more power you have. But you also need tools for understanding the quality. We have huge networks and if you harness technology, you can get the best out of that. But technology will never replace the work a recruiter does.
The benefits of listening Listening is the sign of an outstanding recruiter. It’s a skill that takes a lot more effort and sill than people imagine. Non-verbal communication is important – the way a person says what’s not being said is worth paying attention to. Value what you do Recruiters are the barometer of the economy. We’ve got a situation where recruiters are fundamentally vital to the UK economy. The challenge for the industry is to make sure we are able to identify passive and active candidates who are going to be right for niche roles. It’s a worn-out phrase, but recruiters need to be proactive and innovative. The golden age As recruiters we live in in pretty exciting times as the industry becomes more and more professional. I find those kind of conversations with recruitment students and people I help train invigorating. I think 2016 will be a remarkably successful year as we see more efforts to professionalise by REC members.
To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com
RECRUITMENT MATTERS DECEMBER 2015 7
Events and training
LISTEN UP, WE HAVE MORE GREG SAVAGE THE REC IS GIVING YOU MORE GREG SAVAGE, FOLLOWING ON FROM HIS SOLD-OUT MASTERCLASSES IN OCTOBER. The awesome Aussie stars in a special episode of the Scale Up Podcast with Kevin Green. Download now at rec.uk.com/scaleuppodcast
Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 17 Britton Street, London EC1M 5TP. Tel: 020 7880 6200. www.redactive.co.uk Editorial: Editor Michael Oliver email@example.com. Production Editor: Vanessa Townsend Production: Production Executive: Rachel Young firstname.lastname@example.org Tel: 020 7880 6209 Printing: Printed by Precision Colour Printing
The official magazine of The Recruitment & Employment Confederation Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 2100 www.rec.uk.com
ÂŠ 2015 Recruitment Matters. Although every effort is made to ensure accuracy, neither REC, Redactive Publishing Ltd nor the authors can accept liability for errors or omissions. Views expressed in the magazine are not necessarily those of the REC or Redactive Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduction in whole or part without written permission.
8 RECRUITMENT MATTERS DECEMBER 2015