RM January 2013 issue

Recruitment Matters Issue 11 January 2013

Trade Association of the Year

What’s inside

2 The Intelligence

Two new REC reports outline the changing face of recruitment and Recruitment Index Benchmarking’s Chris Ansell discusses margin pressures

3 Exciting year: There were many memorable events during 2012, including the Business Brains On Tour roadshow in the autumn. This year is set to be even busier and REC members are urged to make the most of their membership. See centre pages.

Now members take new compliance test The REC’s determination to raise the bar for standards of professionalism within the industry moves another step forward this month as existing members begin taking the online compliance test introduced last summer.

Members must pass the test every two years to retain their membership and have three attempts in six months to succeed.

Recruiters wishing to join the REC for the first time have been sitting the test since July, with 115 passing and 13 failing, as RM went to press. Angie Nicholls, head of consultancy and compliance delivery, helped design the test and she supports recruiters worried about the multiple choice questions.

“There is guidance available to assist with the legal and technical elements and a

training test which members can take first to see how the exam is laid out and which areas they need to work on before they begin the real one,” she says.

She adds that the areas recruiters tend to fail most on relate to health and safety and elements of the REC’s Code of Professional Practice covering business ethics.

“It is natural to be nervous before taking this test but the questions relate to every day work in a recruitment business. There are no tricks and we are there to help members.”

One member that has already passed the test is SixTwoFive which serves the technology, media and digital industries.

“You have a 24-hour window to complete the test and can pause whenever you like. The advice and support makes the whole process straightforward,” says managing director David Preston (left). “You can repeat the practice exam as many times as you like and the results explain where you went wrong and direct you to further reading.”

REC Talk

Tom Hadley grades the Coalition’s performance so far and Kevin Green says the industry is proving its resilience in difficult times

4-5Membership news

Are you making the most of your REC membership?

6

Business Matters

Meet the REC’s Legal Helpline team and discover why many members are outsourcing their back office processes

Institute of 7 Recruitment Professionals RM meets two of the IRP 2012 Award Winners, Christopher Clark and Jeff Brooks

and 8 Facilities training

Why not hold your London meetings at the REC’s new offices?

www.rec.uk.com

REC Research

the intelligence Fig 1: Annual Change in NDR

Recruitment’s changing times

20%

Roger Tweedy reveals how two new reports from the Industry Research Unit will keep recruiters ahead of the game in 2013 Recruiters are naturally curious about what the future might hold and the prospects for temporary and permanent staffing.

Some of the answers can be found in two new documents now available free to members.

The ‘Back to the Future’ Working Paper reviews how the industry has evolved in the last decade. It tracks the rise of employer branding and the migration of recruitment advertising online as employers turned away from traditional print media towards commercial job boards in the search for active talent.

The recession changed many of the dynamics of the UK labour market as employers unexpectedly hoarded skilled workers, social media opened up new channels to passive talent and job boards responded with professional networking apps such as BeKnown.

Identifying trends The Paper uses robust analysis of past trends to build a new understanding of the future and how these trends are likely to play out. It identifies eight critical trends the REC believes will shape recruitment up to 2020 and beyond.

One of the starkest findings was that the number of recruitment businesses fell by 11% in 2011. Weak economic growth, margin pressure, technological advancement and new channels to market have driven this period of consolidation which is likely to continue.

The other important document members should get their hands on is ‘Recruitment 2022 – The Effect of Social Media and Technology

2 Recruitment Matters January 2013

(net disposable revenue)

on Future Recruitment’. It was commissioned by the REC’s Technology Sector Group and examines key strands from ‘Back to the Future’ in more depth.

The report is based on detailed interviews with more than 30 leading industry experts and practitioners.

15% 10% 5% 0% -5% -10% Nov 10

Jan 11

Mar

May

Jul

Sep

• You can follow Roger on Twitter @Tweedy_REC

Number of UK recruitment businesses by turnover Turnover size band (£000s)

2009 2010 2011

250-499

2,480 2,445 2,255

500-999

2,175 2,125 1,850

1,000-4,999

2,955 2,810 2,405

5,000

1,025 1,015

Total

8,635 8,395 7,435

925

Jan 12

Mar

Jul

Sep

Fig 2: Annual NDR Growth 50%

––– Upper quartile ––– Median ––– Lower quartile

40%

Role of technology Jeff Brooks, chairman, REC Technology Sector Group, says key aspects of this research are the continuing move towards freelance/ contract careers and the growth in part-time working. He also feels that technology will continue to refine the attraction and selection process, with automated screening and testing becoming routine.

Technology will enable recruitment to be acknowledged as the most important HR process.

The Working Paper will be shared with the HR community and anyone intrigued to know how technology is re-shaping the recruitment industry and employment, from crowd-sourcing to the gathering of data on your company’s output across social media.

Both reports are available from the REC’s online research bookshop: http://www.rec.uk.com/research/ bookshop.

Nov

30% 20% 10% 0% -10% -20% -30% Nov 10

Jan 11

Mar

May

Jul

Sep

Nov

Jan 12

Mar

Jul

Sep

Margin squeeze puts pressure on NDR In previous editions of Recruitment Matters I have commented on how recruiters are seeing downward pressure on net disposable revenue.

Figure 1 reveals that throughout 2012 median NDR has been lower than at the same time a year ago. So why are recruiters seeing a declining NDR ?

I have commented for some time that annual revenue growth for recruiters has been very low. Indeed it has averaged less than 1% for the last 8 months.

Recruiters have seen a significant fall in NDR margin in 2012, declining from 25.6% at the end of 2011 to 22.5% in October.

It is the combination of flat revenues and declining profitability of those margins that is leading to a fall in NDR. However, some recruiters are still doing well. Figure 2 shows NDR growth for the lower quartile, median and upper quartile recruiter.

The best performing 25% of recruiters are growing NDR at nearly 15% from last year – a very creditable performance in the current economic climate.

• 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; info@ribindex.com: 020 8544 9807. The RIB is a strategic partner of the REC.

www.rec.uk.com

Leading the Industry

2013 – A campaigning odyssey This year presents more external challenges for the industry and the government must do more to deliver on jobs and growth, says director of policy and professional services Tom Hadley

The View

Our policy priorities for 2013 include: •A n effective review of the Conduct Regulations. The aim is to streamline current requirements – especially those covering business to business arrangements – while ensuring effective enforcement.

• T o protect our flexible labour market. For example, by ensuring that IR35 taxation rules for contractors are clear and workable, and by taking forward the recommendations of our Flexible Work Commission.

•D elivering greater clarity on tax rules, especially with regards to travel and subsistence schemes and VAT charges in specific sectors. There must be a level playing field for all recruitment businesses.

• T o promote sustainable procurement policy. We want a balance between cost control priorities and the quality and safety of supply.

•A ccelerating progress on youth employment. This must involve embedding employability within the curriculum and developing an effective career guidance network. Harnessing the expertise of recruitment will ensure schemes such as the Youth Contract and apprenticeships make a real impact.

•D riving the skills agenda. We need action on skills and immigration policy to address the lack of suitable candidates in key sectors which is a barrier to growth.

In many areas the government has recognised the need for tangible action. Projects such as reviewing the Conduct Regulations, simplifying CRB checks and creating fiscal incentives for employers to take on young people can improve our labour market.

However, our overall assessment is that government has talked a good game but has not delivered in enough key areas. Over the rest of this parliament we will be working closely with key departments to drive progress.

Given the fragile economy, the UK’s jobs market performed incredibly well last year.

While temp billings were down in the first quarter, permanent hiring remained strong. After a period of stability in the summer – with the Olympics having less of an impact than forecast – the recruitment market picked up with a level of demand not seen for two years.

Employer confidence is back.

We have record employment and although there are stubborn levels of unemployment that will be hard to shift, the signs are the total number of people in work will rise throughout 2013.

The recruitment industry has proved its resilience. The market grew by 4.3% (to £25.7bn) in 2011/12, driven by continuing demand for flexible staffing and growth in interim, contractor and temporary workers.

Margins are still under pressure, candidates are harder to find and social media means corporates are doing more recruitment themselves. Yet recruiters who stay ahead of the game will still grow.

There is a bright future for those recruiters that respond to this changing landscape, understand the needs of their clients and the aspirations of their candidates. ‘An inch wide and a mile deep’ is the mantra I repeat to small and medium-sized recruiters as the model that will allow them to differentiate themselves.

Last year was a good one for the REC which was recognised as the UK’s best Trade Association and we held the best ever Ciett global recruitment conference.

We are not going to rest on our laurels. We will up our game with renewed energy to provide you with even more information, support and guidance than ever before. We will also fight on your behalf to ensure the regulatory and economic environment you operate in is as conducive as possible.

Please look at your membership handbook to ensure you are taking full advantage of everything the REC has to offer in 2013. All our research is now free, more content is available via webinars and social media, and this year we are completely overhauling our website.

And watch out for our Apprenticeships in recruitment, new kinds of events in your area and make sure you have taken your online compliance test.

This is going to be an exciting year for the UK recruitment industry.

• Follow Tom Hadley on twitter @HadleysComment

• Get live updates via twitter @kevingreenrec

Our recent report on the government’s progress in the first half of this parliament gave the coalition five out of 10.

As well as looking back, our ‘Creating Opportunities and Jobs’ report identifies practical measures to make a real difference during the rest of this parliament.

This forward-looking manifesto will inform our work with government and opposition parties in 2013.

www.rec.uk.com

Recruitment Matters January 2013 3

Membership news

Making the most of your membership The REC has a comprehensive range of services and benefits to help recruiters develop their talent and grow their businesses, but some members are missing out

Research proves its value The REC’s research analysing the health of the jobs market as well as the recruitment industry is one of the most valuable tools available to members.

Head of the REC’s Industry Research Unit, Roger Tweedy, says the research supports recruiters with their business planning and preparation for tender documents where specific sector and market knowledge is essential.

“Our research is also used to give members access to best practice. They can see what the top consultants and managers in the industry are doing and can benchmark their own performance,” says Tweedy. “We work with leading market research firms, academics and think-tanks, as well as stakeholder partners such the Department of Business, Innovation and Skills (BIS) and CIPD.” The research is powerful collateral when talking to existing and potential clients and is used to challenge perceptions about recruitment and particular industry sectors.

From this year all research is free for members and the most popular surveys include JobsOutlook based on a monthly survey of employers. It shows what impact the economy is having on short-term hiring intentions for permanent and temporary workers.

Other popular research projects include the Working Papers. New publications include ‘Back to the Future’ which provides insight into how the UK recruitment market will develop over the next 10 years.

“Members are losing a competitive advantage by not accessing this free research resource to retain and gain clients,” says Tweedy.

HR services company Randstad’s market intelligence manager Andy Pashley says the REC’s quantitative research is particularly helpful to gauge the size of particular markets.

“It complements and supplements the research we do internally so it is a powerful partnership,” he says.

“The Working Papers help our senior managers to get a feel for what is happening in the industry to assist our strategy planning. All members need to be outward looking and see what is happening in the wider employment market.”

4 Recruitment Matters January 2013

T

he REC’s director of member services, Anita Holbrow (below), says that for many agencies membership is bought as an insurance policy for when they need help with a particular area of their business such as AWR or pensions auto-enrolment.

Her mission for 2013 is to ensure all agencies make more use of their subscription and use some of the many services outlined on these pages. “We want them to look at what is on offer every day to help them expand their business,” she says.

Corporate membership assists agencies to become business compliant, while involvement in the Institute of Recruitment Professionals (IRP) recognises the work of individuals within agencies and minimises risks to clients.

“There is also the REC’s Recruitment Business Academy which has all the tools an agency needs to provide the best possible service to clients and candidates,” says Holbrow.

The Recruitment Business Academy is a suite of tailored services including mentor support, training and qualifications. “One

www.rec.uk.com

IRP is an HR tool

Sector success

Corporate members are seeing the benefit of involving their staff in the many initiatives run by the Institute of Recruitment Practioners (IRP).

The IRP has become a core component of many members’ HR strategy, allowing recruiters to differentiate themselves, retain talent, celebrate their staff’s achievements and keep them motivated. Corporate members now receive up to three complimentary memberships.

The IRP Advocacy Programme is a way for REC corporate members to demonstrate professionalism through promoting the benefits of IRP membership to clients, candidates and staff. Some Advocates believe so strongly in IRP they invest in membership for their staff.

“IRP involvement helps members to generate new business because they have access to the logo and client tool kit, it improves their consultants’ careers and the company’s professionalism and there are tangible benefits including discounts at about 500 retailers and brands,” says IRP head Richard Charnock (right).

The benefits are currently being reviewed and the IRP website will be revamped soon to make it easier to navigate.

“This is a very exciting year for the IRP as recruitment is recognised as a professional industry and we see the first Advanced and Higher Level Apprenticeships,” says Charnock.

The REC has 18 Sector Groups ensuring members stay at the forefront of their profession by making them aware of what is happening in their specific market.

The groups provide an opportunity to network with others in a particular industry and to share ideas and concerns.

Sheron Cummins (left) is managing director of Advance Drivers, and a member of the Drivers Sector Group which works with The Vehicle and Operator Services Agency and the Driver and Vehicle Licensing Agency. “REC membership gives you credibility and a code of conduct that everyone can work to as clients demand more for their money,” says Cummins.

“We use the REC’s legal helpline for advice on areas such as the Working Time Directive, AWR and pensions.”

She says the sector group meetings allow companies of the same size to discuss how they are interpreting different regulations and debate hot industry issues such as Driver’s Negligence Insurance and the cost of fuel. “If you share concerns you can often find a common solution.”

Charlotte Rafferty (left), managing director at Solo Plus, has been a member of the Education Sector Group for more than 10 years.

“It is important to listen to the opinion of others in your sector and to keep up-to-date with what is going on in your industry. The new Academies Programme is a big change for education agencies and we need to be able to plan for our business,” she says. “In 2013 I can see a lot of debate at our sector meetings around teacher training.”

member came to us because they wanted to move into a different industry sector and we were able to offer the relevant training they needed.”

During 2013 the REC is putting even more resources into contacting members to explain the full portfolio of membership services. There will be additional visits

and presentations in the regions by account managers with business planning workshops and events relating to the REC’s valued research.

“Our message to members is come and talk to us about your business needs and let us guide you. You might be surprised by how the REC can help.”

Take your partners Many third-party companies see the advantages of working with members and the REC Business Partner Services programme provides agencies with exclusive special offers, introductory deals and discounts.

The REC has partnerships in key business areas including insurance, design and print, facilities and outsourced services, finance and accounting, IT, software, tax and office space. Members can also access market insight from the partners.

“All the affiliations we have in place are based on member need and can save recruiters thousands of pounds a year,” says head of brand partnerships Chris Howard (pictured above).

In November flexible workplace provider Regus joined the partner programme. REC members now have access to more than 1,300 business centres around the world and 160 in the UK through the Regus Gold Businessworld Card.

“Virtual offices provide recruiters with a prestigious business address and access to office and meeting room space,” says Regus’s UK communications manager Henry Collinge. “Regus staff answer the phone in the recruiter’s name and in the local language, connect calls anywhere in the world, take and relay messages per a customer’s requirements, handle incoming and outgoing faxes confidentially, and forward and collect mail.”

www.rec.uk.com

Recruitment Matters January 2013 5

Legal Update

Legal Helpline provides members with peace of mind The REC’s Legal Helpline is part of the REC’s legal team and receives about 60 calls a day from members looking for advice on different legislation affecting the recruitment industry.

The number of calls varies throughout the year, with peaks whenever significant law changes are announced, such as pension auto-enrolment or the Agency Workers Regulations 2010 (AWR).

“The most common queries tend to be about temporary workers and holiday, charging transfer and introduction fees to clients, statutory payments such as sick pay and maternity pay and general issues around limited company contractors and umbrella companies,” says Caroline North, one of four legal advisors on the Helpline.

“Pensions auto-enrolment will be a big area for us this year and the government is consulting on various pieces of employment legislation as part of its Red Tape Challenge.”

Legal advisor Emily Janson says when details of AWR were first released the legal team were receiving up to 100 calls a day. “This has been a popular topic for months but there are many different areas within the recruitment, employment and commercial areas of law that we support members with.”

Zoe Rogers-Wright has been a legal

Here to help (clockwise from top left): Caroline North, Chris Cuckney, Emily Janson and Zoe Rogers-Wright advisor on the Helpline for two and a half years and says she is busiest in the middle of the week. “We can be on the phone for anything from 10 minutes to 40 minutes depending on the query,” she says. “This is certainly a part of recruiters’ corporate membership that they really value.”

Chris Cuckney has been a legal advisor for a year and he has learned a lot about

the recruitment industry during his first 12 months. He said: “Members often call us when they are in distress or facing difficult HR issues. Often members that call want us to confirm what they already think is correct regarding a piece of employment law – we give them peace of mind.

“However we also give advice to members that is often hard for them to hear, particularly when we have to offer correction and guidance on their interpretation of the law or their actions.”

Business development Back office boost Many recruiters outsource different back office processes to make the temp side of their business more efficient.

Since May 2000 REC business partner New Millennia Group has helped recruiters manage their cashflow by funding the entire transaction process relating to temporary workers. It pays workers, invoices clients and pays agency margins every week.

Business development manager Paul O’Rourke (pictured) says in recent years more consultants have taken the leap into running their own business.

“Much of our work is with start-up temp agencies and we emphasise to them the importance of having credit insurance

6 Recruitment Matters January 2013

and signed terms and conditions so they are working in a compliant and commercially-viable way,” he says.

New Millennia Group also helps recruiters reduce their overheads, especially in their first three years of trading. However, O’Rourke says temporary agencies face some big challenges in 2013, including RTI (Real Time Information) being implemented by HMRC. “Recruiters must have payroll software which meets the requirements of RTI so submissions of the individuals they are paying are sent in real time to HMRC when a payment is made,” he says. “Pension reform is also adding pressure to agencies working on tight margins.”

www.rec.uk.com

Inspiration

Behind the scenes at the Institute of Recruitment Professionals

Celebrating success In the first of a series of interviews with the 2012 IRP Awards winners, we meet Recruiter of the Year and Permanent Consultant of the Year Christopher Clark, and Jeff Brooks, who picked up the Lifetime Achievement honour Christopher Clark from agency Redlaw has been in recruitment for four years and an IRP member since 2010. He specialises in Private Practice Legal Recruitment.

What’s the best thing about being an IRP award winner?

Feeling proud of the recognition I Christopher Clark received for all the hard work I’ve put in.

Top tip to anyone hoping to get on next year’s shortlist?

Do the best job you can for candidates and clients – and remember to ask for recommendations when you have to.

Has winning boosted your business?

Yes, we received calls from clients that we’ve never dealt with asking us to work with them exclusively – it couldn’t get better than that.

What makes recruitment one of the best industries to work in?

It is completely meritocratic. If you work hard consistently you will do well. That’s the beauty of it.

“We received calls from clients asking us to work for them exclusively” What reputation does the industry have and does it need to change?

The industry is still seen as being slightly unprofessional, without a thought to long-term careers. The REC/IRP is helping to change this.

What do your colleagues not know about you?

I used to race 100cc go-karts in the British University Karting Championships Which one person do you believe has made the biggest positive impact on the recruitment industry?

James Caan on Dragon’s Den. His input has resulted in good publicity for the industry.

To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com

www.rec.uk.com

Jeff Brooks from Primesourcing Ltd has 28 years’ experience in recruitment, is heavily involved in the REC and has been an IRP member since 2004. His specialism is IT. How surprised were you to be honoured?

Jeff Brooks I had an inkling but I didn’t dwell on it – it was nice to think I might receive an award.

What are the biggest changes you have seen in the industry?

The internet was a game changer – the speed of communication and therefore recruitment increased dramatically but we lost something of the personal touch.

What qualities do you need to be recognised in this way?

You need staying power and an ability to adapt to new technologies and ways of working. You also need to develop relationships and networks.

What does being a member of the REC/IRP mean to you?

Sharing ideas and tips with your peers helps you grow as a recruiter and a rounded business person.

What makes recruitment one of the best industries to work in?

It is pretty uncomplicated – you find a role, understand it properly and find suitable candidates; it’s all about communication and relationships and is immensely satisfying.

What do you think are the biggest challenges facing recruiters?

You must provide a personal service within the social media ‘noise’, find great candidates from hundreds available and build enduring relationships rather than CV posting.

What reputation does the industry have and does it need to change?

There will always be those that think they can make a fast buck, but the agencies that think they can cut corners will be quickly be found out.

If you had not been a recruiter what would you have been?

I wanted to be an actor and I should have given that a go.

Recruitment Matters January 2013 7

Facilities and training

Meeting in London? Look no further Members can now take advantage of the excellent room facilities at the REC’s new premises in London for meetings, conferences and training courses.

The fully-equipped rooms in Stamford Street are a 10-minute walk from Waterloo or Blackfriars stations and supported by the REC’s experienced facilities team, with refreshments available.

“We now have eight meeting rooms rather than three in a central London location and are pleased to offer them to our members for hire,” says facilities manager Lucy Clarke. “There are rooms to suit any size of meeting, from a two-person interview in the Business Lounge to an impressive boardroom space for a company meeting.”

The rooms: • T he Business Lounge can accommodate four people • T he AV Room has room for up to six people with laptop and screen • T he Eileen Simpson Room can hold eight people in a formal table layout with laptop

• T he Training Room can accommodate 12 people in an ‘E’ shape layout with laptop and screens •B oardroom 1 can seat up to 24 people in boardroom style and up to 50 in theatre style with laptop and screen •B oardroom 2 can hold 12 people boardroom style and 20 theatre style with laptop and screen •B oardrooms 1 and 2, when combined, have a capacity of 36 (boardroom) and 80 (theatre) with laptop and screen Tea, coffee and lunch can be provided and there is free wireless internet access. The rooms can be hired MondayFriday from 9am-5.30pm.

Room charges start from a day rate of £170 (or £136 for

an REC corporate member) for the business lounge, to up to £1,100 (£880) for the combined boardroom space.

Half-day rates are also available.

For more information contact the facilities team: facilities@ rec.uk.com or visit www. rec.uk.com/aboutrec/ recroombooking.

Training boost Get your company on the right track in 2013 with the REC’s training programme to boost sales, qualifications and improve staff motivation and retention.

Profitable Candidate Management (London 5 March and 19 June) This session reveals the tips and techniques for getting the best out of your existing database to improve candidate attraction and referral rates. There is also advice on using social media, writing better adverts and building stronger relationships.

Creative Marketing on a Shoestring (London 11 April, 20 June and 10 September) Recruiters can follow cost-effective marketing campaign strategies to ensure they get the most from their marketing budget. This course also covers the importance of the company brand, and how and when to use social media to build an online presence.

Fundamentals of Finance for Recruitment Managers (London 23 April and 8 October) Budgeting and forecasting are complex areas, especially for new managers and senior consultants recently given budgetary responsibilities. This course demystifies financial measures, terminology and ratios.

Visit www.rec.uk.com/training to download the 2013 training calendar with a full listing of all courses, dates and prices, or call 020 7009 2100.

Recruitment Matters The official magazine of The Recruitment and Employment Confederation Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT Tel: 020 7009 2100 www.rec.uk.com

8 Recruitment Matters January 2013

Membership Department: Membership: 020 7009 2144, Customer Services: 020 7009 2148 Publishers: Redactive Publishing Ltd, 17 Britton Street, London EC1M 5TP. Tel: 020 7880 6200. www.redactive.co.uk Publisher: Anne Sadler. anne.sadler@redactive.co.uk Tel: 020 7880 6213 Consulting Editor: Liz Banks liz.banks@rec.uk.com Editorial: Editor: Steve Hemsley. steve.hemsley@redactive.co.uk. Production Editor: Vanessa Townsend Production: Deputy Production Manager: Kieran Tobin. kieran.tobin@redactive.co.uk Tel: 020 7880 6240 Printing: Printed by Southernprint © 2013 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.

www.rec.uk.com