Issue 51 July 2017
RECRUITMENT MATTERS The View and The Intelligence
Big Talking Point
Post-election jobs market p2-3
Member of the Month
Legal Update Dismissing employees
Products and Training Product oduct of o the Month
WHAT IS THE COST OF BAD RECRUITMENT?
AVERAGE COST OF A BAD HIRE EXCEEDS £100K – REC Businesses could lose more e than £100k for every bad hire, with more than 85% off HR staff admitting they’ve ng made that mistake, according to new research. The Recruitment & Employment Confederation’s ‘Perfect match – Making the right hire and the cost of getting it e wrong’ report highlights the real costs businesses face for choosing the wrong talent. The report explains the common mistakes employers make, details the real cost of poor hiring decisions, and offers practical advice to
@RECPress RM_JULY_17.indd 1
businesses seeking to avoid financial risks at every stage in the hiring process. It also finds that a third of employers say bad hires occur because the pool of talent
ava available is too small. R REC chief executive Kevin Gre Green says hasting hiring sho should not be taken lightly. “W “When candidates are scarce, employers can be tempted to make hasty hiring decisions. While being fast is som sometimes no bad thing, if it lead leads to poor hiring decisions it ca can be very costly,” he says. “I “It is now more important than ever for employers to attract and retain the right people. We will work with employers and recruiters to ensure good practice remains a priority as they compete for
talent and search for the perfect match for every job. “The REC is leading a national debate on what good recruitment looks like by promoting good practice to employers.” He adds: “We encourage employers to sign up to the Good Recruitment Campaign to improve workforce planning, ensure an authentic employer brand and deliver a great candidate experience every time.” REC members can download the report for free at rec.uk.com/perfectmatch
www.rec.uk.com 13/06/2017 15:45
Leading the Industry
There are opportunities for recruiters postelection, says Tom Hadley, REC director of policy and professional services
The cost of a bad hire has never been more real, says Kevin Green, REC chief executive Right now, employers in nearly every sector are finding it difficult to attract people to fill the jobs available. The UK’s unemployment rate is the lowest since the 1970s, while demand for staff is increasing. When candidates are scarce, employers often make hasty hiring decisions. While being fast is often a good thing, in hiring decisions it can lead to costly mistakes. Our latest research, ‘Perfect match – Making the right hire and the cost of getting it wrong’, shows that employers are underestimating the financial impact of getting recruitment wrong and because of this they’re not seeking to improve their recruitment processes and practices, so that they get it right more often. This research will, for the first time, enable recruiters to define for their clients why getting recruitment right is so important, and provides a cost/benefit analysis of why it makes sense to use a professional recruitment expert. We found that almost nine out of 10 HR professionals have hired the wrong person for a job: bad hires are not isolated incidents but frequent occurrences. Employers clearly don’t fully understand the implications of a bad hire – and if you fail to measure its damaging impact then you won’t learn how to avoid it next time.
2 RECRUITMENT MATTERS JULY 2017
WHAT’S NEXT? The potential costs of a bad hire can encompass more than the time and money spent on repeating the recruitment process. A bad hire will have a negative impact on staff morale, a loss of productivity and potentially even an impact on reputation and brand. All this translates to weakened performance. In fact, we calculate that for a middle manager, the cost of a bad hire can be over three times their salary. With this new research, we want to provide our members with the tools and knowledge to talk to clients about the business case for investing in recruitment. The report explains the common mistakes employers make, and offers practical advice to businesses. It’s all part of our work to lead a national debate on what good recruitment looks like by promoting good practice to employers. We want employers to sign up to the Good Recruitment Campaign to improve workforce planning, ensure an authentic employer brand and deliver a great candidate experience every time. It’s more important than ever that UK businesses get this right. If you want to keep up to speed with all things recruitment then follow me on Twitter @kevingreenrec
Despite the general post-election mayhem and initial uncertainty, one thing remains crystal clear: addressing the squeeze on skills and staffing must be a priority for the new government. Our latest Report on Jobs shows demand for staff at a 21-month peak and the sharpest drop in candidate availability since August 2015. Our play is to use our ongoing data and new research to argue the need for an agile and balanced immigration strategy. Recent discussions have also focused on the need to proactively ‘sell’ the UK as a place to come and live and work – is not a case of just ‘letting people in’, it’s about recognising the fact that we are competing with other countries for skills, and that we need to elevate the UK’s brand as a destination of choice. The CIPD/Hays Resourcing and Talent survey found that almost three-quarters (72%) of HR professionals think competition for skills will increase over the next three years. There’s a huge opportunity for us to showcase the role that recruitment professionals can play in boosting inclusion and in driving genuine innovation in the way businesses can attract and nurture the people they need. As well as influencing the here and now, we are positioning our industry at the forefront of the ‘future of work debate’. In the short term this will mean taking stock of the Matthew Taylor review into Modern Working Practices. In the longer term, we want to use our ‘Future of jobs’ commission to preempt how demographic, technological and social changes will shape a future UK jobs market. As recruitment gets harder, our role is to help UK plc get better at it. The Good Recruitment Campaign has taken on a political dimension as policy-makers recognise that reviewing hiring practices are a key element in building a country – and jobs market – that works for everyone.
“THERE’S A HUGE OPPORTUNITY FOR US TO SHOWCASE THE ROLE THAT RECRUITMENT PROFESSIONALS CAN PLAY IN BOOSTING INCLUSION AND IN DRIVING GENUINE INNOVATION” You can follow Tom on Twitter @hadleyscomment nt
THE INTELLIGENCE WITH REC SENIOR RESEARCHER, MARK HARRISON As this article goes to print, the Taylor review on Employment Practices in the Modern Economy will either just have been published or be due out in the next few weeks. Bumped from its original publication date by the general election, the Taylor review was commissioned by the government in October 2016 and a large part of its scope involves reviewing employment practices in the temporary employment market. ONS data demonstrates that there has been little overall change in the proportion of those in employment working in temporary roles in the last 25 years. Temporary workers as a percentage of the overall workforce actually reached a peak of 7.9% in Q2 1997 before following a downward trend over the next decade to its lowest point of 5.4% in the
NFI/GP RETURNS TO YEAR-ONYEAR GROWTH IN Q1 2017 After four quarters of negative year-on-year growth in the Net Fee Income (NFI)/ Gross Profit of the median RIB recruiter, Q1 2017 saw a return to positive territory. The latest information from the RIB Index (sponsored by Bluestones Group) highlights that, having realised a lower monthly average NFI/GP (£) across the entirety of 2016 than the previous buoyant year (-4.8% YoY in 2016 versus
summer of 2008. Since 2010, this percentage has fluctuated between 6% and 6.5% before actually dropping back below 6% in Q1 of this year. Moreover, since 2014 there has been a decline in the percentage of temporary workers stating that they have taken temporary work because they were unable to find permanent work. For most of the noughties, the number of temporary employees taking temporary roles because they didn’t want a permanent role was higher than the number taking temporary roles because they couldn’t find a permanent role. Unsurprisingly, this changed in the aftermath of the 2008 financial crash and by 2013 the percentage taking temporary employment because they couldn’t find permanent employment was nudging over 40%. However, this has been on a steady downward trend since 2014. By Q1 of 2017, there was only a 1.8% percentage point gap
TEMPORARY WORKERS AS A PERCENTAGE OF THE OVERALL WORKFORCE ACTUALLY REACHED A PEAK OF 7.9% IN Q2 1997 BEFORE FOLLOWING A DOWNWARD TREND OVER THE NEXT DECADE TO ITS LOWEST POINT OF 5.4% IN THE SUMMER OF 2008.
between those temporary employees who couldn’t find permanent work (27.8%) and those who didn’t want it (26%). The REC’s monthly Jobs Outlook reports have also consistently shown how temporary work can be a route to permanent employment for those who want it. Jobs Outlook May 2017 shows that currently over half (54%) of employers transfer temporary workers to permanent positions, with nearly a quarter (23%) transferring 50% or more of their temporary workforce into permanent employment. Much of the impetus for the Taylor review came from new employment practices (such as gig-working) and employment practices in the
Figure 1. NDR/NFI vs last year (%): median RIB recruiter, Q1 2015-17 14 12 10 8
Q1 2017 Upper quartile: +21.8% Median: 0.6% Lower quratile: -11.8%
BY Q1 OF 2017, THERE WAS ONLY A
PERCENTAGE POINT GAP BETWEEN THOSE TEMPORARY EMPLOYEES WHO COULDN’T FIND PERMANENT WORK
27.8% 26% AND THOSE WHO DIDN’T WANT IT
media spotlight (such as zerohours contracts). Whilst we welcome this attempt to more fully understand and respond to these changes in the temporary employment market, the review should remember that there are a significant number of workers who actively seek and choose to work in temporary positions. In responding to these challenges, the government should maintain the ability of those who want to work on a flexible, temporary basis to continue to be able to do so. As to what extent market activities in the run up to the new Off Payroll rules for public sector bodies impacted trading performance will require evidence from Q2 2017 to determine.
0 -2 -4
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017
+6.5% YoY in 2015), Q1 2017 provided welcome respite for the median recruiter (+0.6% YoY). Trading remained challenging for those in the
lower quartile of the RIB index (-11.8% YoY) while the upper quartile yielded significantly higher NFI/ GP (+21.8% YoY).
Belinda Johnson runs employment research consultancy Worklab, and is associate knowledge & insight director of Recruitment Industry Benchmarking (RIB) – part of the Bluestones Group. The RIB Index provides bespoke confidential reports on industry benchmarks and trends. See www.ribindex. com; email@example.com: 020 8544 9807. The RIB is a strategic partner of the REC.
RECRUITMENT MATTERS JULY 2017 3
Member of the Month
AUTOTECH RECRUITMENT Autotech Recruitment is full of car fans. Managing director Gavin White tells Recruitment Matters why doubling down on talent puts them in the fast lane Recruitment Matters: How niche are you?
Gavin White: We mostly recruit technical positions, mainly MOT testers. That’s how niche we are. If you consider how any garage workshop works – they run on a full headcount, but they often have no flexibility. An MOT tester has a highlyspecialised skillset. They’re not the sort of people you can swap around. If one of them goes on holiday, you can bet your bottom dollar a garage will have an influx of MOT work. If they don’t have a tester working, that could cost them £2k a day.
RM: And you fill that gap? GW: Yes – there’s a lot of compliancy around MOT testers. They’re rare too, so there’s a lot of value in recruiting those guys.
RM: It’s an inch-wide, miledeep approach? GW: We’re all about that – that’s who we are and what our brand is about. It’s easy to start recruiting for other areas and lose your identity. We’re seen as the go-to place for finding a vehicle technician. RM: Is that reflected in the people you hire? GW: The majority of guys who work for the business are exindustry. We’ve taken vehicle experts and turned them into recruiters. Our National Sales Manager has worked 30 years in the car industry, and once clients hear him talk about recovery rates, lead times and other technical things, the barriers come down. They know they’re talking to someone who knows the job. Other agencies don’t have that level of expertise.
“IT’S REALLY EASY TO START RECRUITING FOR OTHER AREAS AND LOSE YOUR IDENTITY”
FULL THROTTLE 4 RECRUITMENT MATTERS JULY 2017
“WE FOUND THAT ONLY HAVING A CV WAS UNACCEPTABLE.” skill level of each technician is to put them through a series of exams and tests and we hold all their certification on site. When our clients learn that we work this way, they’re pleasantly surprised.
RM: What challenges are you facing? GW: We’re keen to overcome the poor perception of recruitment agencies. That’s why we’ve chosen to work with the REC because they want to change perceptions of the industry too. We’re also challenged to attract good staff. I don’t think many in the car sector would perceive working in recruitment as a great industry to work in. That’s why we big-up ourselves as a company, our values and what we do for staff. We’re more than salary and commission – we have regular team get-togethers, we’ve gone through a new office fit and we’re looking at introducing a profit share model.
RM: Given that you recruit in such a niche area, what kind of process do you through for finding talent? GW: We’ve got about 300 www.rec.uk.com
contractors working across the UK and we’ve compiled quite a stringent vetting process. We found that only having a CV was unacceptable. The only way we can ascertain the
RM: What about young recruiters? GW: We’re massively into apprenticeships and I want to see that throughout recruitment. As an industry, I think we need to do more for the benefit of all of us. Recruitment is a very tight-knit community and anything that keeps good talent in the industry has to be a good thing. RM: What makes a good recruiter? GW: For us, it’s not about the CV or the soft skills. It’s about their values as a person and what their ethics are. We’re not looking for cliché things like ‘drive’ and ‘ambition’. We want honest people who’re hardworking and have exceptional customer service skills. That’s what we sell – we sell a service. I’m a big believer in not letting a client down and if you say you’re going to do something, do it.
RM: How has that been received on the shop floor?
RM: Has that translated to growth?
GW: We’ve found that some of our highest billers are motivated by things other than money. Say, if they want to leave early on a Friday afternoon and they’ve hit their targets, they can do. You’ve got to be creative in motivating recruiters and their staff.
GW: Over the last seven years, we’ve grown from three staff to 25, and could grow even more. But we don’t recruit people for the sake of it – they’ve got to be right. We’ve only had one person leave of their own accord. That’s a testament to what we do here to retain staff. RECRUITMENT MATTERS JULY 2017 5
CONSIDERATIONS FOR EMPLOYERS WHEN DISMISSING AN EMPLOYEE By Bunmi Adefuye, solicitor and commercial adviser at the REC Dismissing an employee can be problematic if it is done incorrectly or unlawfully. An employment contract can terminate in various ways, including dismissal by the employer, resignation by the employee, mutual consent of both parties or by the operation of law where the contract is frustrated and simply cannot continue. When an employer decides to dismiss the employee, the starting point is the reason for the dismissal, then the provisions in the contract or any contractual policy/ handbook together with the employee’s length of service. Employers must ensure that a fair process is followed to minimise the risk of an employee issuing proceedings. Despite the introduction of tribunal fees, unfair dismissal is one of the most common and difficult claims. The right not to be unfairly dismissed is a statutory right for employees in the Employment Rights Act
1996. To issue proceedings, the dismissed employee must have been continuously employed on or before 5 April 2012 for one year or after 6 April 2012 employed for two years. However, an employee that does not have the required number of years’ service can issue proceedings for automatic unfair dismissal provided it relates to familyfriendly entitlements, national minimum wage, working time rights, whistleblowing, part-time workers, fixed-term workers, union recognition or assertion of other statutory rights. Another tricky matter is wrongful dismissal, where an employer, for instance, breaches the employee’s contract by not providing the correct notice (except in the case of summary dismissal), or paying an employee in lieu of all or part of the notice but it is not stipulated in the contract. It could also be terminating a fixed-term contract before
the end of the term or not following a contractual dismissal procedure. An employee does not need two years’ service to bring a wrongful dismissal claim. Notwithstanding the above, there are fair reasons for dismissing an employee, which could be an incapacity to do the job, lack of appropriate qualifications, misconduct of the employee, redundancy when an employer needs to reduce its workforce, a legal restriction that prevents continuous employment or some other substantial reason. If an employee is dismissed for a fair reason, the tribunal will consider the process followed and: • whether an employer acted reasonably by considering if dismissal was indeed a reasonable response • if warnings given to the employee were reasonable, and • the employer’s size and administrative resources.
On the other hand an employee could resign and claim constructive dismissal because the employer’s breach of contract made it impossible for the employee to continuing working. Some other challenges for employers include the employee’s protections against discrimination and prohibited conduct under the Equality Act 2010, the decision to enter into a settlement agreement and post-termination issues, such as restrictive covenants and references. Dismissals must be handled fairly and be consistent with good employment practice. Depending on the circumstances, dismissal should not be the first option. Employers should obtain legal advice and where appropriate follow the ACAS Code of Practice, given that getting it wrong could result in spending valuable time and money to defend the proceedings.
BUSINESS PARTNER: MICRODEC The 25 May 2018 EU GDPR legislation always seemed a long way off. Plenty of time to get everything sorted! Now we’re less than 12 months away, concern is growing among business leaders in the struggle to untangle the impact of the forthcoming laws. Recruiters store names, addresses, career history, salary information, passport details – the list goes on.
6 RECRUITMENT MATTERS JULY 2017
To comply, it’s vital to demonstrate that you’re acting lawfully, with reason to handle personal data and with permission, control and processes in place. Firstly, each individual must perform a clear affirmative action to give you permission to hold and process their information. Using pre-ticked website forms or assuming consent is not enough. The source must be verifiable, so
you’ll need to keep records of how and when consent was given. Individuals will have the right of access to their information free of charge and be entitled to have their data rectified if inaccurate or incomplete – or to be removed completely. If you have shared information with third parties, then you must also inform them of the changes and be able to inform the individual about the
organisations with whom their data has been shared. This all points to having diligent practices, getting your CRM and marketing software right, and making sure there are no ‘gaps’ in your processing. To protect yourself, start by understanding your processes today. Having that platform will help you get your teams ready and for your partners and suppliers to support you.
BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS
Helen Lacey is the managing director of Red Berry erry Recruitment
IRP ADVOCACY Why did you become an IRP Advocate? We believe passionately in good recruitment principles. We believe all candidates, clients and colleagues should be treated with respect. So much so, we have what we call the 10 Berry Commandments, which all staff sign in their handbooks and aim to follow as much as possible. Why do you think it’s important that your staff are IRP members? It demonstrates commitment to Red Berry, the industry and themselves. Being an IRP member shows, I feel, their commitment in being a recruiter; it’s a career path, not just a job. What’s the biggest business benefit you’ve seen from becoming an IRP Advocate? The respect given by other recruiters. It still takes time for businesses to see the benefits of a recruitment business being members. However, for other professional recruiters they can see the hard work and dedication that oneself and one’s company puts into the recruitment industry. Would you recommend IRP Advocacy to other companies? I would most certainly recommend IRP Advocacy to other companies. As recruitment is all about people, I feel it gives us the edge knowing we are a reputable, professional recruitment agency who care about their team. So, why wouldn’t a company want to show the same commitment? [IRP Advocacy] is a great way of doing this.
“BEING AN IRP MEMBER SHOWS, I FEEL, THEIR COMMITMENT IN BEING A RECRUITER; IT’S A CAREER PATH, NOT JUST A JOB”
Amber Whalley is the director of operations at Human One
LEVEL 5 STUDENT Why did you choose the Level 5 Diploma in Recruitment Leadership? I went from doing a recruitment-type role to an operational role. After two years of learning on the job, I received an email from the REC about the Level 5 Diploma in Recruitment Leadership. I thought it would be a fantastic opportunity to summarise and grow upon everything I’ve learned in the role so far. How will the Level 5 help shape your career? We are changing all our processes and procedures next month, so I know I will use what I’ve learned in the Level 5 there. My pet project is to take what we’re doing and make things better and smarter. I have to take into account the risks and benefits that will take place during such a big change. Risk and strategic planning will be fundamental and I know that I can put the Level 5’s modules into practice. What modules have you found most useful? What we do is never defined by recruitment as a specialism, but by the industry we work with as a whole. There’s a module in the Level 5 that covers the effects of internal and external factors on a business – I found that really useful. It brings to light things you wouldn’t think affected you, but they all do. Would you recommend the Level 5? From personal experience, the Level 5 has been fundamental to how I work daily and how I will work in future. For an operational role, it’s a step-by-step guide about how to survive. I really don’t think there’s anything else the course could cover – everything you need is there.
To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com
RECRUITMENT MATTERS JULY 2017 7
Products and training
PRODUCT OF THE MONTH: CRONER SETTLEMENTS & FORECASTS All recruitment businesses need a complete understanding of pay settlements and forecasts to plan ahead. REC members can access Croner’s monthly Settlements & Forecast report at www.rec.uk.com/ croner-settlements. It provides updates on pay trends across a number of sectors and regions. What does it feature? Croner’s Settlements & Forecast report contains detailed commentary about pay trends on a month-bymonth basis. The report includes analysis from Croner’s team of labour market experts, and earnings movement for
basic and total pay every quarter. • Participants supply details of their last pay settlement and the forecast increase for the next review • Croner Reward’s experts
comment on the current settlement and forecast trends • Comprehensive pay and benefits information and advice from Croner Reward REC members can
access Croner’s monthly Settlements & Forecast report at www.rec.uk.com/ croner-settlements • Call your account manager on 020 7009 2100 for more information.
OUR TRAINING – YOUR OFFICE Our In-company training has members in mind. If you are looking at ways to stay ahead of the competition, In-company training offers you the flexibility to build a knowledgeable workforce. Some of the key benefits of In-company training are: • We can come to you – any location • Your choice of topics • We can focus on niche market areas • A dedicated trainer • Money saved on travel, expenses and a lower cost per head • Investing in your employees increases employee retention and productivity With In-company, you can create your own programme by tailoring elements from existing programmes, or we can
start from scratch and work with you to design your own. You can include sector specifics, social media, legislative workshops, coaching and team development. We also offer one-to-one coaching, engaging employees with their work, making them feel valued and fostering commitment. Visit www.rec.uk.com/incompany for more information
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 firstname.lastname@example.org. Production Editor: Vanessa Townsend Production: Production Executive: Rachel Young email@example.com 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
© 2017 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 JULY 2017