Issue 59 March 2018
RECRUITMENT MATTERS The View and The Intelligence The Carillion collapse
Big issue p2-3
Recruitment Industry Trends 2016/17 p4
Legal Update Gender pay reporting
Events and training p6
All new Compliance workshops p8
NEW TOOL GUIDES RECRUITMENT LEADER DEVELOPMENT Future and current recruitment leaders are being invited to measure their effectiveness with a new REC tool. The REC’s Scale Up Workbook – How to lead, inspire and retain your people is the latest in the popular Scale Up workbook series. It outlines steps budding recruitment leaders can take to develop their leadership skills and retain their core talent. What sets the workbook apart is the range of people spoken to. The REC’s research team interviewed leaders, managers and consultants from a variety of recruitment businesses to find out how people at all levels define good leadership. It also includes key questions and action points
@RECPress RM_MARCH_18.indd 1
to improve leadership skills. REC chief executive Kevin Green says people form the crux of any successful recruitment business and honing leadership skills is critical for development. “What we know is at the heart of recruitment businesses are the people. Attracting, engaging, inspiring, motivating and retaining talent is what makes recruitment businesses successful,” he says. “This research is there to help recruitment businesses. Applying the knowledge shared within the workbook is crucial for developing and growing your business.” The REC research team spoke with a number of recruitment leaders. Managing director of Red Berry Recruitment Helen Lacey
told the team that one of the biggest issues for any recruitment leader is ensuring trust in their team. “If your staff and team trust you to be their leader and they value your honesty and integrity, they are more likely to value your company. Listening, mentoring and offering training opportunities to staff are all essential to keep all staff motivated.” The REC has also produced an interactive checklist. It gives recruiters the opportunity to rate the effectiveness of their leadership and compared with the results developed
in the workbook. The Scale Up Workbook is available to download now at www.rec.uk.com/ howtolead
www.rec.uk.com 01/02/2018 09:33
Leading the Industry
Carillion’s collapse highlights big changes in the job market, says Tom Hadley, REC director of policy and professional services
The industry’s best years are ahead of us, says Kevin Green, REC chief executive
As I prepare myself to leave the REC after close to 10 years as its CEO, I’ve been reflecting on my time leading this great industry. I started in June 2008 as the UK economy entered the financial crisis. It was tough seeing the industry shrink by 30%, losing £7bn of sales in 18 months! What was clear even in those difficult times was the resilience and agility of recruiters. Many made tough decisions and came out in better shape and a bit wiser. We had to restructure the REC; we reinvented ourselves and sought new ways to add member value. This included creating leading edge research and vibrant campaigns to help our members survive and thrive. We’ve built on this approach over the last few years with the Scale Up campaign. Recruitment is now starting to be thought of as a professional career of choice. We recognised that apart from representing the industry and seeking to influence government, we had to develop the industry’s human capital. We set about developing world-class training and qualifications and launched a new individual offering with the Institute of Recruitment Professionals. This was to help our corporate members develop their businesses by attracting
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RECRUITMENT POST-CARILLION and fully utilising their people. I see huge disruptions in the jobs market over the next decade as technology and our post-Brexit deal will make a significant impact. The elimination of the jobs in the middle of our labour market will mean that high-paid/ skilled and low-paid/skilled jobs flourish. As a consequence the labour, skills and talent shortages we see today will only get worse and the quest for good people will continue unabated. However, not all recruiters will grow and prosper. The winners will either have a deep specialism and know where the talented candidates are or can meet labour requirements at short notice and be fully compliant. I am convinced the REC will go from strength to strength over the next few years as it provides even more value to its members. Recruitment’s best years are ahead of us and it’s been a privilege to lead this great organisation and its fantastic people. I would love to see as many recruiters as possible at my final Scale Up in the Round events in Peterborough, Edinburgh and Manchester. Don’t forget to follow me on twitter @kevingreenrec
The Carillion collapse was a stark reminder of how quickly major businesses and sectors can unravel, and the implications for individual working lives. Discussions on the back of the fall-out have focused on what role recruitment professionals can play in helping people bounce back into work and on how we can best work with government to facilitate career transitions. There is significant demand for construction staff and major projects will still need to be delivered – albeit through a different contracting organisation. However, a wide variety of jobs are at risk through a convoluted supply chain. This is why the debate can be broadened into how we best help people adapt to a fast-moving employment landscape. Many of the jobs available today will disappear over the coming years and new jobs will require new skills. This underlines a core recommendation of our Future of jobs commission, namely the creating of a world-class, all-age careers advice network. One of our commission members, Charlotte Aldritt from the Royal Society of the Arts (RSA), underlined the need to “shift away from lifelong learning being a tool to address failure to being a resource that empowers people to respond to a labour market that is changing like never before”. Spot on! A priority for us at the REC is to promote the role that recruitment professionals can play in helping to deliver sectorspecific guidance and support. At the same time, our ongoing Good Recruitment Campaign is encouraging employers to review hiring procedures and criteria, which may lead to less reliance on previous experience and boost transition opportunities. Which job to do is the most important life decision that most people make – 77% of respondents to a YouGov/REC survey ranked this top, ahead of other life-defining decisions, such as where to live, starting a family or getting married. The Carillion collapse is a reminder of how quickly things can change. A future UK jobs market must be one where we have a world-class careers advice network which reflects this ‘brave new world’ of work and which harnesses the expertise and drive of the UK’s £35bn recruitment industry. You can follow Tom on Twitter @hadleyscomment nt
THE INTELLIGENCE WITH REC SENIOR RESEARCHER, MARK HARRISON The REC’s first JobsOutlook report of 2018 suggests new lows in employer confidence. Net overall confidence as a whole in the UK’s economic conditions has dropped to negative double figures; the proportion of employers thinking economic conditions are getting worse outpolled those thinking they are getting better by 13%. Employers’ confidence in their hiring and investment decisions has also dropped to a single figure percentage, with only 9% believing it would improve instead of getting worse. We also asked participants about the main challenge for their business as the year drew to a close. A third said that political and economic uncertainty was the greatest challenge facing their business. When we had
AVERAGE DEBTOR DAYS EXCEED 50 IN Q3 2017 The latest information from Recruitment Industry Benchmarking’s RIB Index shows that the median industry recruiter has continued to experience a rise in the average number of debtor days. At its peak, in Q3 2017, the average monthly number of days for the median recruiter exceeded 50. Set into historical context, the Q3 average for the median recruitment rose from
asked the very same question in January 2017, a third of respondents stated the same as their main concern. Employers are therefore conscious of and concerned about the uncertain political and economic times we find ourselves in. Nevertheless, our Recruitment industry trends report shows that 2016/17 has been a good year for our industry. Recruiters helped nearly 1 million people find a permanent job in the past year and on any given day there were nearly 1.3 million workers on temporary agency payroll. Turnover for the industry overall surpassed £32bn in 2016/17 and we anticipate this will continue to grow in the medium term. A shortage of candidates, caused by anticipated lower levels of migration exacerbating already present skills shortages, is likely to lead to more demand and higher fees for recruiters. In
2016/17 HAS BEEN A GOOD YEAR FOR OUR INDUSTRY. RECRUITERS HELPED NEARLY 1 MILLION PEOPLE FIND A PERMANENT JOB IN THE PAST YEAR
the longer term, a limited pool of candidates caused by an excessively tight immigration policy may lead to more significant challenges for the industry overall. As mentioned above, employers were no more assured by the political and economic situation at the start of 2017 than they were at the end of it. This uncertainty appears to be beginning to affect companies’ thinking about their short- and medium-term recruitment strategies. Our latest JobsOutlook shows record levels of uncertainty when it comes to future hiring intentions. A quarter of companies that employ temporary staff now say they don’t know whether the number of temporary workers in their organisation
Figure 1. Median debtor days – quarterly average 52
40 Q1 Q2 2015
Q1 Q2 2016
42.6 days in 2015, through 46.6 days in 2016 to its new high of 51.2 in 2017 – and early indications for Q4 2017, as evidenced by October and November data, show little signs of improvement.
Q1 Q2 2017
Encouragingly, however, those with a tight rein on debtors – as evidenced by the performance of the lower quartile recruiter – reduced the average from 38.3 in Q3 2016 to 35.5 in Q3 2017.
will increase or decrease in the short-term or in the mediumterm (ie. the next three months and the next four to 12 months respectively). Both of these are an approximately threefold increase on the same time last year. Amongst those that recruit permanent workers, 10% were unsure about short-term permanent employee numbers and 15% were unsure about longterm; both figures are more than double than in the same period last year. With the UK’s scheduled departure from the EU rapidly approaching, our data suggest the government needs to do far more to reassure businesses so they can plan their future with confidence and sustain the successes of the UK economy. As market uncertainty is set fair to continue, the importance of benchmarking performance against other recruiters to maximise performance cannot be underestimated. 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 MARCH 2018 3
The Big Talking Point
RECRUITMENT INDUSTRY TRENDS 2016/17
STATE OF THE MARKET With the end of the financial year fast approaching, many recruitment businesses are going through their books and looking for areas of growth. The REC’s Recruitment industry trends 2016/17 report is an authoritative analysis of the position of the UK’s recruitment sector. More than that, it is an essential tool for scaling up and making the most of the next 12 months. Recruitment Matters casts an eye over this year’s report and highlights three ways you can use it to shape business planning in 2018 1: INDUSTRY TURNOVER FOR 2016/17 What does the report say? Total industry turnover of the broader permanent and temporary/contract recruitment activity for 2016/17 was £32.2bn. This figure comprises £28.2bn (87.6%) in temporary/contract placement revenue and £4bn (12.4%) in permanent placement fees income. The latest Recruitment industry trends captures the activity of a broader representation of providers
4 RECRUITMENT MATTERS MARCH 2018
than in previous years. It includes managed service providers (MSPs) and recruitment process outsourcing (RPO) services, plus activity from those offering HR services, such as umbrella companies and direct engagement solution providers. How can you use this? The report covers the 12 months ending in March 2017, a year of continuing volatility for the recruitment industry stemming largely
from the UK’s vote in June 2016 to leave the European Union. Stagnant wage growth, changes in employment legislation and increasingly complex recruitment supply chains have also played their part. In spite of these, the industry continued to respond admirably to employers’ ever-changing needs. The REC’s member directory is one of the most popular sections of the REC website, with a growing number of
Recruitment In Trends 2016/17 Permanent placement turnover
+ £4 billion TEMPORARY £
average number of temporary/ contract workers on the industry’s payroll on any one given day
average tempo pl
TEMPORARY WORKER Mean assignment length
Mean contract length
Total numbe in the recrui exceeded 10
candidates and clients using it to find agencies. Ensure you feature in the directory and your details are up to date at www.rec.uk.com/directory.
2: STAFFING AND MARGINS What does the report say? A plurality of recruiters surveyed (47%) reported permanent placement margins of between 15% and 19% in 2016/17. The average permanent placement fee was £3,984. The average annual turnover of temporary/ contract workers was £21,953, with a plurality of agencies (31%) reporting margins of 15-19%. When looking at the extremities of the bandings for average placement margins recorded within this year’s REC study, just 4% of industry respondents suggested an average of under 9%. Three times as many respondents (12%), however, indicated that they were achieving 20-24%.
nt Industry 6/17 nover
Total industry turnover
= £28.2 billion
average turnover per temporary/contract placement
average turnover per permanent placement
REC FORECAST We expect the recruitment industry
17 WEEKS 23 WEEKS + 1 DAY
permanent placements in 2016/17
to grow by the following:
6 5 4 3
2016/17. This gives you a simple and clear picture of where your business is operating compared with your competitors and outlines practical steps you can take to improve and grow. The tools are available to use now at www.rec.uk.com/ trends
Total number of staff employed in the recruitment industry exceeded 100,000
@recmembers | @RECPress | #rectren ds | www.rec.uk.com/trends
Meanwhile, just 8% of industry respondents suggested an average of under 9% for temporary/contract placements. But, almost twice as many (15%) indicated that they were achieving margins of 25+%. How can you use this? The REC has developed two interactive benchmarking tools. These easy-to-use calculators place your key placement numbers against UK averages for
3: MEDIUM-TERM FORECAST What does the report say? Three quarters (75%) of permanent recruiters surveyed expect permanent recruitment requirements to grow in 2018, with 18% believing this will grow strongly. And 70% believe this will continue growing into 2019, and beyond, with 16% believing growth will continue to be strong. Three quarters (77%) of temporary/contract recruiters also believe their market will grow in 2018, with 17% believing it will grow strongly. And 74% believe growth will continue into 2019 and beyond, with 22% believing growth will continue to be strong. Both Recruitment industry trends respondents
and anecdotal reports from a number of REC members suggest that they are currently operating in challenging and uncertain economic circumstances. However, the number of recruitment agencies has continued to grow despite this adversity. The rate of growth in the number of perm-centric businesses has slowed in the past year and the REC predicts this will continue. It also says the number of temporary and contractcentric businesses will continue to grow at a slow rate in 2017/18. These numbers also assume a reduction in candidates that allows the industry to continue to grow above GDP into the first year of the two-year transition period after the UK leaves the EU (which begins in April 2019). A successful economy and recruitment market beyond this will depend on the final Brexit settlement agreed between the UK and EU. The REC believes that designing an immigration system with the needs of business in mind and based
on the evidence will allow the economy and the industry to continue to grow in the long term after the UK has left the EU. How can you use this? An unpredictable and volatile economy may encourage a steady-as-it-goes approach, but recruitment businesses would be wise to try new things over the next two years. As candidates become harder to source and businesses look to double down on their unique selling points, recruiters can take advantage of new technologies and channels to grow. The advent of social media and content marketing will be crucial for bringing talent to you. The REC’s exciting range of new learning courses offer practical and smart steps for recruiters looking to capitalise on these changing times. Find out more at www.rec. uk.com/training Recruitment industry trends 2016/17 is available to download now at www. rec.uk.com/trends
RECRUITMENT MATTERS MARCH 2018 5
GENDER PAY REPORTING By Lewina Farrell, head of professional services Organisations that have more than 250 employees* must publish their first gender pay report by 4 April 2018. The report can be published on the organisation’s own website but must also be published on https://genderpaygap. campaign.gov.uk/. After that, the information must remain available for a minimum of three years from the date of publication. * Please note that for the purposes of this report ‘employees’ includes full-time and part-time employees as well as temporary workers on a contract for services. The gender pay report must contain the following information about staff employed by the business on the ‘snapshot date’ (ie. 5 April 2017 and annually after that): • The difference in the average (mean) hourly rate of pay between male and female full-pay relevant employees • The difference in the average (median) hourly rate of pay between male and female
full-pay relevant employees • The difference between the average (mean) bonuses paid to male and female employees • The difference between the average (median) bonuses paid to male and female employees • The proportion of male and female employees who receive bonuses • The relative proportions of male and female employees in each quartile pay band of the workforce. What does ‘pay’ include? Ordinary pay includes basic pay, allowances, shift premia, pay for piece work, pay for holiday, maternity leave etc. It does not include overtime, redundancy or other termination payments, pay in lieu of leave, benefits in kind or expenses. Pay is worked out before any deductions for tax, national insurance or pensions etc. Bonus pay includes money, vouchers, payments that relate
to profit sharing, productivity, performance, incentive or commission. It does not include ordinary pay, overtime or payments that relate to the termination of employment or redundancy. Who? The ‘employer’ is responsible for pay gap reporting. So where a recruiter works with an umbrella company and the umbrella has the contract with the temps, then the umbrella is the employer for gender pay reporting purposes. If a recruiter uses a payroll provider to administer its payroll but the recruiter has a contract of employment or contract for services with the temp, then the recruiter is the employer for reporting purposes. What? The report must include a supporting statement which (a) confirms that the information is accurate and (b) is signed by a director, partner
or equivalent. Employers can also include additional supporting text to explain any gender pay gap in the report. This is particularly helpful for recruiters who may need to explain any gender pay gap differences which are influenced by pay rates for temporary workers. Enforcement At the time of writing less than 10% of organisations expected to report have done so but this should ramp up quickly. Some reports, which published zero pay gap, have been challenged and resubmitted. A consultation on the powers of the Equality and Human Rights Commission to take action against employers who do not comply with the obligation to report closed just before we went to print. The government may at some point also consider a form of ‘name and shame’ list similar to the national minimum wage ‘name and shame’ list.
PREVENTING TAX EVASION IS KEY The Criminal Finances Act, which became law in September 2017, is forcing many recruitment businesses to review their Preferred Supplier List (PSL) or implement one for the first time. The legislation introduced a new corporate criminal offence for businesses that fail to prevent the facilitation of tax evasion. An agency is criminally liable if it fails to prevent those who act for it, or on its behalf, from facilitating tax evasion. This liability applies even if senior management had no involvement in, or awareness of, what was going on.
6 RECRUITMENT MATTERS MARCH 2018
Scenarios that could lead to a conviction include: • A recruitment consultant accepts a referral fee from an umbrella company /contractor accountancy firm but doesn’t declare the tax and NI due. • A recruitment consultant accepts a referral fee to refer contractors to a tax evasion scheme. • A recruitment business pays an intermediary that facilitates tax evasion. In light of the Act, recruitment businesses are rightly taking steps to protect themselves from the heightened risks associated with
choosing unethical or non-compliant providers. A growing number of agencies are adopting the position that has been the official advice of the REC since 2015 – namely that they should work only with fully accredited FCSA members such as ADVANCE. We expect this trend to continue and accelerate throughout 2018. Email firstname.lastname@example.org to request our guide to the Criminal Finances Act. For more information on how ADVANCE can support you and your contract candidates, visit www. advance.online or call 01244 564 564.
BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS
Lisa Murray is the owner of Braundton n Consulting
Jodie Rafferty is the managing director at Rafferty Resourcing
WHAT I KNOW
IRP AWARDS WINNER
Best candidate story I love being able to transform my candidates’ lives, and a good example of this would be one of my candidates returning to work. She had great skills but had lost her confidence. So I worked with her, got her some temp work, made her feel really good about herself and placed her in a permanent part-time job in London. She actually rang me a year or so later, a few months ago, to say she’s now been made PA to the chief exec. That was a fabulous story to hear.
Congratulations for winning Best Candidate Experience at the 2017 IRP Awards I’m still pinching myself most mornings – it’s a little bit like a dream I haven’t quite woken up from yet. To be in your first year of trading and win the most important award to me was a dream come true. A big thanks to the IRP Awards judges for picking me.
Secret of success I obviously want to be successful and I think to do that you’ve got to have a really strict plan. So I really like to get organised. Everyday I’m thinking “What am I going to do to help somebody today? Who am I going to get on interview? What jobs am I going to take to help that person?” And I really try and focus on what I’m going to do to help people as my real focus on being successful for the day. Giving back I really want to be sure that I can add impact to somebody’s life long term. So, one of the things I do is I give back to the community each month. I will offer to place a candidate into a job for no monetary gain if it means getting that candidate into a job. A recent candidate I worked with just got offered a position as a school leaver in an amazing HR department, which she would not have got if I had not made that happen. Now she’s got her foot in the door for the rest of her life. Tips I would say really treat people every day how you want to be treated. Set the right expectation, don’t over promise and under deliver, and always try to leave them with something positive – whether it be some free training, some interview advice – so they can go away with something you’ve been able to pass onto them.
Have you had any positive feedback from the win? It’s been a steady stream of congratulations. We’ve had new people approach us who want to do business with us because of our reputation for candidate experience – that’s our biggest USP. Now that we’ve got the IRP Award to back it up, people have approached us. We’ve seen a big rise in temp recruitment on the back of the win, and that new business has come to us directly. How did Rafferty Resourcing start? We’re based in Hampshire and we’re a small, family-owned business. There’s five of us involved, I manage all the client relationships and the rest of the team are candidate coordinators, who work exclusively with candidates, ensuring their need are met. It’s a different model from most other recruitment businesses. We’ve had a lot of clients approach us and say that we offer something different. What does candidate experience mean to you? I don’t want a huge database of candidates who we’re not working with and will, ultimately, be disappointed if we don’t find them a job. We work with a small number of exclusive candidates at any one time, and they give us a wish list of companies they want to work for and the kind of jobs they want. Clients love it when you say you’ve got someone who has identified them as someone to work for. It’s a friendly approach from both sides, but it works, and the clients come back.
To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com
RECRUITMENT MATTERS MARCH 2018 7
What’s coming up?
SETTING THE STANDARD WITH COMPLIANCE The REC Compliance Test helps drive professionalism within the industry. The REC requires its members to take the Compliance Test as a prerequisite for membership. It also requires them to pass the test every two years to enable them to remain in membership. Our Compliance Test creates awareness of both the REC Code of Professional Practice, key industry legislation and the requirements of The Employment Agencies Act 1973 (the Act) and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Conduct Regulations). The test itself takes on average 35 minutes to complete and consists of multiple choice questions. We are running a number of Compliance Test workshops at our London offices throughout 2018. These one-day sessions help you to
Compliance Test workshop dates • 15 March • 27 April • 18 May • 27 June • 19 July • 29 August • 26 September • 23 October • 23 November • 6 December understand all aspects of compliance within a recruitment business and enable you to pass the Compliance Test with flying colours. Visit www.rec.uk.com/compliance to book on any of these free sessions.
RECRUITMENT MATTERS The official magazine of The Recruitment & Employment Confederation Dorset House, 1st Floor, 27-45 Stamford Street, London SE1 9NT
ARE YOU A FUTURE RECRUITMENT LEADER? This highly respected qualification provides the insight, practical skills and knowledge senior recruitment managers and directors’ need to manage and enhance processes and efficiencies within their own business. Industry-specific in content, the Level 5 Diploma in Recruitment Leadership (DipRL) is a strategic level qualification and equivalent to degree-standard learning. Who is the course for? Senior managers and directors looking to enhance their leadership skills will gain from this qualification. The Diploma in Recruitment Leadership provides authoritative learning that will add value to the service you provide to clients and candidates, and help enhance your personal and professional effectiveness. How is the course taught? On-demand enrolment makes the Level 5 DipRL easy to fit around work and personal commitments, with four examination points each year. You will meet with your cohort three times to work through the seven mandatory units in year one, after which you take a minimum of one additional optional unit to fully qualify. During your study you will be provided with all learning materials and be allocated an IRP Study Coach, who will also facilitate the workshops. You can enrol on individual units for £675 + VAT per unit, or the whole course is £4,500 + VAT per person. Visit www.rec-irp.uk.com/DipRL to enrol.
Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 78 Chamber Street E1 8BL. 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 © 2018 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.
Tel: 020 7009 2100 www.rec.uk.com 8 RECRUITMENT MATTERS MARCH 2018