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Recruitment Matters Issue 13 March 2013

Trade Association of the Year

What’s inside

2 The Intelligence

Roger Tweedy says there is a compelling body of evidence underpinning the business case for having a diverse mix of employees

3 REC Talk iStock

Tom Hadley on working together to tackle candidate shortages, and the REC reacts to the scrapping of the Quality Mark Mixing it up: Organisations with a diverse workforce can be more productive, competitive and more likely to retain good people. RM explores the role of recruiters in educating clients. See pages 4-5.

Member benefits on the move Recruiters can now access REC membership benefits on the go via their smartphones following the launch of the REC App. The App displays essential membership information in the REC’s five pillars of Membership: win more business; increase profits and efficiency; develop your people; manage your risk; and stay ahead of the game. These are all displayed in an easy-tonavigate membership wheel. REC director of member services Anita Holbrow says the App will enable members to discover new ways to use their REC membership, find different ways to boost their business and up-skill their staff.

“Members can show clients how they are staying up-to-date and at the top of their game by spinning the wheel to find the section where they need assistance,” she says. It was created by digital company throughMobile. Managing director Gareth Di Fante plans to produce similar template or bespoke on-the-go products for agencies that must adapt to the changing way people are using the internet. He cites research by Gartner and Cisco Systems, which claim that 2013 will be the first year more people use their mobile phone than their PC to get online. Mobile internet searches have grown by 400% since 2010. Members can download the App by scanning the QR code (right) or http://mobile.rec.uk.com/ memberbenefits on a mobile phone browser.

Big 4-5The Talking Point

Why recruiters must not underestimate their role in helping clients to understand the benefits of having a diverse workforce

6

Business Matters

Discrimination, the law and recruiters’ obligations. Plus, helping flexible workers to clarify their employment status

Institute of 7 Recruitment Professionals Caroline Pearson is the top Certificate in Recruitment Practice student, and David Gold from Prospectus chats about winning an IRP Award

8 Events and training Rob Gee will share his leadership expertise during the first REC Leadership Programme

www.rec.uk.com


REC Research

the intelligence Embracing diversity

Fig 1: Median net profit margin 5%

Business Secretary Vince Cable’s open letter naming and shaming the seven FTSE 100 companies without a woman on their board put the spotlight once again on the importance of workplace diversity

Gender and racial diversity are recognised as lead indicators of a healthy business 2 Recruitment Matters March 2013

3% 2% 1% -0% -1%

Alex Folkes/Fishnik Photography

One of the first reports into diversity was ‘Recruitment 2020’ published by Demos in 2007. Commissioned by the REC’s Industry Research Unit, it claimed the declining number of white, able bodied men under 45 in the workforce would force employers to embrace diversity. Six years on, the statistics are just as powerful: • In 2006 there were more 55-64 year olds than 16-24 year olds for the first time. By 2030, 46% of the UK’s population will be aged 50 or over • The government estimates that by 2020 migrants will account for more than 40% of the growth in the working age population • There are 9.8m people with a disability in the UK and they remain a largely untapped source of talent. There is a compelling body of evidence that underpins the case for having a diverse mix of employees. Research by Corporate Executive Board (CEB) discovered that in a diverse workforce, employee performance improves by 12% and intent to stay by 20%. Other studies by Catalyst and McKinsey demonstrate that companies with the highest representation of women on their boards of directors experienced better financial performance on average in terms of return on sales, return on invested capital and return on equity.

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Fig 2: Revenue growth and headcount growth 20% 15% 10%

Vince Cable

Increasingly, gender and racial diversity are recognised as lead indicators of a healthy business. They suggest an organisation is fishing from a bigger pool of talent, accessing a deeper knowledge bank and leveraging those resources throughout the business value chain. A recent ‘Diversity and Inclusion’ survey published by CEB ranked the UK fourth internationally for creating a diverse and inclusive workforce, with 63% of employees stating their organisations are actively promoting workplace diversity. There is now a clear opportunity for agencies to use their access to local and international pools of diverse talent to add real strategic value by working with their clients to support the diversity agenda. The REC’s Working Paper on Employer Branding www.rec.uk.com/ recworkingpapers provides some practical examples of how the consultancy value of agencies can be realised in this way. The evidence is clear. Diversity makes perfect business sense for agencies and employers. • You can follow Roger on Twitter www.twitter.com/Tweedy_REC

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n Median revenue growth n Median employee growth

-25% -30% -35%

Apr Aug Dec Apr Aug Dec Apr Aug Dec Apr Aug Dec 09 10 11 12

Watching the pennies In previous editions of Recruitment Matters I have commented on how recruiters are improving their profit margin by keeping their overheads under control. Figure 1 shows that since the sharp fall-off in net profit margin (NPM) in the second half of 2011 and early 2012, recruiters have been rebuilding NPM. In fact, it has nearly tripled from February’s less than 1.5% to more than 4.2% in November, due to strong control of overheads. The decline in NPM from November to December is what we see each year, as recruiters have a full month of overheads in December, but only two to three weeks to generate revenue. So how have recruiters rebuilt their profit margins? Figure 2 compares recruiters’ revenue growth, with growth in their own headcount. Since June the red line, representing median revenue growth, has been above the black line, which shows growth in recruiters’ own employee numbers. By keeping tight control of their own headcount, lower than revenue growth, recruiters have been rebuilding profitability. The control of overheads means a near tripling in net profit as a percentage of net disposable revenue as recruiters keep control of their overheads. That is excellent operational management. • 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 8 544 9807. The RIB is a strategic partner of the REC.

www.rec.uk.com


Leading the Industry

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professional services, explains how recruiters and clients are working together to review recruitment procedures and address candidate shortages The big message from a recent REC Engineering meeting was the need for employers, specialist recruiters, government and educationalists to bridge the growing skills gap. REC members in other high-end sectors such as technology, life sciences and creative industries have echoed this call and understand how recruitment professionals can help clients shake up their hiring criteria and procedures. Simon Conington, chair of REC Engineering and managing director of BPS, highlights how “employers are still looking for the finished article with a minimum requirement of a graduate degree plus two years of experience”. This lack of flexibility is regularly flagged up by REC Technology members and is a source of frustration for recruiters because candidates can be brought up to speed once in a job. In sectors like oil and gas where time is limited and projects require highly-skilled and experienced workers, recruiters have little option but to source and place candidates who can hit the ground running. There are positive signs across many sectors of recruiters working in genuine partnership with their clients to address the skills deficit. 1. Making the most of apprenticeships: this is gaining momentum. The Engineering Employers Federation (EEF) underlines the fact that nearly 70% of businesses in their sector offer apprenticeships. Recruiters are managing process, sourcing and filtering candidates. 2. Widening the pool: under-represented groups must be encouraged to look at careers in high-demand sectors. This is a long game and involves raising awareness and changing perceptions so we start to see more gender balance in sectors like technology and engineering. Recruiters are working with schools and through initiatives such as the REC’s Youth Employment Charter. 3. Facilitating career transitions: more can be done through fast-track retraining schemes that enable workers to make career transitions and come into high-demand sectors. REC members have flagged up the benefits of building on the existing skills and competencies of people leaving the military and other public sector organisations, for instance. 4. Going global: in some sectors recruiters are working with clients to source the necessary skills from across Europe and beyond. The skills gap is likely to remain one of the major barriers to growth in our economy for the foreseeable future. • Follow Tom Hadley on twitter www.twitter.com/HadleysComment

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Shutterstock

Recruiters help plug skills gap Action not words over Quality Mark Tom Hadley, the REC’s director of policy & The REC has acted swiftly to reassure schools following the Department for Education’s (DfE’s) decision to scrap the Quality Mark from 31 March. The move was described by REC chief executive Kevin Green as a retrograde step, particularly in light of the government’s public commitment to the safeguarding of children and the success of the scheme over a number of years. The DfE stated the industry should be making its own arrangements to ensure recruiters are complying with relevant legislation and safeguarding requirements without government involvement. Agency compliance has been high since the Quality Mark was introduced in 2002 as a joint initiative between the DfE and the REC to drive up standards. The Quality Mark set minimum standards for agencies and local authorities recruiting and interviewing supply teachers by checking and managing their performance so they remained at the forefront of changes in the teaching sector. From 1 April an REC transitional scheme will be introduced for the 135 recruitment agencies who are members of the REC and hold the Quality Mark. They will then be invited to join a new REC Audited Education Scheme, based on the REC Audited Scheme, which will broaden its brief to include anyone who works in an education setting. “Since early 2012 the REC has been reviewing its compliance products and we have considered bringing education into the Audited Scheme for some time,” says the REC’s head of consultancy and compliance delivery Angie Nicholls. “The DfE’s decision has meant bringing this forward.” A consultation process is taking place to make the product more desirable to schools. An REC webinar held in February produced a number of ideas about how the new safeguarding scheme should develop and the REC continues to seek feedback from members. Recruiters have reacted with disappointment to the government’s decision. Brian Roebuck, managing director of Salford Supply Desk, says the aim now is to work closely with the REC. “I was personally disappointed that the government has withdrawn funding for such an important aspect of our work in safeguarding children,” he says. “We must get the new scheme right using the REC’s expertise and guidance.”

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The Big Talking Point

Delivering the diversity message Recruiters can play an important role in conveying to clients the benefits of creating a diverse workforce, says Steve Hemsley

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mployers sometimes need reminding of the business benefits and their moral obligations of ensuring their workforce reflects their own customer base in terms of gender, ethnicity, age, physical ability, sexual orientation and religion. Research by employer branding practice Bernard Hodes called ‘Diversity & Inclusion – Fringe or Fundamental’ revealed that 83% of the HR practitioners it questioned worked for organisations with a Diversity & Inclusion (D&I) strategy in place. However, many organisations do not look beyond legal compliance or take a truly embedded approach. While 74% said D&I is central to their people strategy, only 64% have active involvement from senior leaders. Less than half of respondents include D&I in their line manager training, and only 40% use specific key performance indicators to monitor the impact of D&I activity.

There is a role for recruiters to help employers look beyond just being legally compliant around diversity. There is plenty of evidence that having a broader mix of individuals in a workplace increases productivity and market competitiveness, helps to retain talent, cuts absenteeism and boosts an employer’s corporate reputation. The REC’s Diversity and Inclusion Forum meets quarterly and chair Sarah Gordon, associate director at The Sammons Group, says recruiters should work in partnership with businesses and diversity groups. For example, the REC has a strong relationship with the Business in the Community’s Race for Opportunity diversity campaign. “There are many knowledgeable recruiters already helping clients to understand the bottom line, staff engagement and retention benefits of implementing diversity initiatives,” she says. “If the partnership between recruiter

Young women key to growth in engineering Diversity is high on the agenda at engineering recruiter TXM Recruit, where encouraging more women into the industry remains a challenge. Partnership manager Jennifer Davidson (left) says skill shortages across engineering mean employers need to expand the candidate pool and create a more diverse workforce. “Many of our clients are looking closely at talent acquisition and putting a diversity strategy in place. As a recruiter we are in a unique position to advise and pass on our knowledge,” says Davidson. “We have to understand how to find and attract the best talent. Currently only 8% of engineers are female so the key is to talk to younger women about the opportunities in this industry.”

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and client works well, the agency can play a key role in job analysis and succession planning.” A respect for diversity is enshrined in the REC’s Code of Professional Practice and Gordon says recruitment consultants need to know they can be firm if clients make particular hiring requests that do not promote diversity. “It comes down to the culture within each recruiter and whether consultants feel they have the support of their bosses to challenge and even walk away from a client,” she says. REC trainer Andrew Carr says it is one reason why diversity is covered extensively within many courses. “Some clients think they can push responsibility for diversity on to their agency and ask the recruiter questions they should not, such as not wanting women of child-bearing age put forward,” he says. “It is important recruiters train their own staff in this difficult area.” He adds: “Consultants need the confidence to stand up to clients, so that they have more knowledge of the benefits of having a diverse workforce, as well as the law.” Recruiters are getting the diversity message across in the mainstream media.

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Taking the lead

Rebekah Handford, managing director of Highpoint Recruitment, appeared on BBC Radio 4’s Woman’s Hour to discuss the challenges and prejudices faced by older female candidates and explain how recruiters can help. “We have to educate clients and this is a tricky process,��� she says. “We encourage candidates to take their age off their CV and we talk to the employer about the candidate’s skills, talents and team fit. Older women can be easier to manage because their expectations and aspirations are different.” Mustafa Ozbilgin, professor of Human Resource Management at Brunel Business School, specialises in diversity in the workplace and managing diversity. He says employers must avoid turning to a narrow

band of talent when hiring. “If you look at the UK’s universities and classrooms you can see how diverse the future workforce will be and the different talents people will bring,” he says. “Employers must recognise differences and how people from various backgrounds work and are motivated differently.” Guy Bailey, head of employment at the CBI, says businesses are starting to recognise how promoting diversity opens up a wider talent pool and different ways of thinking. “British workplaces have become much more diverse in recent decades, and the key to further progress must be to focus on voluntary, workable solutions rather than complex regulatory initiatives,” he says.

The REC and Jobcentre Plus have agreed a Diversity Pledge to deliver best practice in recruitment. The emphasis is on harnessing talent and potential and demonstrating that diversity is a necessity not a choice in today’s workplace. The pledge promises to value and harness the differences between people, actively seek to identify diverse candidate pools, review all aspects of the employment process to eradicate unjustifiable discrimination and promote recruitment and selection best practice in accordance with the REC’s agreed standards. www.rec.uk.com/diversitypledge

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Diversity in the recruitment process is essentially about how far you are prepared to go to provide your clients with the best person for the job, says Shahid Bashir (left), corporate diversity strategist at Diversity Works for London. He believes good recruitment is inclusive recruitment and promoting the benefits that diverse experiences and perspectives can bring to an organisation must be part of a recruiter’s USP. “By taking and advocating this approach, you’re enhancing the workforce capability of your clients by improving the potential for innovation, creativity and problem solving,” he says. He adds that a robust approach to diversity is based on developing a brand and a structure to attract the widest pool of talent, demonstrating you run a fair and inclusive recruitment process and ensuring procedures and practices are compliant with equality legislation. “The biggest challenge for recruitment agencies is being able to translate ‘diversity thought’ into recruitment processes, practices and, most critically, behaviours,” says Bashir. “Do managers and staff have the tools to manage unconscious bias and make better, informed decisions? Is there a reluctance on behalf of some employers to do something different and break away from recruiting in their own likeness?” He adds that an organisation must work at developing an inclusive culture, inclusive leadership, management styles, ways of working, ways of having fun and creating an environment where employees feel valued for their differences: “Without an inclusive culture the benefits of a diverse workforce will not be easily realised.” A respect for diversity is one of the guiding principles enshrined in the REC’s Code of Professional Practice. REC trainer Andrew Carr says many recruiters do have a diverse workforce themselves but many still do not. “It is important recruiters continually monitor their own diversity policy and update it because clients will ask questions,” he says.

Recruitment Matters March 2013 5


Legal Update

Don’t ask us to discriminate Recruiters are put in an awkward position when they receive discriminatory instructions from clients, says REC solicitor Bunmi Adefuye Maintaining good commercial relationships with clients whilst protecting their own business and staying within the law is a difficult balance for recruiters to strike when discriminatory instructions are received. Under the Equality Act 2010 (the Act), employment agencies and employment businesses are classified as employment service providers. Employment businesses are also deemed to be employers when they engage workers. The Act places obligations on employment agencies/businesses, which include not victimising or discriminating against anyone: • by refusing to provide services or not offering to provide services to certain individuals • in the terms and conditions applied in providing services to individuals • by terminating the provision of services or by subjecting the individuals to a detriment where they are treated less favourably If a client gives an employment agency/business an instruction that is discriminatory and the instructions are carried out, the client and the agency/ business expose themselves to a discrimination claim.

This can occur if, for example, the client states they require a PA but they will only consider UK citizens who speak English fluently or they prefer women aged between 21-35. This generic example falls under some of the protected characteristics in the Act which are age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. If the employment agency/business only puts forward individuals based on the above specification, that will constitute direct discrimination on the grounds of sex, age and race. It is also worth considering the financial implications because discrimination claims can be very expensive to defend and can damage reputations. The Act contains exceptions where it is not illegal to stipulate a requirement for individuals to have a particular protected characteristic to do the job; these are known as occupational requirements. For example, the job specification could state that the client requires a Jewish teacher to teach Judaism in a faith school or a female gym instructor in a femaleonly gym.

Clients must objectively justify the specific requirements and demonstrate that their requirement is a proportionate means of achieving a legitimate aim. However the employment agency/ business must take steps to guard against discrimination claims by asking clients to substantiate any objective justification in writing. The employment agency/business has a defence if it reasonably relies on a statement made by a client that their specification will not amount to unlawful discrimination. Once a written explanation is provided it should be reviewed carefully to determine whether the statement is reasonable to rely on in the event of a claim. A client will be guilty of an offence if it intentionally or recklessly makes a statement to mislead the recruiter. Ultimately, a recruiter must carefully consider clients’ instructions to avoid the risk of a discrimination claim.

Business development Advising flexible workers Recruiters are adding value to their service by helping flexible workers make the right decision regarding their professional status once they have been hired. Agencies are putting successful candidates in touch with Brookson, an REC business partner, which clarifies whether someone should be employed by the agency, self-employed or use an umbrella option from a tax and legal perspective. “We are offering an important secondary service, which gives the agency and the person hired peace of mind,” says business development director Andrew Fahey.

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Brookson is a specialist accountant for contractors, freelancers and self-employed professionals across a range of industries and has been supporting agencies with payroll solutions for more than 17 years. “We also help recruiters understand the diverse talent pool they are sourcing from,” says Fahey. “You cannot treat everyone as a ‘temp’ or as a ‘skilled consultant’. We are there to advise candidates, clients and agencies about how different candidates, including older workers or working parents, might have different requirements when it comes to their flexible employment status and needs.”

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Inspiration

Behind the scenes at the Institute of Recruitment Professionals

The man with Former vet is CRP star the midas touch This month we talk to modest industry stalwart David Gold from Prospectus Ltd about winning the IRP Award for Best Contribution to the Community Name: David Gold CEO Agency: Prospectus Ltd Years in recruitment: 10+ Specialism: Beyond Profit sector RM: What was the response from clients to winning the award? DG: Whilst we have not marketed it heavily, the clients we have told are really pleased we have received recognition for the work we do. RM: How can work in the community benefit the business in tough times? DG: I believe in the ‘company citizen’ where everyone has a part to play in the community. It is not about benefit, just participation. RM: What do you like and dislike about our industry? DG: Finding the best human capital to help organisations improve and the individual develop and grow has to be a great opportunity for any organisation. I dislike highly financially incentivised structures but I am sure it has some advantages. RM: What’s your top tip for people entering the industry this year? DG::: This year and every year – a career decision should be made on learning, development and seizing opportunities.

RM: How can recruitment improve its image? DG: Appear to be less transactional. RM: How can recruiters advise clients on the benefits of having a diverse workforce when hiring? DG: Diversity is all about creativity and little to do with compliance. RM: Is there anything your work colleagues don’t know about you? DG: I can’t think of anything and I’m not sure you’d be the first to know! RM: If you were not working in recruitment, what job would you do? DG: Who knows – live in the moment only and I am enjoying myself currently.

Caroline Pearson was “speechless” when told she came top in the latest Certificate in Recruitment Practice exams. In fact, Caroline achieved a distinction and scored the highest mark since the new qualifications were launched. She was one of 247 students to take the exam in December. She only moved into recruitment in 2012 when she joined XRE Ltd in Wiltshire, after leaving behind her career as a vet following the birth of her children. “Being fresh into the industry the certification programme gave me the essential basics to build on as I gain more responsibility,” she says. “Units 2 and 3 covering Selling and Managing the Recruitment Process were particularly informative.” She says the course stressed to her the importance of taking time to understand the industry, what services you offer and how to monitor your own performance as well as candidate/client satisfaction levels. “It can be tough juggling a job and studying when you have two young children, but the required coursework ensures you have already thought about a large proportion of the course content before you get to the revision stage.” Caroline says anyone studying for the Certificate will benefit professionally, but they must be committed. “Five of XRE’s team sat the exam in December and we have noticed an improvement in our methods and service provision as a result of the knowledge we gained,” she says. “Practically, I found breaking the course down into structured revision notes early on saved me a lot of time close to the exam.” To keep up to date with everything the Institute of Recruitment Professionals is doing, please visit www.rec-irp.uk.com

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Events and training

Leading from the front Robert Gee (left) knows a thing or two about leadership, writes Steve Hemsley. He has been developing leaders for more than 30 years and is looking forward to running the REC Recruitment Business Academy’s first four-day Leadership Programme in May. His client list is impressive, ranging from Network Rail and The Royal Bank of Scotland to the Open University. He has delivered courses to senior leaders on strategic thinking, emotional intelligence and

mentoring as well as employee engagement. He warns recruitment businesses against being over-managed and under-led because they are too focused on balance sheets and targets. “Leadership is about more than just managing,” he says. “The two are complementary but leadership is about setting the vision for the recruitment business, inspiring those who work for you and being innovative.” He adds that the RBA Leadership Programme will include plenty of participant involvement working through real-life scenarios and recruitment leadership problems as a group. “Participants will reach a different level of thinking about their business,” he says.

The RBA Leadership Programme takes place on 15, 16 May and on 13, 14 June. Day One: Defining leadership, how it differs from management, what leaders do and how to get people to follow you. Day Two: How a leader works, styles of leadership, motivating followers and how successful leaders get it right so often. Day Three: Attracting the right talent, team building and cohesion, engaging and retaining talent. Day Four: Leadership and culture, creating awareness of diversity and the role of leaders when the workplace environment is changing? For more information call 020 7009 2100.

Pensions Automatic Enrolment Your recruitment business will need to comply soon but do you truly understand…

…the new pensions automatic enrolment regime? …when your staging date is? …what you need to do and what the cost implications will be? …the impact this will have on your business, staff and clients?

There are a lot of misconceptions....are you prepared? We have a range of support solutions available including the Pensions Toolkit and Pensions workshops, visit www.rec.uk.com/pensions to register your interest

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

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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.

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RM March 2013