Read. Review. Recruit. Recruitment Newsletter | Winter 2018/19
Budget 2018: What was in it for Recruitment?
Tax Tips for Recruitment Agencies
Recruitment Trends 2017/18
Discover the key points recruitment agencies need to take note of following the Budget 2018, including IR35 and changes to AIA and Entrepreneur’s Relief.
Tax can be a never-ending minefield. Businesses that do not regularly review their finances run the risk of being non-compliant and of paying too much tax.
The UK recruitment industry grew by 11% to ÂŁ35.7billion in 2017/18 despite ongoing Brexit uncertainty, according to data published by the Recruitment and Employment Confederation.
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Contents
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Welcome and Partners
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Special Feature Budget 2018: What was in it for Recruitment?
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What to Watch out for in 2019
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Making Tax Digital Latest
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Business Metrics for Success
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Employee Spotlight
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Watch out for Fake Emails
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Upcoming Events
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Raffingers Foundation Masquerade Ball 2019
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Tax Tips for Recruitment Agencies
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“Who needs an accountant?”
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Ten Traits of Successful Recruitment Agencies
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Are Back-Office Demands the Biggest Threat to Your Start-Up Business?
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Recruitment Trends 2017/18
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Raffingers Recruitment Sector Helpline
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Welcome to our WINTER Newsletter We hope you have had a lovely Christmas and New Year and are ready for what is going to be an interesting year... At 11pm on Friday 29 March, Britain will leave the EU. It is important that you begin considering (if you have not already) the impact Brexit could have on your business. Indeed, Brexit will bring more challenges than opportunities, most significantly with talent. You need to consider if Brexit will affect the talent not only within your business at a senior and junior level, but also within your suppliers’ organisations. It also appears, in the latest ONS statistics on the UK labour market, that the uncertainty of Brexit has tightened the jobs market. The latest results published in December show:
• UK employment increases to 32.48million,
79,000 more than for May to July 2018 • The unemployment rate was estimated at 4.1%, virtually unchanged from the previous period • Number of vacancies sits at 848,000 for September to November 2018 - 10,000 more than the estimate for the previous period • The number of people aged from 16 to 64 years not working and not seeking or available to work (economically inactive) was 8.66million, 95,000 fewer than the previous period
Raffingers Partners Gary Inglis Managing Partner gary.inglis@raffingers.co.uk
Andrew Coney Partner andrew.coney@raffingers.co.uk
Lee Manning Partner lee.manning@raffingers.co.uk
Adam Moody Partner adam.moody@raffingers.co.uk
Suda Ratnam Partner suda.ratnam@raffingers.co.uk
Barry Soraff Partner barry.soraff@raffingers.co.uk
Indeed, these latest statistics indicate the strength of the UK job market, but with near-record numbers of vacancies and candidate availability tightening, the challenge of finding skilled candidates is set to intensify.
Paul Dell Partner paul.dell@raffingers.co.uk
To help your agency prepare for the year to come our Special Feature on page 4 looks at the impending changes (announced at the Budget) and our article on page 5 indicates the trends that you should be aware of this year.
Roy Butcher Partner roy.butcher@raffingers.co.uk
To help you succeed we also bring you the best ‘Tax Tips for Recruitment Agencies’ (page 10) and ‘Ten Traits of Successful Recruitment Agencies’ (page 12). For help or advice on any of the articles discussed, please do not hesitate to contact one of us.
Neill Staff Partner neill.staff@raffingers.co.uk
If there are any topics you would like to see discussed in the next edition, or if you would like to submit an article of your own, please get in touch with lauren. kelly@raffingers.co.uk. The Partners at Raffingers
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SPECIAL FEATURE
Budget 2018: What was in it for Recruitment?
With Brexit around the corner we did not know what to expect from last year’s Budget. Beforehand, it was expected that there would be incentives for businesses, particularly small businesses, to keep their confidence high pre-Brexit. However, this did not seem to materialise. Maybe, we will see another Budget in April (which we were told could be a possibility)? Back to this Budget though and what was announced. Well, the key points recruitment companies need to take note of are:
IR35 The government will be going ahead with IR35 in the private sector, but it will be delayed until April 2020 and will only apply to large and medium sized businesses. The rules are set to bring the private sector in line with the public sector and make the tax system fairer. The good news is that the government has listened to consultations and is giving businesses more time to prepare for the change.
agencies to take on apprentices.
Annual Investment Allowance From January 2019, for two years, the Annual Investment Allowance will increase from £200,000 to £1million, which the Chancellor hopes will encourage capital investment. Therefore, if your agency needs to invest in new equipment, such as computers or office equipment, next year is the time to do it.
VAT Despite concerns that the VAT registration threshold will be reduced, the Chancellor announced that it will in fact stay at its current rate until 2022. This is good news for smaller businesses who do not need to register for VAT until their turnover exceeds £85,000.
Entrepreneurs’ Relief Entrepreneurs’ relief will continue; however, the rules have been tightened.
The bad news is that the changes are not going away and will be implemented eventually. Therefore, companies do need to begin planning; training their team and getting their internal systems and processes in order.
From April 2019, the qualifying ownership period will be extended from 12 months to two years in the hope to encourage longer-term investment in businesses. Furthermore, as of this date, only sole traders who have owned part of a business for at least 24 months will be entitled to the relief when they sell.
HMRC has also confirmed that they will not be looking at a company’s previous IR35 declaration if they are now caught by the new legislation, which is some relief especially if the end user takes a blanket approach to the CEST test and taxes all companies.
Also, take note that, as of 29 October 2018, the relief will be targeted at shareholders with significant stakes in a business (at least 5%). Those that own less will not receive any relief. This was a hidden clause published in the Budget 2018 Policy Paper.
It will now be interesting to see what the government classes as a small business and who will be exempt from the burden as of April 2020.
Conclusion
Apprenticeship Levy The good news for small recruitment agencies is that the government has halved the fee businesses must pay when they take on an apprentice. SMEs now only have to contribute 5% as part of the government’s “£695million package to support apprenticeships”. We do not yet know when this change will commence and expect to hear further details early next year. It is hoped though that this change will encourage more recruitment
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The Budget brought no major surprises; however, there are a few points that recruitment agencies can take advantage of and should also be aware of. This was always going to be a ‘holder’ Budget, whilst Brexit takes place; it will now be interesting to see if there are any further updates this year.
Lee Manning 020 3146 1604 lee.manning@raffingers.co.uk
What to Watch out for in 2019 As we start another year, it is important to be aware of the key trends; what you need to be weary of and what you can capitalise on? Not surprisingly, Brexit is on most people’s lips and the uncertainty that leaving the EU will bring. Indeed, Brexit will bring more challenges than opportunities, most significantly with talent. You need to consider if Brexit will affect the talent not only within your business at a senior and junior level, but also within your client’s businesses. Although implications of Brexit are as of yet unknown, you should be reviewing the potential impact on your business and how you can mitigate your risk when the time comes. In addition to Brexit, some of the other challenges recruiters may face this year are as follows:
Candidate driven market It has become more and more difficult to recruit the right people. Previously, the candidate was the salesperson, but roles have reversed, and you will need to educate your clients to sell themselves in order to entice candidates to take the role on offer. Ensure that your clients are making the right impression to entice candidates who can assist in moving their business forward. Recruitment marketing is the new buzz word, ensure that you show the desire and interest in the candidate too to make them want to take the job on offer.
Inbound recruiting Inbound recruiting is becoming more and more popular. Again, businesses need to be proactive at enticing candidates to work for them, not only with promises of flexible working and benefits, but to compete your clients will need to be clear on their culture and values and how they can support candidates in their development. Candidates will be comparing businesses more than ever before, making it essential for your clients to differentiate and stand out – the best way to do this is through showcasing the culture of your clients. This also goes for you too. Candidates have more choice over the recruiters they use, what differentiates you and why should they work with you?
Employer branding
It has become more and more difficult to recruit the right people. becoming known as THE place to work is key to recruiting the people you want. It will take time, effort and investment to improve your brand; however, if you do so, you will reap the rewards in the long-term.
Candidate experience The interview process is scary enough for most candidates; therefore, ensure that you make the experience they have memorable (in the right way obviously). They should leave the interview with positive thoughts about both the interviewers and the business. You also need to be able to understand the skills of the candidate – can they do the role? Do they fit in to your clients’ culture? Create an interview process that is effective at revealing future leaders.
Social recruiting Using social media for recruitment is one of the key recruitment trends that will continue to be a growth area. LinkedIn, Facebook etc. are platforms that allow you to converse with potential candidates. Also look at groups formed on LinkedIn that relate to your sector, an easy way to discuss business with like-minded people.
HR analytics Companies are beginning to use technology more and more to measure what recruitment practices are successful for them. By using software, you can build trends over time to see where you should invest resources and identify what areas need to be improved. There will always be challenges in the recruitment sector and the coming year will bring more than normal. Make sure that your business is primed for the latest recruitment trends and that when a recruitment need arises, you are the choice that the candidate takes.
Adam Moody 020 3146 1601 adam.moody@raffingers.co.uk
As above, improving yours and your clients’ brand and
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Making Tax Digital Latest Making Tax Digital Delayed? HMRC has listened to stakeholders and their concern over whether some businesses will be able to comply with Making Tax Digital (MTD) by April 2019. HMRC has taken on board these concerns and delayed MTD until 1 October 2019 for VATregistered businesses with complex requirements. This gives these businesses more time to prepare. So, what does HMRC mean by VAT-registered businesses with more complex requirements?
MTD delayed until 1 October 2019 for VAT-registered businesses with complex requirements.
HMRC has confirmed that MTD will be deferred by 6 months for:
• Trusts • ‘Not-for-Profit’ organisations that are not set up as a company • VAT divisions and VAT groups • Public sector entities required to provide additional information on their VAT return • Local authorities • Public corporations • Traders based overseas • Those required to make payments on account and annual accounting scheme users HMRC expects that the deferral will only apply to around 3.5% of those affected from April 2019.
HMRC Contacting Xero Users HMRC has been contacting Xero users to remind them of their Making Tax Digital (MTD) obligations. If you are a Xero user, you should have received a letter from HMRC. The letter reminds businesses that from 1 April 2019, those VAT registered and with an annual taxable turnover above £85,000 will need to comply with MTD and the new VAT reporting requirements. For those that are affected, the letter asks you to speak to your accountant about signing up for MTD. For clients of Raffingers, where we file your VAT return, we have already set up the MTD account and are in the process of testing the platform. Our clients can therefore be rest
assured that at this time, no further action is required. This should be the same for most businesses, where their accountant files their VAT return. However, you should check with them first. For those that file their own VAT return, either through Xero or through the gateway, you will need to follow the instructions in the letter to sign up for MTD. Since 16 October, HMRC has been piloting its new VAT service and we are aware that Xero is currently in the process of beta testing its new VAT return for MTD connection too. This will be made available to Xero customers shortly.
For support with Making Tax Digital and making your business compliant, contact Lee Manning 020 3146 1604 | lee.manning@raffingers.co.uk
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Business Metrics for Success Are the figures you measure targeted and focused on achieving your business’ objectives or are they just easy to measure?
What to Measure It is easy nowadays to have up-to-date financial information; however, this is just the beginning for the businesses we work with. We take a business’ financial information and undertake financial modelling where we look at the cashflow forecast for the business over the next 12 months. This allows us to see if there are any potential problems and to ensure the business is on track to meet its short-term goals. Once we have a clear financial picture of a business as it is now, we begin to discuss with our clients what the important business metrics are, which determine their future success. At this point it is easy for us, as accountants, to blind clients with jargon and try and measure as many KPIs as possible, but this does not help the company when it is trying to improve and grow. Therefore, we keep the metrics we measure simple and concentrate on profitability, cashflow and business improvement. Whatever a business’ goals, it is necessary for us to work with them to set up the correct metrics for them to achieve these goals. I have discovered in most of my meetings that businesses measure the wrong numbers, which is often because these are easier to track. For example, I specialise in working with those in the recruitment sector and when I first meet with these
clients, I find that they are purely measuring turnover. This is great to show if sales are increasing or decreasing, but does not give any context. I recommend agencies to also measure the number of calls a consultant makes per day and many other non-financial KPIs to ensure the business is maximising the returns from the consultants. Often, if sales are decreasing, it is because there is a problem elsewhere. This also means that you can identify those consultants who are under or over performing. It needs to be remembered that business metrics looked at in isolation cannot give you a complete picture of your business’ performance. You need to look at other factors that influence that metric to see if improvements need to be made, identify if trends are occurring or if there is a problem. The secret is to start with a few simple, complimentary KPIs and every month increase the figures that you monitor. This will also give you a focus and show you where improvements need to be made or to measure the impact of changes on your business. There is now great software available that makes measuring metrics a whole lot easier. By guiding my clients along their journey and discussing the figures that they should be monitoring on a regular basis, I have been able to help businesses become more efficient.
Andrew Coney 020 3146 1602 andrew.coney@raffingers.co.uk
Keep the metrics you measure simple and concentrate on profitability, cashflow and business improvement.
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EMPLOYEE SPOTLIGHT
BLOG
Ingrid Beya Digital Marketing Executive In this slot we introduce you to a valued member of our team, allowing you to put a face to a name. This quarter we speak to our Digital Marketing Executive, Ingrid Beya. Name: Ingrid Beya Email: ingrid.beya@raffingers.co.uk Career: I obtained an International Business degree from the University of Hull in 2014. One of my favourite modules was marketing and I really enjoyed creating strategic plans and researching trends, hence why I decided to make it a career. After graduation I worked in sales and marketing for a security company in Canary Wharf, did some freelance work with SMEs, presented marketing workshops and eventually found my way to Raffingers in 2017. I would say my current role as a Digital Marketing Executive is fun, I get to be creative and I love the autonomy that I have over my work. To become better at my role, I’m studying a Digital Diploma in Professional Marketing with the CIM and hope to graduate in 2019. Interests: I am extremely passionate about my home country, D.R. Congo, and have fundraised for causes including education for children, healthcare and activists that have been wrongly imprisoned. In October I was also fortunate enough to be a speaker during ‘Congo week’ where I discussed how entrepreneurship can help with sustainability. I’m a firm believer in doing activities outside your comfort zone for personal growth; this has led me to climbing (and nearly falling down!) Ben Nevis, travelling abroad alone, participating in a pageant and public speaking. Partners Report: You will often find Ingrid gazing at one of the Partners on her computer screen, but fear not, she is simply editing Raffingers’ videos. Since starting at Raffingers Ingrid has taken on responsibility for raising the profile of Raffingers online and has done an incredible job - just check out our social media platforms. Ingrid is an integral part of the team at Raffingers and we are lucky to have her.
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Watch out for Fake Emails By Lee Manning Fake emails are still a major problem for business owners, bookkeepers and accountants. With so much awareness now on fake emails, I naively thought that people being duped by spam emails was a thing of the past. However, a recent article on Facebook highlighted the severity of the problem. The conversation started on Facebook… “OMG I have just paid £25k on behalf of a client and just found out it was a fictitious company….” It is common for accountants to make payments on behalf of their clients. In this instance the accountant in question received an email, which looked genuine, requesting payment. The scammers found the accountants’ email address from their website (which was not too difficult). The accountant made the payment and is obviously now mortified that it was a fake email. What concerned me the most about this story was that it was not an isolated incident. From reviewing the comments on the post, it appears that many other accountants and businesses have also been duped. Do not be a victim of fake emails It is increasingly important that you and your team are aware of the severity of spam emails and can easily spot them: Questions to ask: • Is it from a genuine email address? • Does it have many spelling and grammatical mistakes? • Does it ask for personal information? • Does the branding look legitimate? • Is the linked website or any hyperlinks legitimate? (often if you hover over the hyperlink the address that appears is different from the address that appears in the email) I also advise, especially regarding payments, if it is over a certain amount that you update your internal processes to get the payment authorised by two people.
Upcoming Events February 2019 Making Business Digital with Barclays 10am-12pm | 26 February 2019 | Barclays, Canary Wharf Join us for an informal business networking event and seminar on Making Tax Digital and Making Business Digital with Barclays on Tuesday 26 February. Digital is becoming more and more important and relevant in business. We are running this event, in partnership with Barclays, to give you an overview of the changes to TAX reporting starting in 2019 and to share how some businesses are using digital to grow and make efficiencies. Our Partner and Making Tax Digital expert, Lee Manning, will discuss Making tax Digital and preparing your business for these changes, alongside Barclays’ Digital Engagement Manager. At the event there will be plenty of opportunity to discuss and ask questions on either of the topics. We hope you can join us. Places are limited and are first come first served. To confirm your place, RSVP to Lauren Kelly at lauren.kelly@raffingers.co.uk.
Raffingers Foundation Masquerade Ball 2019 ‘Find a mask and wear it well...so your true identity none can tell’ We are excited to be hosting our Charity Ball for the third year running, which this year will be a Masquerade. We really hope you can join us. Enjoy a three-course meal, dancing entertainment in an elegant setting.
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Event Details • Date: Saturday 2 November 2019 • Venue: Woolston Manor, Abridge Road, Chigwell, Essex IG7 6BX • Time: 6:30pm - 11:30pm Tickets Tickets are £60 per person, or, tables of 10 are available for £580. If you are unable to make it but would like to support our Charity Ball, we have advertising opportunities in our brochure available from £100 and are also in need of raffle and auction prizes. To purchase tickets or support our Charity Ball contact lauren.kelly@raffingers.co.uk.
All money raised for Raffingers Foundation goes to:
1. Research projects conducted by Pancreatic Cancer Research Fund and Ovarian Cancer Action 2. Families affected by pancreatic or ovarian cancer and experiencing financial difficulties. Funds are available to help with costs, such as private counselling
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Tax Tips for Recruitment Agencies Tax can be a never-ending minefield. Businesses that do not regularly review their finances run the risk of being non-compliant and of paying too much tax. These tips are here to help you get more from your recruitment agency.
1. Pay yourself efficiently Since April 2018, the tax-free allowance for dividend income reduced to £2,000. To extract money tax efficiently you need to consider the right split of dividend, salary and benefit-in-kind (BiK). BUT, did you know that you can also consider paying interest on loans made by directors to the company? This can help you extract more money from your business.
2. Keep it in the family The personal allowance is currently £11,850. Have you considered utilising the personal allowances of family members who can carry out duties in your business?
3. Working from home? If you work from home, you can claim a tax deduction to cover part of your home running costs. HMRC allow (a modest) £4/week without asking for any evidence. You may be able to claim more, depending on the proportion of your home used for work purposes.
4. Plan ahead If you aspire to sell your agency, to minimise your tax bill and maximise the value, you must plan ahead. Buyers are interested in profit and will not pay more for ‘potential’, you need to show that you are already successful, have control of your costs and are low risk.
5. Can you benefit from investment through the EIS or SEIS?
product or process could be eligible for Research and Development Tax Credits (R&D). If you have developed a new process, such as an internal system, you may be eligible to claim the relief.
7. Do not be caught out by unnecessary fines Be organised and make sure you are aware of your legal requirements. For example, P11D rules and regulations are complex and the penalties applied for not submitting returns on time are hefty. If you are a director of a company and your company has provided benefits or expenses to either yourself or your employees, you are required by law to provide details of these benefits to HMRC via a P11D.
8. Make the most of tax-free Benefits in Kind There are many benefits that you can deliver to your employees that are not liable to tax and National Insurance, these include:
• • • • • •
Increased pension contributions Childcare vouchers Long term service awards Suggestion schemes Welfare counselling Annual staff parties (cost per employee must not exceed £150, including VAT) • Non-cash rewards that are below £50
9. Have the correct company structure Consider whether your agency would be better off as a sole trader, partnership, limited company or Limited Liability Partnership (LLP). There are pros and cons to each of these structures, all depend on your personal situation and your aspirations.
10. Capitalise on company pension schemes
If your company has been trading for less than two years, with less than £200,000 of assets you may be able to benefit from investment through the Seed Enterprise Investment Scheme (SEIS). Or, if your company is under ten years old, with less than £15million of assets the Enterprise Investment Scheme (EIS) may be for you. These schemes are ideal if you are struggling with your cash flow or require investment to get your business to the next stage.
Pension schemes are deductible for the company and you can select how much you pay into them to reduce the tax you are liable for. For example, for 2018/19 if your income exceeds £100,000, your personal allowance (£11,850) will be reduced by £1 for each £2 of income above £100,000. Therefore, you can opt to increase your pension contributions to reduce your salary and the tax you are liable for.
6. Are you eligible for R&D Tax Credits?
For advice on any of the tips discussed, contact Gary Inglis at gary.inglis@raffingers.co.uk.
Any business that invests, develops or innovates a
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Tax From the Trenches | Neill Staff
“Who needs an accountant?” When dealing with HMRC, particularly in enquiry cases, it is an absolute must to have a tax accountant in your corner. The background to the case I wish to discuss started five years ago when HMRC showed an interest in one of our clients. The company in question had a workforce of around 1,000 people, the majority of which were engaged on a contract of services and charged their costs through a limited service company. At the point when we acquired the client, this practice had been in place for many years and, unfortunately, many of the contractors had been less than diligent in filing company accounts and self-assessment tax returns. HMRC believed there to be significant tax leakage and a major status issue and commenced an enquiry. The case was eventually settled for around £100,000 with an agreement that most of the contractors would be dealt with under PAYE going forward. As part of their fact finding, HMRC registered some of the individual contractors and their companies for investigation. As well as acting for our client, we were also appointed to act for the contractors that had enquiries. Unfortunately, the accountant who initially prepared a lot of the contractor’s service company accounts had not done a particularly good job, so in addition to asking the usual status questions, HMRC also asked about some of the expenses that had been claimed. When the main company case was settled HMRC started looking to reactivate the smaller contractor enquiry cases. Our meeting with HMRC All was progressing nicely as we discussed the merits of some of the expenses claimed in the accounts when I raised the subject of earlier years. I suggested that the client would be amenable to a one-year deal. To assess over four years and up to six years HMRC must establish that a person was careless. Anything over six years and up to 20 years they must establish a deliberate behaviour. In my view, the client was not guilty of careless behaviour. The circumstances of this case are that our client went to an accountant when he first started working for our client in 2007. The accountant advised him to set up a limited company and told him he would prepare the company accounts and personal tax return. Therefore, our client put his faith in the accountant to prepare the accounts and tax returns each year. He asked the accountant what he needed to keep in terms of receipts and invoices and was told he needn’t worry. Accounts were duly prepared
each year with, what must be said, questionable expenses. However, our client had complete faith in the accountant and signed the accounts. HMRC will always make the point that reliance on the accountant is not a reasonable excuse, but these arguments are generally connected to the quite separate argument as to whether a penalty should be charged. The company accounts that are subject to enquiry are for the year to June 2014. To raise an assessment for the year to June 2013, HMRC would need to show the client had been careless. For any earlier years they would need to establish a deliberate behaviour. The Inspectors listened to my explanation and then promptly told me they considered this was a case of deliberate behaviour and they intended assessing all the way back to 2007! At this point I advised the Inspectors that there would be no question of us agreeing to anything like seven years and that we would appeal the assessments and ask for the Inspector’s decision to be independently reviewed. I also doubted that the reviewing officer at HMRC Solicitors Office would agree that this was a deliberate behaviour. The issue of behaviour and earlier year assessments was discussed at length over several hours and eventually the Inspector conceded it was unlikely they would succeed at tribunal with assessments for the earlier years. It did seem to me that they had come to the meeting fully expecting to leave with an agreement for seven years tax interest and penalties and they looked a little deflated. Why you need a tax accountant… It strikes me that if an unrepresented taxpayer were in the meeting, HMRC would have walked all over them and they would have left the meeting facing assessments that were unwarranted and unjustified. Some tax is payable without a doubt, and HMRC are fully entitled to seek a reasonable recovery for the year of enquiry, but it is the job of the tax accountant to make sure that the tax laws are applied fairly and even-handedly when it comes to assessments and penalties. I doubt that an unrepresented taxpayer would have been able to detract the Inspectors from their blinkered view.
By, Neill Staff 020 3146 1605 neill.staff@raffingers.co.uk
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Ten Traits of Successful Recruitment Agencies Every recruitment agency is different, which makes it impossible to apply a ‘one size fits all’ model for success. However, there are certain similarities that the most successful agencies, no matter what their size, possess.
The most successful agencies we work with have a clear ‘reason for why they exist’.
1. Clear Vision and Strategy Probably the most successful agencies we work with have a clear ‘reason for why they exist’. This does not have to be a complicated statement, but writing down your vision gives the whole firm a focus, gets everyone on the same page and working towards the same goal. So, what is your vision? Is it to be a trusted recruitment supplier in a niche market? Is it to be the happiest place to work in recruitment? Is it to deliver the best customer service to clients or to always deliver high calibre candidates? Having a clear vision that your whole team is aware of will help you focus. New opportunities may present themselves, but with a clear vision you will not be distracted and will achieve your goals much quicker.
2. Clear Future Plans Ten-year and three-year plans are essential. What do you want to achieve? Is it to increase turnover, hire more people, be a leader in your market? Ensure you have an ambitious, but realistic ten-year plan that the whole team is aware of. Having ambition helps to instil enthusiasm in the team and means everyone is on the journey together. Once you have a ten-year plan, confirm what you need to do in the next three years to get you on the right path.
3. Effective Management Management teams that are consistent and know and ‘live’ the company’s core values and vision are integral to business success. These managers will lead the team and help foster a culture that attracts and retains employees. Remember, people leave managers, not businesses. The successful business owners and directors we work with also know their strengths and weaknesses.
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Many are not experts in marketing or technology and so they surround themselves with people who are. This also means they are productive with their time and utilising everyone’s strengths.
4. Recruitment and Retention of Employees Hiring the right employees with the right skills is crucial for long-term growth. It is advisable to take the attitude, ‘hire slow, fire fast’. In reality, this is not always feasible but hiring slow and taking the time to understand the skills and ‘values’ of potential employees is important for long-term success. This is where your core values are so important, it is possible to influence someone’s beliefs about your company, but you cannot change someone’s values. Therefore, make sure you are hiring the people with the right attitude and drive to take your business forward. For those ‘star’ recruiters you also need incentives and perks in place to keep them. What stops your employees going to another recruitment firm? Consider Enterprise Management Incentives (EMIs) to get more of your team to commit to the agency, or simply speak to your team and listen to what drives them, this can help inform your benefit strategy.
5. Technology Is your technology fit for purpose? Not only is out-dated technology frustrating to work with, but it can hold you back. The most successful agencies have a budget for technology and take time every 12 to 18 months to review and consider improvements. Investing in the right technology can help you save time, improve communication with candidates and clients and be more productive. Maybe introduce a suggestion box in your office and encourage your team to post their recommendations.
6. Streamlined Processes Regularly reviewing and improving your processes is recommended to run an efficient agency. Try putting yourself in your candidates or clients’ shoes and review their journey with your business – what are the touch points, is it a ‘nice’ experience? As agencies grow, we find many implement ‘quick fixes’ to problems, which in the long-run create complicated and time-consuming processes. When in doubt, abide by the rule ‘keep it simple’ and review your processes to ensure they are being carried out in the most productive way.
7. Marketing Your vision is so important because not only will it focus your team, but also your marketing. Having a consistent and clear message will help you to target your marketing communications and grow your brand. Furthermore, the agencies that experience the quickest growth are those that recognise marketing is not a function of one person or team, but the whole team. Those that encourage their team to be active on social media, such as LinkedIn, and position themselves as leaders in their field (through blogs, articles, videos etc) are more likely to gain traction and grow.
8. Know your Clients Understanding your clients and your target market means you can deliver not only the most relevant candidates, but also a great client experience. Make sure your recruiters are asking key questions to your
clients and challenging them, truly understanding what your client’s requirements are will allow you to approach them with quality candidates – not someone too experienced that may get bored, or to inexperienced who would not work out long-term.
9. Financial Literacy You do not need to be an accounting expert to run a successful agency, but you do need to be able to interpret the figures and understand when the time is right to grow. With cloud accounting it is getting easier to produce management accounts and dashboards to give you a snapshot of your key metrics and how your business is performing now and in the future. Just make sure that these are reviewed monthly so that trends, opportunities and issues are spotted immediately. As part of this process you also need to have control of your costs and cash flow. Make sure, at least annually, you are reviewing your overheads – negotiating better deals where possible and cutting unnecessary expenses.
10. Become experts To achieve true success in the competitive recruitment market, our most successful agencies are those that have become the ‘go-to’ agency for their sector or field. This has been achieved by keeping up-to-date with changes in the market, encouraging the team to be thought leaders online and always investing in training and courses to keep themselves and their team ahead. Agencies with a strong brand are those that have specialised and become renowned for a niche. These are some great traits that can help create consistency and sustainable growth in your agency.
It is possible to influence someone’s beliefs about your company, but you cannot change someone’s values.
Barry Soraff 020 3146 1603 barry.soraff@raffingers.co.uk
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Are Back-Office Demands the Biggest Threat to Your Start-Up Business? If you are relatively new to the recruitment industry, the Small Business Association statistic that 50% of companies fail within their first five years will no doubt weigh heavily on your mind. But all too often, the threat of failure comes not from external factors, but from critical problems within the backoffice of your recruitment agency. When back-office gets in the way of business development Start-ups need to run a lean operation to keep overheads to a minimum, and this can make it hard to balance business development activities with your backoffice operation. It is particularly challenging for new recruitment businesses, because our industry is very admin-heavy. To secure clients you need contractors, but this workforce comes with a swathe of paperwork and payment chasing – all of which eats into your time. For many new recruitment agencies, the demands of back-office can be fatal. The process of manually checking timesheets and expense claims, making sure they are consistently formatted, and pairing them with invoices can take many, many hours every single week. And that’s before you’ve wasted time chasing up missing documents, or nudging clients that haven’t settled their invoice by the requested deadline. Taking tech from big recruitment agencies, and giving it to start-ups Traditionally, start-up agencies have had little solution to this back-office problem – other than growing your company until you can afford additional members of staff to share the burden. Technologies that standardise and automate operational processes have been complex and expensive, meaning they are only affordable to major international recruitment companies. However, the recruitment tech industry is realising that growing agencies are struggling with the same issues as big businesses and creating versions of their software that are accessible to start-ups.
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50% of companies fail within their first five years. *SMALL BUSINESS ASSOCIATION
These tools offer the same functionality as their sister solutions, but at a fraction of their price tag. Not only that, they are set-up to be used by entrepreneurs with little technical expertise, with support systems in place should you require training or assistance. Focus on business development – and let the backoffice take care of itself With new back-office management technologies arriving on the start-up market, new recruitment agencies now have a unique opportunity to make timesheets less time consuming, and payments less painful. By automating these all-consuming but essential admin tasks, your business will have more time to focus on value-add activities – which will help your business to grow and thrive, where others without the support of technology may flounder. By Guest Contributor Nick Woodward Nick Woodward is Founder and Executive Chairman at recruitment tech specialist ETZ, which recently launched Startup 20/20, back-office software for startup recruitment agencies. For further advice call him on 0800 311 2266 or email ETZ at hello@etzpayments.com.
Recruitment Trends 2017/18 Recruiters and associated HR services placed over 1.1 million people into permanent jobs in 2017/18, and were responsible for placing more than 1 million agency workers on any given day, according to new data published by the Recruitment & Employment Confederation (REC). The REC’s annual Recruitment Industry Trends report for 2017/18 showed that the total industry turnover from permanent and temporary/contract placements, and other HR services, reached £35.7billion, an increase of 11% on last year. £30.85billion was generated through temporary/contract placement activity, and approximately £4.84billion through permanent placements. The number of businesses operating in the UK recruitment industry grew by almost 10% in the year to March 2018, totalling 30,430, and the industry employed approximately 115,000 people – enough to fill all the seats and the pitch at Wembley Stadium.
Other figures from the 2017/18 report include: • Almost two thirds (64%) of temporary assignments were for 12+ weeks, while one in five (20%) were for 6+ months (compared to 61% and 20% respectively in 2016/17) • 85% of contract placements were for 12+ weeks, and 45% of contract workers were on assignment for 6+ months (compared to 80% and 44% respectively in 2016/17) • The average value of permanent placements from the wider recruitment industry was £4,238 (up by 6.4% on the average in 2016/17) • The average annualised turnover of each temporary/contract worker on assignment was £34,976 (up 20% on the average in 2016/17) Recruitment Industry Trends 2017/18 also includes the REC’s forecast for the next three years, which remains positive despite the unknowns in the political landscape. The REC forecasts that the UK’s recruitment
The UK recruitment industry grew by 11% to £35.7billion in 2017/18 despite ongoing Brexit uncertainty. industry will grow by 4% in 2018/19, 4.5% in 2019/20 and 5% in 2020/21. Commenting on the report, REC chief executive Neil Carberry said: “It has been an extraordinary year for recruitment and recruiters. Tight labour markets and quickly shifting skills needs have driven the growth of the industry – but only because recruiters have adapted swiftly to changing times. We see this increased value for clients reflected in our monthly survey feedback – recruitment is a key part of the UK’s world-leading professional services sector. We should celebrate an industry which boosts the economy and transforms candidates’ lives every single day. “The path ahead is uncertain – Brexit, immigration reform, tax changes, technology. But this report shows that recruiters can look at that uncertainty and see the opportunities. Whatever the coming months and years bring, recruiters will continue to use their skills and knowledge to boost the UK’s labour market and find people their perfect job.” Simon Adcock, Head of Professional Services for HSBC UK, which supports recruitment businesses of all types and sizes, added: “Despite current uncertainty, the recruitment industry’s focus on quality of service and its enthusiasm for technological innovation has seen it continue to flourish, boosting the wider UK economy. In a world where the way we work is becoming ever more flexible, the role of the recruiter in connecting people to opportunities and employers to people has never been as important. That’s why we remain firmly committed to firms in this vital part of the professional services sector.”
Raffingers Recruitment Sector Helpline Get rapid answers to any tax and business-related queries you have through our recruitment sector helpline. We have launched a free helpline for recruitment agencies – recruitmenthelp@raffingers.co.uk. Whether you have a question on your tax return, are looking for funding options or want advice on the best IT software, our team is here to support you.
We specialise in the recruitment sector and have a mission to help you fulfil your ambitions. Please note, this is purely an advice helpline. We will point you in the right direction and guide you as much as we can. If your query requires additional work, we will provide you with a proposal and quote accordingly. Contact us at: recruitmenthelp@raffingers.co.uk.
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