Recruitment Matters- November 2014 by Redactive Media Group

Recruitment Matters Issue 30 November 2014

Trade Association of the Year

What’s inside The Intelligence 2-3 and REC Talk What does the latest Recruitment Industry Trends survey show about permanent recruitment?

season 4-5Party opens What do the big three parties have in mind for the jobs market?

Recruiters have key role in new youth scheme The Recruitment & Employment Confederation is in a unique position to help build the nation’s young workforce. That is according to the head of the Education and Employers Taskforce, who launched a plan in October to bolster young people’s job awareness. The new Primary Futures initiative will give schools access to a network of volunteers from a number of backgrounds to promote careers and apprenticeships. They will speak to primary schools about the importance of linking school work with building a career.

Director of the Education and Employers Taskforce Nick Chambers says recruiters are important for fostering relationships between schools and businesses. “REC members are very well-placed to help given their wide range of knowledge of jobs and sectors,” he said. Director of policy and professional services Tom Hadley says the REC’s Youth Employment Charter will help to direct recruiters and businesses to the new scheme. “The charter plays a key role in improving awareness and perceptions of our industry as a whole,” he said.

The plan has also received backing from the government. Secretary of state for education Nicky Morgan said: “We want schools to connect with industry and the business community in order to inspire children to consider the vast array of different opportunities available to them. “These visits will help to show children what they could achieve and that no occupation should be closed to them.” Recruiters who are interested in learning more about the Primary Futures initiative can visit www.rec. uk.com/youth

6Legal lowdown

Should you buy clients presents this holiday season?

Institute of 7 Recruitment Professionals Becky Lawrence-Webb from Covent Garden Bureau and Michael Bennett from Rethink Group

8 Start Up course

Why the RBA’s Start Up course can help to launch your business

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06/11/2014 14:34

Leading the Industry

the intelligence Permanent growth By Nina Mguni, senior researcher at the REC

Fig 1: Recruiter revenue growth ■ Upper quartile ■ Median ■ Lower quartile

40 30 20

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-10 -20 Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul 12 13 14

Fig 2: RIB recruiter annualised turnover per employee 550 ■ Upper quartile ■ Median ■ Lower quartile 500 450 400 350 £,000

45% of recruiters stated that the availability of permanent candidates was worse than the previous month. Clearly supply side factors are at work, which will impact on the volume of placements in some sectors. One response to supply side shortages is an increase in starting salaries. A recent survey showed that higher earners are not only more likely to have a pay review, when they did have a review they are more likely to have a pay increase. This suggests that businesses are willing to pay more to not only entice a potential candidate to join an organisation, but also to retain a valued employee. This shift in employer willingness to be more generous on pay is evident in the average permanent placement value, which has increased by 5.7%. Data in Recruitment Industry Trends suggests that margins haven’t changed sufficiently to account for the increase in placement value which suggests improved starting salaries are filtering through to permanent placement values. Variation in hiring across sectors is also at work. Recruitment Industry Trends shows that accounting/financial and computing/IT have seen the largest increase in number of placements since 2007/08. Other sectors, such as drivers and construction, have seen annual volumes of permanent placements fall over the same period.

We recently published our annual report on the state of the recruitment industry, the Recruitment Industry Trends Survey 2013/14. The data shows there is reason to be confident. The value of the industry now stands at £28.7bn, the highest on record, and growth in revenue from permanent placements is comparable to that of growth in revenue from temporary/contract placements. In the previous financial year (2012/13), revenue from permanent placements grew by 2.2%. In 2013/14, the growth rate was 8.7% and revenue stood at £2.68bn in total. Recruiters helped more than 634,000 people secure a new permanent job in 2013/14 with secretarial and clerical, accounting and financial, and computing and IT the three sectors seeing the highest number of permanent placements. Both supply and demand factors are at work. One of the main concerns identified by recruiters working in permanent placements was sourcing sufficiently skilled candidates. In the October edition of the REC/ KPMG/Markit ‘Report on Jobs’,

300 250 200 150 100 Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul 12 13 14

Recruiters are growing faster The great news this month is that the strong revenue growth that we have talked about for several months continued to accelerate in August. Recruiter revenue growth has been steadily accelerating since October last year, with the median recruiter revenue growth standing at nearly 20% in August. The top quartile of recruiters have done even better with stunning revenue growth of over 35%. On the other hand, more than a quarter of recruiters are still seeing falling revenues, with the lower quartile revenue growth being down more than 5% on a year ago, demonstrating the importance of understanding your key performance indicators that drive profitable growth. Growth is becoming more evenly based, with permanent and temporary revenues now growing at similar rates. Fig 2 shows that accelerating revenues mean recruiters are having to take on additional employees, so that revenue per employee was slightly down in August 2014, by around 1%. Those recruiters with the lowest revenue per employee saw much steeper falls, with revenue per employee down 15% on a year ago. Although this may be due to recruiters taking on new staff to cope with increasing demand and it taking a while for those new employees to become fully effective. Despite the strongly accelerating top-line revenue growth we are concerned that this fall in employee productivity is causing recruiter profitability to fail to benefit from strong revenue growth, with median net profit margins actually falling in August to their lowest value in more than two years, barring months affected by the Christmas break. • Chris Ansell is Chief Financial Officer at Recruitment Industry Benchmarking (RIB). The RIB Index provides bespoke confidential reports on industry trends. See www.ribindex.com; info@ribindex. com: 020 8544 9807. The RIB is a strategic partner of the REC.

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Leading the Industry

The UK’s industrial policy and skills strategy must find ways to move forward together, says REC director Tom Hadley

Skills, thrills & industrial strategy There was a flurry of pronouncements at the political party conferences this autumn about ramping up the UK’s industrial strategy. Subsequent meetings have confirmed two important truths: firstly, that successful industrial policy is indelibly linked to an effective skills strategy; and secondly, that the debate on both skills and industrial strategy presents real opportunities for recruiters On a soggy Monday morning last month, we took part in the CBI’s Industrial Strategy Conference with big hitters from all the major parties. Vince Cable talked up success stories like the automotive industry, BIS minister Matthew Hancock shared his vision of ‘making the UK the best place in the world to start and grow a business’ and shadow business secretary Chuka Umunna flagged the ‘need to improve the performance of Local Enterprise Partnerships’ to deliver tangible progress on the ground. What does all this mean for recruiters? The focus on industrial strategy will drive growth and hiring needs in specific sectors. This is already happening – from oil & gas in Aberdeen, to life sciences in Cambridge and aerospace in Portsmouth. The work of the REC’s sector groups will increasingly focus on identifying opportunities linked to this growth agenda. Which brings us to a related hot topic – skills. CBI deputy director general Katja Hall recently issued a call to arms on ‘getting to grips with the skills crisis’ and there is now broad recognition that this is a major barrier to growth. In the short term, part of the solution is to encourage employers to review hiring procedures and criteria. This is an aim of our Good Recruitment Campaign and it was encouraging to hear the shadow business minister recognise the importance of ‘shaking up’ hiring procedures at the CBI event. And long term? Our plan is to inform skills policy and use our Youth Employment Charter to feed into new initiatives like Primary Futures from the Education and Employers Taskforce. As well as the indefatigable ‘celebrities’ at the forefront of the youth employment agenda (Robert Peston, Michael Grade, Miriam González Durántez et al), the launch featured a parade of school children in job-related outfits – judges, doctors, engineers, chefs and even an astronaut. It was like a cat-walk of REC sector groups and a visual demonstration of how important sector expertise will be as we do our bit to help new generations of candidates. We are in a great position to inform and inspire the future workforce – including budding astronauts. • For more, visit www.rec.uk.com/goodrecruitment • You can follow Tom on Twitter @hadleyscomment

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The View The candidate experience is getting worse, despite all the data showing that employers spend a huge amount of time creating their brands, streamlining recruitment processes and using technology. Why does this matter? • Recent data from the CEB showed that those successful candidates who have a good experience outperform those that have a poor time getting a new role. • Employees who had a positive recruitment experience were 38% more likely to stay with that employer than those that didn’t. • Candidates share their poor experiences with others. An amazing 83% tell friends and family, while 64% take to social media to spread the word. It’s important we seek to get the whole experience right. However, only 5% of candidates would say they had an excellent experience, while a whopping 48% said they had a poor or very poor time when seeking a new role. The question for recruiters is are we part of the answer or are we in fact part of the problem? The two areas where businesses seem to keep getting it wrong is keeping candidates informed during the process, and whether candidates feel they are treated as individuals during the journey. It’s clear that recruiters can add huge value to the recruitment experience, which I think can be boiled down to the five essentials of great candidate management: 1) Be explicit to potential candidates about the whole recruitment process if we decide to put them forward for a role. 2) Screen out those that have no realistic chance of getting the the role so that the candidate does not invest a significant amount of time writing a CV and preparing for the selection process. 3) The agency should take responsibility for flagging up risks to the client if their line mangers are not delivering against predetermined standards and timelines in relation to the candidate experience. 4) The recruiter’s main role once the process is underway is to keep all candidates informed of progress throughout. 5) Finally, ask the candidates what they thought of the recruitment process! It sounds straightforward but only 11% of employers currently ask for candidate feedback. • You can follow Kevin on Twitter @kevingreenrec

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The Big Talking Point

Party season has just begun The party conference season gave recruiters much to think about.. Michael Oliver looks back.

he last party conferences ahead of next year’s General Election have given the recruitment industry much to think about. The three main parties have laid out plans to build upon improving job numbers, buoyed by unemployment falling below two million for the ﬁrst time since 2008. We analysed the debates from all three conferences and examined what the Tories, Labour and Lib Dems have in store for the jobs market.

Conservatives Jobs were at the forefront of Tory thinking, as the Prime Minister laid out his vision for the next ﬁve years. David Cameron was keen to celebrate the growing jobs market, saying it wouldn’t have been possible with Labour holding power. He promised a new Tory government would push through job reform, which he says will give UK workers more choice. He singled out zero-hour contracts for attention, assuring workers on such contracts will be able to pursue other work without being bound by any kind of exclusivity clause.

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But the spectre of immigration was also brought into focus. The PM promised a Tory government would look at EU migration levels, with some calling for caps or a pointsbased system. But the Recruitment & Employment Confederation (REC) was disappointed by suggestions from the PM that agencies were targeting foreign workers at the expense of home-grown talent. REC director of policy Tom Hadley challenged the assertion. “The Equality Act already prevents discriminatory recruitment practices against British workers, a fact we continue to emphasise in our conversations with politicians of all parties,” he said. And the beneﬁt of a skilled migrant workforce wasn’t lost on attendees. Tory policy advisors and MP David Willetts spoke at the CIPD’s fringe event alongside the main conference hall, where the positive impact migrants have made to the UK economy was celebrated. But they recognised more must be done to improve the skills of UK workers. The Conservatives were concerned

about the number of young people on beneﬁts, and promised to institute a ‘learn or earn’ policy. People aged between 16 and 18 would either take up jobs or enter into a training programme to continue receiving government allowances. While this spelled good news for trades keen to take on more apprentices, there were warnings it could backﬁre. “If this age bracket is forced into training or apprenticeships, they may do so under duress and not be 100% committed,” said Institute of the Motor Industry chief executive Steve Nash. “It could deter employers who take on apprentices who do not have their heart in the vocation.”

Labour Labour leader Ed Miliband singled out six major points in his keynote address, four of which are of interest to the recruitment industry. The Scottish independence vote has everyone talking about devolution, and Labour are keen to pursue that with haste. Miliband said it was in the country’s best interest for local areas to have more control over budgets and services. The party is promising to retain Local Enterprise Partnerships should it win a majority. This gives recruiters a great opportunity to build relationships within those local circles. “They are likely to have a greater say over local investment budgets for skills training, business development and

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When companies employ staff on zerohours contracts and then stop them from getting work elsewhere, that’s not a free market – it is a fixed market. In a Britain that everyone is proud to call home, people are employed. They are not used. David Cameron

We mustn’t allow coalition to be caricatured either. This government has provided the country with the political stability without which the economic recovery and hundreds of thousands of new jobs would never have materialised.

We will give employers the money for apprenticeships for the first time and we will say to every big company that wants a government contract: you must provide apprenticeships to our young people. Ed Miliband

Nick Clegg

infrastructure projects,” said Tom Hadley. Labour is also promising to reform the department of UK Trade & Investment, which it says will make it easier for UK businesses to invest overseas. Unsurprisingly, the party is eager to keep the UK in the EU, recognising what it calls strong economic and social ties. The party pledged to create 36,000 new NHS jobs and crackdown on tax avoidance from umbrella companies. And there was interest in Labour’s promise to increase the National Minimum Wage to £8 by 2020 and to end what Ed Miliband called “exploitative zero-hour contracts”. He singled out a “growing army of self-employed” who would be assured equal rights under a Labour government. Shadow secretary for work and pensions Rachel Reeves says it would mean a simpler beneﬁts system and better access to pensions. The REC is eager to see recruiters play a

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role in shaping those policies. “Recruiters are not only going to be a great source of information for policy-makers in explaining how selfemployment works now and what needs to change, they are also going to be important conduits for explaining any new employment rights to their candidates and clients,” said Tom Hadley.

Liberal Democrats: Business secretary Vince Cable announced a government review of employment status, hard on the heels of the recent zero-hours contract review. The Lib Dems are concerned about the lack of clarity regarding workers’ rights in some freelance and independent jobs. Employment relations minister Jo Swinson says any review must avoid any kneejerk reactions that will discourage employers from taking on freelance and temporary workers.

The Lib Dems were also looking to bolster the UK’s fledging teacher numbers. Education minister David Laws called teacher recruitment one of his five main priorities, and wants to see the launch of a Royal College of Teachers to professionalise the industry. One point the party agreed with both Labour and the Conservatives on was the need to fix the UK’s careers service. Cable has pledged to increase the minimum wage for apprentices from £2.73 to £3.76 an hour. REC head of policy Kate Shoesmith says it’s important recruiters help businesses and educators help young people find as many viable options as possible. Once the talk had settled over all three conferences, one thing remained clear: 2015 will be an election fought on the jobs front. All three parties will want to be the voice of the worker, and recruiters will be vital in helping those voices be heard.

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06/11/2014 16:07

Legal Update

Christmas conundrums By Lewina Farrell, solicitor and head of professional services, Recruitment & Employment Confederation

Christmas is just around the corner so it is worthwhile reminding ourselves that whilst it is a time to be joyful and have fun we still, as employers and employees, have a responsibility to our colleagues and our businesses. Issues which may arise include behaviour at or following the staff Christmas party, or providing gifts to clients. Let’s take each one in turn: The staff holiday party. We wait all year for it – the free food and drink, the chance to dress up and maybe even misbehave a little. Still, there are some key things we need to remember. 1. The party must be open to all staff – don’t assume someone won’t come because “they never go out” or don’t drink. Remember to ask staff who work remotely, part-time or who have been absent eg. on maternity leave. 2. Provide a range of food and drink, including non-alcoholic, to cater for all. Consider whether to limit the free bar so as not to encourage excessive drinking. 3. The employer is ‘vicariously’ liable for the acts of its employees – so remind staff that while you want them to enjoy themselves, the contract of employment remains in place. Remind them about behaviour – what is and is not acceptable (relevant policies include anti-bullying and disciplinary). Remind them about your social media policy and if or how you consider it appropriate to post pictures online of themselves at or after the party. Remember though that there is a balancing act between protecting the business’s reputation and the employees’ right to a private life. 4. Remind staff that if the day after the party is a normal working

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day you expect them in and on time, unless they have booked the day off as annual leave, and that you will be monitoring unauthorised absences carefully. Buying presents for clients. Businesses can of course continue to offer hospitality to or buy presents for clients, provided these are reasonable, proportionate and offered in good faith ie. provided they do not fall foul of the Bribery Act 2010. ‘Reasonable’ and ‘proportionate’ are not legally defined but we are talking about gifts or hospitality of a financial level that could not be considered a bribe eg. a hamper versus a Ferrari! Take particular care with public sector clients. Public sector contracts will usually have a clause prohibiting any sort of gifts or hospitality and if your business is found to have offered a gift or hospitality (however innocently) to a public sector client it may find itself banned from further procurement exercises. There are four criminal offences under the Bribery Act including: bribing another person, receiving a bribe or failing to prevent bribery by a relevant commercial organisation. The penalties for committing any of these offences can be imposed on the company or any of the company directors. It is essential therefore that all staff in the business understand the business’s line on gifts and hospitality and the repercussions for failing to comply with company policy. The REC covers each of these issues in more detail in its legal bulletin and has produced a range of policies on topics including anti-bribery for its members to use. These are all available here: www.rec.uk.com/legal-resources

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Inspiration

Behind the scenes at the Institute of Recruitment Professionals

Top Diploma student Becky Lawrence-Webb is a permanent recruiter at Covent Garden Bureau in London and was the top student in September’s Diploma of Recruitment Management class Congratulations on being the top student – how has your year been? My year has been really, really busy. It’s been challenging, but very good. Tell us about the sectors you cover We recruit for everything from policy to communications to marketing and research. No two days are ever the same. How did you find the diploma? I really enjoyed the diploma. It was a massive challenge because it covered a lot of topics. But it was really good to see a framework of things I do on a daily basis and understand the full scope of my job. I found the webinars comprehensive and they really helped to back up the learning. But I found the legal modules really engaging, because that’s part of the industry I haven’t had much experience in dealing with. What is the most interesting part of recruitment? The people – it’s a people-orientated role and you get to meet a really interesting mix. Covent Garden has an open door policy, so I interview people every day and talk to clients every day. What’s clear is that there’s no such thing as a normal day, and I love that. What is the biggest challenge? The market is improving. I’ve noticed a real upturn in the past six months but there are fewer applications coming through for roles. We have to look broadly and interview the right people. In recruitment, you have to be aware of these changes and utilise everything, especially tools like LinkedIn. We have to use best practice even when we are incredibly busy. How do you find using online tools and databases like LinkedIn? They are an incredibly useful way of ﬁnding contacts but it doesn’t take away from providing services to clients. If you’re providing a tailored all-round service, people will come to you. People tend to buy from people, especially those they get along with. There’s no substitute for building a nice working relationship with others. What would you say to your younger self on her first day? I would say “Don’t worry too much about the sales label”. You’ve got to make sure everybody – clients and candidates – are getting what they want. Bashing out 100 cold calls a day won’t achieve that.

What I know Michael Bennett is the director of Rethink Group. He explains what steps they’ve taken to attract talented recruiters and keep them on their books You must attract quality people to work with. We like to think of things from a holistic point of view. We want to attract people to come and work for us – good quality people. We want them to see what good recruitment is. We want people to believe that, see that and feel that. We provide the best environment for someone who wants to come and work in recruitment. And we also want clients and investors to feel that as well. Don’t underestimate the importance of education. We are a pro-recruitment organisation. We know what some of our clients think and want to commit ourselves to quality. Anyone who wants to work for us will know that we are a professional recruitment organisation which wants to move the industry forward. Most importantly, it’s about attracting people to work with us, and demonstrating we are driving to professionalise our sector. I want people to demonstrate their commitment to the industry and the best way to do this is by getting qualified. The IRP’s qualifications are a great way of achieving that because they cover all the bases. People are always a great investment. We want our recruiters to want to come to the office. So we measure our commitment to them by making Rethink one of the best places to work. We always enter ourselves in the IRP Awards for Best Place to Work. I want to measure that kind of quality – and I want to encourage my staff to put themselves forward as nominees too. By doing this, we’re letting them know we value them and we want their achievements to be celebrated.

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

Recruiting startups get ahead with the RBA Geraldine Gobbi, founder of Evolution Law, shares her experiences of Start Up Are you thinking of starting your own recruitment business? Recruitment Matters talked to Evolution Law’s Geraldine Gobbi, who recently ﬁnished the Recruitment Business Academy’s Start Up course, about her experience of the training. How did you find the course? I was very impressed. Over three days, we managed to pack in a staggering amount of practical material, covering all the aspects of starting up a business. From the ﬁrst day, we were taught how to build sales, given tips on how to best market and develop our businesses and build strong client relationships. By the end we felt that we had gained a good understanding of the legal framework, without our brains being completely scrambled. The class was small and very much tailored to our particular businesses. My classmates offered helpful suggestions,

advice and comments along the way which created a lovely, supportive environment.

of law into one day. It could have ended up being very dry but she managed to make it clear, informative and relevant.

What did you get out of it? When I left, I felt that I had been given the answers, a sense of clarity and a great structure on which to continue building my business. Membership of the REC has also given me access to a large number of contract templates, essential to creating the legal relationship with new clients and a legal helpline staffed with cheerful and knowledgeable lawyers.

How has it helped you with setting up your business, and how is that progressing? The course has helped me massively in setting up my business. I always had a clear idea of what I was trying to do, however the REC Start Up course taught me about all the practical steps I need to take in order to make it happen.

How did you find the trainer? I was lucky enough to have not one, but two, great trainers: Jeff Brooks and Lewina Farrell. Jeff has a lifetime of experience in the industry and was happy to share this with us. Lewina was also very experienced and somehow managed to condense a huge amount

Would you recommend the course to others? Deﬁnitely. I already have! If you’re thinking about launching a recruitment business, sign up for one of the RBA’s upcoming Start Up courses at www.rec.uk.com/training or contact our training team on 020 7009 2100

Download the latest REC research The 2013/14 Recruitment Industry Trends Survey is a comprehensive look at the state of the recruitment market in the UK. This year’s survey covers the ﬁnancial year to the end of March 2014, a time when the industry saw important gains in turnover and placements, as well as an increase in the number of people pursuing recruitment careers. The industry reached £28.7bn in

turnover for the year, a rise of 8.2%. A record £26bn (91%) of the market comes from temporary and contract business – an 8.2% rise year-on-year – and more than 14% above the pre-recession ﬁgure from 2007/08. Revenue from permanent business rose by 8.7% to £2.7bn, but still 37% below its pre-recession peak of £4.3bn. The recruitment profession continues to grow, with more than 96,000 people

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

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working in the industry. This is the fourth consecutive rise, but still more than 12,000 short of pre-recession numbers. To find out more, download your copy of the RITS report at www.rec.uk.com/trends

Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 17 Britton Street, London EC1M 5TP. Tel: 020 7880 6200. www.redactive.co.uk Publisher: Aaron Nicholls aaron.nicholls@redactive.co.uk Tel: 020 7880 8547 Editorial: Editor Michael Oliver michael.oliver@redactive.co.uk Tel: 020 7009 2173. Production Editor: Vanessa Townsend Production: Production Executive: Rachel Young. rachel.young@redactive.co.uk Tel: 020 7880 6209 Printing: Printed by Woodford Litho © 2014 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.