Issue 65 September 2018
RECRUITMENT MATTERS The View and The Intelligence Why diversity is key
The big talking point p2-3
How to start an agency
Legal Update p4
Introduction fees
What’s coming up p6
KEY SECTORS COULD FACE
LABOUR CRUNCH
POST-BREXIT British firms could come unstuck in key sectors, such as food supply, if the government does not allow employers to continue to access temporary and seasonal workers from the European Union (EU) after Brexit, says the REC. EU nationals make up 7% of the population but account for 14% of the UK’s workforce, according to a report from the REC.
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The report – ‘Shortterm labour for long-term growth’ – says that four out of five (81%) of employers who create temporary or seasonal jobs said they hire EU workers. Much of this is driven by a shortage of labour in many areas of the UK: 42% of employers said they had not been able to find enough workers to fill all their seasonal or temporary
vacancies, a concern echoed by recruiters. Approximately a third of recruitment agencies supplying agency workers to each of the warehousing (29%), hospitality (38%) or food and drink (39%) sectors had not been able to meet their clients’ overall demand for staff. REC chief executive Neil Carberry says the report sends a strong message to government.
Minister for Disabled People Sarah Newton p8 “Employers need the government to secure the transition period quickly, including an agreement on mobility in the exit deal. Temporary and seasonal roles need to be part of this. The right to work must be attached to the individual coming to work, not dependent on sponsorship by an employer or the promise of a permanent contract,” he says. The report was released just before the latest labour market statistics released by the Office for National Statistics (ONS), which showed unemployment rate was the joint lowest since 1975 at 4.2% down from 4.5% a year earlier. Carberry says employers need certainty to ensure the trend continues. “There may be more challenging times ahead as we move closer to leaving the EU. With employment high, a comprehensive mobility deal is needed to stop lack of people being a brake on jobs and prosperity,” he says.
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Leading the Industry
THE VIEW
A revolution is coming, says Tom Hadley, REC director of policy and professional services
Neil Carberry, CEO of the REC, C, on why inclusivity ty and diversity is central to good recruitment
While we all had the popcorn out watching the Brexit drama in the House of Commons one night earlier this month – and, for the record, business needs government to have the space to do the pragmatic deal on transition, goods and immigration – the other story from Parliament that night was about age discrimination. I don’t agree with the way the Women and Equalities Select Committee has talked about our sector, on very limited evidence. My experience is that recruiters are the engine for change – not the brake on it, which the committee implied. As well as being the right thing to do, they know discrimination makes no moral or business sense – especially in a tight market with candidate shortages. Our prospects for growth and prosperity are damaged if any group of people are denied opportunities to work because of who they are. Looking beyond stereotypes is key – age is not an indicator of ability; shedding the perception that older workers are less productive, because it is not true. As recruiters, challenging client perceptions of older candidates as being ‘too experienced’, ‘overqualified’ or ‘out of touch’ with what an individual may be able
RIDING THE TIDE OF THE 4TH INDUSTRIAL REVOLUTION to bring to the job is vital. After all, when REC members across the country tell us candidate availability is their key challenge, why would we leave some of the best skills on the shelf? Promoting inclusive workplaces should be a hallmark of our world-leading recruitment sector. The REC is already leading the way – our joint initiative with Age UK aims to highlight the skills and experience of the older workforce, while enshrining best practice in recruiting those over 50. Through our Good Recruitment Campaign we support client organisations in evaluating what they do and be more ready for a tailored and inclusive range of choices from their agency. And REC guidance – through webinars, workshops and conferences – can help recruiters to assist their clients to reach new heights in finding the right talent for them while focusing them to remember that older workers are a critical part of the economy and will become more so in the future. It should not be lost on us that recruiters are uniquely placed to guide employers on how to attract and retain a wide range of talent – another example of how central the industry is to some of the key questions faced by the UK today.
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We have been engaging in some serious high-energy futurology since the launch of our Future of Jobs commission last year. Our involvement with the All Party Parliamentary Groups (APPGs) on AI and the 4th industrial revolution have underlined the sheer extent of potential disruption, as well as the shimmering opportunities that a changing landscape can provide. Investing in infrastructure at the right time is one of the characteristics of successful recruitment leaders and it has been encouraging to see how the industry is looking to harness new technology to provide world-class services to both candidates and clients. We are starting from a strong base with over 80% of employers expressing satisfaction with their recruitment agency partners, according to our JobsOutlook report. For future-focused recruiters the opportunity also lies in being ahead of the game in terms of pre-empting major sectoral developments and being able to meet evolving skills needs. The recent PWC report argued that manufacturing, transport and storage, and public administration will see the largest long-term decrease in jobs due to AI with sectors like professional, scientific and technical services, health and education seeing the largest net increase in jobs in the long run. PwC predicts that up to 20% of UK jobs will be displaced; the recruitment sector is uniquely placed to help employers and jobseekers make sense of this shake-up. The next phase of our Future of Jobs project is aimed at prompting further reflection on what seismic changes to the world of work will mean for our industry. With regards to technology and AI, the feedback from REC members so far has been emphatic. The way forward is to walk towards this brave new world, to understand and harness the latest tools and innovations. In the same way that existential threats to our industry like job boards and social media were resoundingly seen off, the key is to be confident – though certainly not complacent – about the sector’s ability to ride the wave of the 4th industrial revolution. You can follow Tom on Twitter @hadleyscomment nt
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50%
THE INTELLIGENCE A NATION FACING A DEVELOPING SHORTAGE OF TEMPORARY WORKERS
Thalia Ioannidou, REC senior researcher The UK’s economic strength is built on companies being able to do great business. With the UK’s employment rate at record high and a fall in net EU migration driven by a decrease in EU citizens coming to the UK for work, ensuring businesses have access to the people they need is of critical importance. In July, the REC published the report ‘Short-term labour for long-term growth: EU agency workers post-Brexit’. The report investigates the potential impact of the end of freedom of movement on the supply of temporary workers, particularly in industries that have a significant reliance on
AGENCY HEADCOUNT GROWTH SLOWS, BUT REMAINS POSITIVE The latest real-time information from the RIB Index shows that year-onyear (YoY) growth in the headcount of the median industry recruiter has been slowing since Q4 2017 – but remains positive. With the move into negative territory in H2 2016, the average monthly headcount growth across the year was just 1.6%. Following a notable uptick in Q1 2017,
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EU temporary workers such as food and drinks, hospitality and warehousing. As the report demonstrates, EU temporary workers provide a valuable contribution across the country in a wide range of sectors and at various skill levels. The REC’s survey of recruiters shows that a significant portion of temporary assignments in key sectors in the last 12 months were filled by workers from the EU. Notably, over half of respondents that supply the food and drinks, warehousing and hospitality sectors reveal that 50% or more of their temporary assignments were filled by EU workers. A particular reliance on young EU temporary labour is also evident – over half of recruiters placing EU temporary agency workers in hospitality and food and drinks roles claim 50% or more of these workers were 18-30 years old. The number
50% OR MORE OF THEIR TEMPORARY ASSIGNMENTS WERE FILLED BY EU WORKERS IN FOOD AND DRINKS, WAREHOUSING AND HOSPITALITY SECTORS
of respondents who only place EU temporary agency workers who are over 30 years old is negligible across key sectors. Similarly, the REC’s survey of employers reveals that nearly half of all businesses had used EU workers to fill seasonal or temporary roles in the last 12 months with three in five claiming 10% or more of their contingent workforce was from the EU. The UK is faced with a developing yet pressing labour shortage. A third of recruiters supplying agency workers to the warehousing (29%), hospitality (38%) or food and drinks (39%) sector had not been able to meet their clients’ overall demand in the last 12 months. For employers, candidate
Figure 1. Total employees versus last year (%) – quarterly average 16% 14%
14.1%
12% 10%
7.8%
8%
6.2%
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6% 4%
availability remains the key challenge for them in meeting industry’s needs, with two in five employers (42%) that recruit temporary or seasonal workers being unable to meet their demand for labour. This represents nearly a quarter (23%) of all UK businesses. The analysis of the views and concerns of recruiters and employers adds further evidence to the Brexit debate and informs the government of the labour needs for temporary workers so that appropriate provisions are made. The flexible workforce plays a crucial role in keeping British businesses economically viable and competitive. Any post-Brexit immigration system that reduces the availability of temporary workers in the UK is likely to have a detrimental knock-on effect on the overall UK economy. You can download the REC’s latest report at www. rec.uk.com/research running at 4.0%. With YoY growth in total turnover and NDR for the median RIB recruiter remaining buoyant, businesses appear to be capitalising on the opportunity to optimise the potential of existing headcount.
4.1%
2% 1.4%
0 -0.2%
-2%
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-4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Apr-May 2015 2016 2017 2018
which remained strong for four quarters, the monthly average headcount growth for the median RIB recruiter across the year was 6.4%.
While remaining positive in 2018, the average monthly YoY growth across the first five months of the year has slowed and is currently
Belinda Johnson runs employment research consultancy Worklab, and is associate knowledge & insight director of Recruitment Industry Benchmarking (RIB) – part of the Bluestones Group. The RIB Index provides bespoke confidential reports on industry benchmarks and trends. See www.ribindex.com; info@ribindex.com: 020 8544 9807. The RIB is a strategic partner of the REC.
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The Big Talking Point
START-UPS
STARTER FOR 10 Looking for a career change? If you want to start your own recruitment agency, the REC is here to help. We know the opportunities available and the pitfalls to avoid. Our dedicated Start-Up Your Own Agency course offers a comprehensive overview of how to run a profitable recruitment agency. For a taster of some of the areas we cover, here is a 10-step guide for starting a recruitment business.
1 What is your unique selling point? There are around 23,980 recruitment agencies in the UK, according to the latest Recruitment Industry Trends survey and standing out from the crowd is important. It is vital new agencies pick a target audience and offer a unique service to clients, whether it be by skill, region or sector. The REC’s regular jobs market data and research offers important insight into the latest recruitment industry trends. You can use these resources to hone your target market.
set up a traditional high street model or low-cost online start-up? Either way, you will need to have a clear and transparent pricing structure that considers your business running costs. The two most common structures are flat-rate fee and commission fee, which is based on a percentage of the candidate’s salary. Our start-up course covers both in depth.
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PLAN
HAVE A GOOD SOURCE OF FUNDING
Develop a clear plan that is simple and realistic. Set easy, clear and timely targets and goals, but be prepared to be agile and flexible to change. As part of our Start-Up Your Own Agency course, you will learn how to develop a clear and realistic business plan, following tried and tested methods.
It is sensible to have enough cash to cover six months of costs. Any loans or investment needs to be legally documented and all parties aware of risks. It may help to use invoice discounting from one of the main banks to help with your cashflow, especially if you are recruiting temps, contractors or interim hires.
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DEVELOP A SUSTAINABLE BUSINESS MODEL
DEVELOP A MARKETING PLAN
Recruitment businesses can take a wide range of models, and each come with different overheads. Are you going to
Taking a planned approach to marketing will ensure your business is seen and heard in a busy and noisy marketplace.
FIND YOUR NICHE
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6 SET UP AN OFFICE THAT WORKS FOR YOU Virtual or premises – that is the question. These days most recruitment businesses are set up virtually – but is working at home the right environment for you? Some may prefer a separate working space to keep them motivated. A guide to setting up an office is provided as part of our start-up course.
7 INVEST IN A QUALITY CRM All great businesses require great technology, but what are the tools that will help your business succeed? Common technology which includes front and back office support software is a good option, plus payroll services, a CRM database and a website. Do some market research and look at what works well for your competitors.
8 ENSURE YOU’RE INSURED All recruitment businesses require legal expenses insurance. There are many providers and you should shop around to find the best cover for your business. As part of REC membership LEI insurance is provided as a benefit.
9 LISTEN TO THE BEST – LITERALLY The REC’s Scale Up podcast features interviews with 25 of the most successful recruitment entrepreneurs, talking about how they built their business. Each podcast episode contains compelling stories and insight from the careers of some of the UK’s most successful recruitment entrepreneurs. Search for ‘Scale Up Podcast’ in iTunes or on the REC website.
10 JOIN THE REC FOR ONGOING BUSINESS SUPPORT AND TO DEMONSTRATE YOUR COMMITMENT TO A PROFESSIONAL STANDARDS
Not every method of communication can be right for your business, and the methods you use can change as your business grows, but the six main tools to consider are: public relations, advertising, online marketing, direct marketing, sales promotion and face-to-face selling. Some promotional activities are expensive, and the tactics chosen should be informed by your objectives. REC members have access to a comprehensive bank of resources, such as a guide to the marketing your business, to help you make the right decisions.
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An REC membership will enable you to stand out from the crowd, giving you a distinctive voice and winning you more business. We are leading the campaign to build the best recruitment industry in the world, being the only professional body to require every candidate to take an online test before granting full membership. Once a member of the REC, you’ll have access to the most current research on all legislative and economic developments, along with advice and support from top legal experts and leading industry professionals. To start your recruitment entrepreneur journey, visit www.rec. uk.com/start-up or contact our accounts team on 0207 009 2100.
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Legal update
INTRODUCTION FEES A RECRUITER’S STRUGGLE WITH INTRODUCTION FEES By Bunmi Adefuye, solicitor and commercial adviser at the REC Claiming an introduction fee can be challenging for recruiters, with candidates now more accessible to employers on social media and recruitment platforms leaving recruiters victims of back-door hiring practices. A back-door hire occurs when a candidate was initially introduced to the client by a recruiter but later on the same candidate is engaged by the client without the recruiter’s involvement. Another common scenario is where two recruiters send the same CV to a client for the same role and it is incorrectly assumed that the first recruiter is entitled to the introduction fee. The loss of introduction fees could be catastrophic for a recruiter, particularly where they place highly skilled candidates in a very niche sector. From the client’s
perspective, they simply don’t want to pay two sets of fees and then possibly decide to walk away from that arrangement, which is a loss to both the recruiter and the candidate. The best ammunition for a recruiter is to ensure that there is an agreed contract with the client from the outset. We need to go back to the basic principles of contract law where a binding contract between the parties requires: • an agreement • an intention to create legal relations • consideration. Contracts don’t have to be in writing to be enforceable as they could be concluded verbally. However, the recruiter will be in a stronger and more secure position with a contract in place if the matter escalates to legal proceedings. The contractual
provisions is one aspect of claiming a fee but case law has established that the recruiter must do more than just submit a CV. The recruiter must be the effective cause of the engagement. There are two old cases in the recruitment sector where the recruiters battle with their clients for introduction fees. Wallace Hind Associates v Lastolite Limited (2000) and Law Staff Legal Recruitment Limited v Just Costs Limited (2009). Both cases considered the principle of the “effective cause of engagement”. Although the facts and the circumstances in the cases were different, the judges concluded that simply submitting the candidate’s CV wasn’t enough and the recruiters had to demonstrate that they played a role in the candidate’s engagement with the client. Unfortunately in
both cases the recruiters were unsuccessful. Given that the recruiter’s obligation doesn’t end after submitting the CV, additional steps must be taken which include arranging interviews or other assessments for the role, obtaining feedback, passing correspondence between the parties and generally playing an active role throughout the recruitment process. As the recruitment industry is highly competitive, it’s very likely that a recruiter at some point will have to pursue a client or a few clients for introduction fees. However, if the recruiter has agreed terms with the client and can demonstrate that their actions beyond sending the CV resulted in the engagement of the candidate, they are in a very strong position to claim their fee.
USING REVIEWS TO ATTRACT QUALITY CANDIDATES By Nathan Alder If you’re in the business of recruitment, you know the importance of quality over quantity. Getting the right people with the right skills to choose your agency over your competitor’s is one of the biggest challenges facing recruiters today in an increasingly saturated jobs market. The more skilled the candidates, the more desirable they are to employers and the higher chance you have of placing them in a job. But how do you go about attracting the top talent, and what can you do to convince them that you’re the right agency for them?
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THE POWER OF REVIEWS With competition at an all-time high, the cream of the crop need to know that they’re not only going to get placed in a great job, but also get a great experience throughout the recruitment process. In the past, word-of-mouth and personal recommendations were a recruiter’s best friend, but this process, much like the candidates, has moved online. Independent online review platforms allow candidates, who have gone through the entire recruitment journey, to leave real reviews about
their experience. Customer feedback is becoming just as powerful as personal referrals, and can go a long way towards establishing trust in your business and driving higher quality candidates to your agency. And 94% of consumers say that reading reviews influences their decision to some extent, so if you’re not collecting candidate feedback already, then you need to start! Feefo is the UK’s leading reviews and customer analytics platform, used by more than 4,000 brands worldwide.
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Inspiration
BEHIND THE SCENES AT THE INSTITUTE OF RECRUITMENT PROFESSIONALS
The View
Helen Lacey is the managing director of Red Berry Recruitment and an honorary fellow of the IRP
Faiekha Narshola Adams is the director of Pinnatte Solutions Ltd
Q&A
WHAT I KNOW
How did your business start? I started my business in January 2007 with £15k. I painted the offices, designed the company logo after coming up with the name and strapline. In the February I started territory mapping, attending networking events and doing sales calls and in March of that year, I recruited my first member of staff.
Starting a business is like pulling water from… If only starting a business was as easy as getting water from the tap, but it’s more like pulling a bucket from a well, in that the quality of water can vary. I would like to be a little cheeky and say my business started with an idea combined with passion and a business plan.
What sector do you recruit in? We are a traditional high street agency – temporary and permanent, commercial and industrial, priding ourselves on building great relationships with the local businesses and community.
Where my business is focused I specialise in the Information Technology sector across diverse industries such as software, telecommunications, financial services, insurance and engineering.
What are some of your big challenges? I would say at present it’s finding talent. Three of our branches are quite rural, so finding experienced recruiters is difficult. We do like to train our own but that obviously takes time. Second to that is the overall candidate-short market and the lack of loyalty some candidates have. Thirdly is the clients’ understanding of how fast the market is changing and how fast decisions need to be made What are you looking forward to? We are just about to move to a new office in Cardiff, so that is exciting, and I have had a strawberry Gin and a raspberry Vodka created for us, so looking forward to launching that. I don’t think many recruitment agencies can boast they have a gin named after their company, can they!? What does the future hold? The future, I think, is going to be tricky, challenging and turbulent. However, ever the optimist I am sure we can weather the storm. We have a great team here, full of energy and positivity, so I am keen to see how this year pans out before making any more decisions on more locations or divisions.
Starting a brand is difficult Realistically, it’s a mental typhoon with a lot of different emotions. Creating the concept and branding of your business to represent you and your values is just the beginning. Be aware of what’s happening around you Awareness needs to be your mantra, taking in only what is most valuable to you and surrounding yourself with the right people that will help you grow and get to the next step. Be confident; if you can convince yourself you can do it, then you can convince anyone else. I truly believe in this statement: ‘Your capacity to sell anything, whether a service or product, lies in the passion you feel about it.’ Positive energy is vital Self-belief, passion, effort and focus will be your building blocks to the next step of growing your business. Pinnatte Solutions will be a legacy grown from its roots with flourishing flowers of positivity touching the very lives it was created for. We will help people move one step closer to where they would like to be. I am really excited about all the things going on in my head.
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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What’s coming up?
RECRUITERS CAN BE LEADING VOICE IN DISABILITY CONFIDENT DRIVE There are more than 7 million working age people in the UK with a disability or health condition – and the recruitment industry is in the perfect spot to find jobs that will transform their lives, writes the Minister for Disabled People Sarah Newton. At 75.6%, the employment rate in Britain has never been higher. This continued success is to be celebrated. And jobs continue to be created. In March to May 2018 there were 818,000 job vacancies – 33,000 more than for a year earlier. As recruiters, I don’t need to tell you that the competition among employers to attract the right people with the right skills is high and is likely to be a key challenge for employers and the recruitment sector in the coming years. As Minister for Disabled People, I am pleased to see that employers are increasingly looking to address their recruitment needs, not only by considering a wider range of potential sources of talent, but also by seeking to understand how to best attract and retain a more diverse range of people. As the Future of Jobs Commission said last year, we need to see a labour market where inclusion is the norm – for employers and employees. And it is great to see the REC and many of its members leading the way through the Good Recruitment initiative, which has the active promotion of diversity and
inclusion in the workplace at its core. There are over 7 million working age people in the UK who have a disability or health condition, representing a vast and varied pool of talent that businesses could tap into. More and more employers are recognising the benefits disabled people can bring to their businesses. However, some continue to have misconceptions about what employing a disabled person will mean. For example, disabled people don’t always need expensive workplace adjustments. Many don’t need any adjustments at all. Many businesses also tell me that they lack the confidence to employ disabled people and are concerned about ‘doing or saying the wrong thing’. The Disability Confident scheme can help employers overcome these barriers by giving them the skills and tools they need to successfully recruit and retain disabled people. Nearly 7,000 employers are already members of the scheme and are benefitting from the free support it offers, including online guidance, access to members-only social media groups, and
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priority access to specialist events to help organisations progress through the Disability Confident levels. I am hugely grateful to REC and its members who continue to be great supporters of the scheme. Manpower has joined the Disability Confident Business Leaders’ Group, bringing the sector’s knowhow to the development of the scheme, and there are over 200 recruitment agencies now signed up to Disability Confident. If you aren’t yet one of them, I urge you to join today by going to gov.uk/disability-confident. We are moving in the right direction, but we need to do
more. There are still far too many disabled people who want to work but are faced with barriers. And there are too many employers who are potentially missing out on the talented people they need. Recruiters can help to address both issues by influencing your clients to be more inclusive and consider a wider range of prospective employees. And if you have already been doing this and are seeing the results, it would be great to hear about it – we are always looking to showcase best practice. To get involved with the Disability Confident scheme, contact policy@rec.uk.com
Membership Department: Membership: 020 7009 2100, Customer Services: 020 7009 2100 Publishers: Redactive Publishing Ltd, 78 Chamber Street E1 8BL. Tel: 020 7880 6200. www.redactive.co.uk Editorial: Editor Michael Oliver michael.oliver@redactive.co.uk. Production Editor: Vanessa Townsend Production: Production Executive: Rachel Young rachel.young@redactive.co.uk Tel: 020 7880 6209 Printing: Printed by Precision Colour Printing © 2018 Recruitment Matters. Although every effort is made to ensure accuracy, neither REC, Redactive Publishing Ltd nor the authors can accept liability for errors or omissions. Views expressed in the magazine are not necessarily those of the REC or Redactive Publishing Ltd. No responsibility can be accepted for unsolicited manuscripts or transparencies. No reproduction in whole or part without written permission.
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