Brown Nosing

Now we really do have to worry … we appear to have a new, cosy relationship with the French! Or, more correctly a Sar-kozy relationship.

I’m personally wouldn’t subscribe to the school of thought that suggests the French are all “cheese-eating surrender-monkeys” but Recruiters should pay special attention to any move to persuade the UK to align its Labour Laws more closely with those of France as a result of the new Anglo French Love-in; unless that is, they are prepared to move some way from their ‘workers rule’ position and put some flexibility back into their own employment policies.

During his recent State visit, French President Sarkozy suggested that “We stand stronger if we stand together”, which may be perfectly true in some quarters but I feel it is more likely that that we will stand together in longer unemployment lines if we move towards France.

I distinctly remember a lobbying visit to a French Socialist MEP in Brussels who informed me that “the British exploit child labour” and when I quizzed her, to explore her rational for this outrageous argument, she sited our cruel and abusive use of children to deliver newspapers (I would have struggled to keep a straight face unless I hadn’t known she was deadly serious!) To top it all, this individual was a member of the EU Employment Group and responsible, at least in part, for drafting or sanctioning the highly questionable legislation we have seen proposed by Europe over recent years.

I have seen deals done with legislation where Governments trade-off one demand for another and I believe Recruiters should argue a strong case for REC to be especially tough in its discussions with BERR to ensure flexible Labour Laws are preserved.

This is doubly worrying as France and M. Sarkozy take the Presidency of the European Union in July 2008 and will, I am sure, be putting that old chestnut The Agency Workers Directive – or some new incarnation or disguised variant of it – back on the table.

Gareth

A new spin on recruitment

One of the biggest problems facing recruiters today is the high level of staff churn in the industry and when they do leave, more often than not, they set up in competition.

It is always the good guys (or certainly the most capable) who go and businesses tend to be left with the mediocre majority. So I ask why let them go? Why not work harder to understand what they want, how you can satisfy them and what’s in it for you? I believe I have a solution – call it Staff Spin-out.

When I first took over at the REC in 2003 I wanted to understand the mindset of a recruiter. As a salesman I recognised that I had to empathise with my customer and REC’s customers are (or should be) it’s Members. So I trawled the information sources to find out what makes recruiters tick. The best piece of research I could find had studied about 450 recruiters who had been identified as ‘high performers’; big billers I assumed. These people, a fairy well balanced sample as it turned out, had been nominated for appraisal by over 50 businesses, both large and small, and the evaluations seemed extremely detailed. The outcomes were fascinating and help me postulate a number of theories.

I quickly concluded that the psychological profile of a high performing recruitment consultant very closely matched that of a successful small business entrepreneur. My thoughts were later supplemented by one of the first pieces of work produced by the REC Industry Research Unit, under Roger Tweedy, which suggested that recruiters most wanted ‘Flexibility; in terms of working structures, and Ownership; in terms of shares and status’ from an employer. This led me to conclude that the best recruiters tend to be naturally entrepreneurial and ambitious by nature. Over the next three years I looked at the people who left good companies and set up on their own and the damage their departure did, or appeared to do, to the agency they left behind. I also spoke to many recruiters who have left, stolen the database, and believe the eventual legal settlement they were forced to pay their former employer was a worthwhile investment in their new business. All of which I find crazy!

Historically, I came from the world of manufacturing (some may remember it) and more recently I was involved in technological innovation; I was a Dragon long before James Caan saw the potential. Perhaps the most sophisticated thing businesses commonly do in the producing sectors is ‘spin-out’ new products or ideas into new, stand-alone companies and, where opportunity exists, compete with themselves. It is quite common place to create a new business around a new technology and hive off some of the best people, often those who are ‘up and coming stars’ and give them their chance to shine.

Now in recruitment, if I am correct, there is an inevitability that the most successful billers (usually two or three of them working together) will quickly conclude that they can have a better future if they set up for themselves. My model offers you, as their employer, an alternative. It suggests that you identify your high flyers and even put them on your high flyers programme, offering them management training (making sure you lock them into repaying your investment if they leave in the next x years). Groom them for success and make sure you understand their aspirations. Tell them that, at anytime in the future, should they wish to start their own business that you will fund them and support them to success. We all know it is fairly cheap to set up an agency so for a modest investment, say £25K, you could fund the creation of a friendly rival, or better still a non-competing parallel business and, with a seat on the Board, keep a limited control over its development. You would of course take a small shareholding (say 25%) for access to your funds, database and mentoring skills and charge a small admin fee for back office support until they can fully stand alone. In three years time you can offer them the opportunity to buy you out, at a fair market price, or you can buy them out – helping them realise their wish for personal wealth – and the opportunity to bring the business back into the fold.

Some try this is the form of a franchise but, and contrary to popular belief, operating a franchise requires an extremely disciplined operating culture and an adherence to process that would defeat most sales-minded people. QED it probably won’t work in recruitment.

Now clearly ‘spin-out’ does happen in our sector. You have to look now further than the genius that is SThree, where Bill Bottriell and colleagues recognised that it is better to keep good people within their sphere of influence than let them get away, and Tim Watts at Pertemps, who just has a great nose for a business opportunity, to realise what is possible but I say that every business should recognise that good people must not be allowed to get away and should implement procedures – managed and operated personally by the business owner – to protect their most precious and costly asset, their staff.

Gareth

"And Cash is Reality" - especially now

You will probably be familiar with the business mantra ‘Turnover is Vanity, Profit is Sanity’. It is certainly true but I always feel this misses one final but vital stanza which should read, ‘And Cash is Reality’.

Many businesses fail each year, not because they are mismanaged; although what follows would tend to suggest they are dumb for not managing their cash, they simply run out of money. With the economy in a vulnerable state, as it is now, I would recommend that every recruitment business focuses a significant amount of effort on making sure its cash collection process is robust and credit control is working properly.

This is not just advice for the back office staff but an essential consideration for the whole client facing team. Make sure you watch for signs that clients may be having problems of their own. Watch out if you see clients starting to chop and change suppliers more than usual; it often signifies that they are spreading the load and not wanting to have too many single supplier large debts accruing. Watch out for debtor days (the period they take to pay you) starting to extend – when money supply is short businesses always use the cheapest cash available and that come from their creditors.

I am confident that the economy is strong enough to stave off any major threat but do worry that ill prepared businesses will become victims. Don’t become one of them.

Gareth

Every business needs an NXD

Ask yourself what the fundamental difference is between a British business and an American business?

The answer is simple, just look at the typical Board structure of both and all will quickly become clear. The Board of a British business has only executive directors (usually 3) who are all working in the business. The average American SME has 5 directors, two executive and three Non-Executives (external professional mentors).

In the British company there is no need for a formal Board meeting; why, because the principals meet everyday, one of the three is ‘boss’ and makes the decisions and why waste time talking about “what we discuss everyday.”

In an American business the Executive Directors are required to air issues, share problems and seek guidance to inform the decisions the Board makes, collectively, for the strategic development of the business. These decisions, accurately recorded in the Minutes, are then enacted by the MD (with clear understanding and parameters) who reports back at the next meeting.

Now I recognise that to many would-be ‘entrepreneurs’ this would be an imposition but to introduce this level of rigor to the business’s governance is an essential element for success.

Running a business can be an extremely lonely pursuit and NXDs don’t just bring knowledge, experience and wisdom (although these are all essential elements of the role), they also bring that invaluable ear; someone to talk to.

If more British businesses had just one NXD then the quality of governance would improve dramatically and there would be significantly fewer early stage business failures.

(Please note that I am about to write a blog on what an NXD should do for you and what you should pay for what level of input – coming soon)

Gareth

Agency Work Commission

I am delighted to see that the REC has this week (12th March) written to the Prime Minister confirming its support for a proposed Agency Work Commission. This is definitely the right action for the industry and it is encouraging that the Government is at last creating the environment for opposing factions to air their differences and try and find common ground; which definitely should exist.

I always personally believed, and regularly reported to the interested partners, that at least 80% of the original EU Agency Workers Directive was capable of immediate implementation and that sensible negotiation would have enabled that part to proceed, if only the more extreme elements could have been set aside for later debate. At my meetings with Brendan Barber, Secretary General of the TUC, I always offered to debate the issues and even commissioned an incredibly robust piece of work to impartially test the opinion of Agency Workers; sadly to no avail – other than to stall the introduction of adverse legislation.

The REC has done a stunningly good job holding off the European Commission’s demand, for what it sees as an equitable application of employment legislation, for over 7 years. Much of this was entirely due to the tireless efforts of the External Relations Team and me, during our respective interventions, but the time is now right for a new approach and the proposal for an Agency Work Commission could afford this.

I recommend the industry really does get on board and have its say.

Gareth

A Budget for Stability - 2008

I have never heard the word stability used so many times in one speech but Alistair Darling achieved a new record in his first UK Budget. It did make me wonder if it was a lesson in brain washing however his supporting evidence did enforce the fact that the UK is ahead of many of its EU partners and most of the world. He suggested it is the most stable of the G7 economies and has the second highest GDP per head of population in the same grouping.

Comments by pundits did suggest that the current slow down will not result in a recession for the UK simply a tightening of fiscal belts. It would probably not allow for further interest rate cuts in the near future.

The Chancellor made a point of stressing that the UK now has lower unemployment than France, Germany and Italy and our “fair employment rules” have gone a long way to ensuring this continues. I hope this point marks a continuing endorsement of the Government’s commitment to not giving way on the EU demands for user comparability pay and what was formerly the Agency Workers Directive; despite its recent proposal to create an Agency Work Commission.

He announced the following aid for businesses, especially SMEs:

· More help for small businesses, with capital gains tax remaining at 10 per cent.

· £60m more for SFLG Scheme, which will be extended to all small businesses.

· New target of 30 per cent of Government contracts for small firms.

The latter point is particularly important to those recruitment agencies that supply to the Public Sector. In recent years we have seen an increasing move towards the use of PSLs and Master/Neutral Vendor arrangements where the criteria for selection preclude SMEs from tendering. This new commitment should endorse our claim to be treated fairly. It must still grow further, especially as SMEs now employ of the workforce than do large firms.

So, in conclusion I would say it was a fairly safe (stable) budget for recruiters. Nothing special but equally nothing horrendously challenging.

Recruiters should welcome ID cards

With the onus now on employers and recruiters to validate the identity of those they place, I passionately believe the recruitment industry should stand up and support the Governments plans for the progressive introduction of Identity Cards. This activity should of course be led by the industry body, REC.

So far the industry has kept a typically low profile but the time is right now to come out and argue its case for introduction.

Its website suggests that, “Recruitment professionals in the front line of the UK’s labour market take their data checking responsibilities extremely seriously. Whether it is establishing a workers eligibility to work in the UK or making sure that the appropriate criminal record checks have been conducted, recruitment agencies play a key role in promoting safe recruitment”.

For years Government has considered the recruitment sector to be mercilessly profiteering (despite any truth in that statement being seriously eroded by continuous legislation and suicidal major operators) and having no real respect or concern for its workers, candidates or clients. Support for this serious issue, which is after all inevitable in a world where identity can be so easily stolen, could be a turning point.

Even more importantly we should mobilise our support for ID cards in exchange for the full and final demise of further, an wholly unnecessary, Temporary and Agency Workers legislation; aka the EU Agency Workers Directive is designer gear.

Gareth

Advice – call the office of your local MP (and MEP) ask for their position on ID cards, tell them yours and invite them to visit you and share opinions. While they are with you demonstrate what you do, as a responsible recruiter to ensure people are who they say they are and explain the current difficulties, take some photos, produce a press release and finally inform the REC; so they can add it to their portfolio of evidence.

UK Recruitment Industry - “The Spotty Youth of British Business”

It is true to say that as a marketeer I really should think before I speak – which sadly I don’t, much to the annoyance of many of those who have worked with me in the past and who would subscribe to the thought that “he only opens his mouth to change feet.” But I would hope that those same critics would also conclude that I can always be trusted to “say it as I see it” and more importantly am always prepared to give way to a well argued contra-opinion. And my frankness has added considerably to my strength as a negotiator, lobbyist and champion of difficult issues.

I have been using the phrase “Recruitment is the Spotty Youth of British Business” since my time as Managing Director oft the REC, the trade body for the £26 billion UK recruitment industry, where I coined it to convey a heartfelt belief that the recruitment industry desperately needed to ‘grow up’, especially if it was ever to stand a chance against the apparently respectable HR and purchasing community – its primary clients.

I visualised the average operator as a hormone charged adolescent, bounding with energy and enthusiasm (and perhaps just a little anger) and eager to please everyone around but without the knowledge and sophistication of age. Simply I reckon the average recruiter goes about business like a ‘bull in a china shop’ and breaks more than a few priceless plates along the way.

Whilst I was charged by some as ‘dissing’ the business sector (which simply goes to enforce my point), the reality is that I have a real love of the industry and especially its passion but I do feel it should spend less time raving (for the short term pleasure) and more time focusing on life and the pursuit of happiness (its strategic gains). It has never come as a surprise to me that few recruiters have Business Plans and even fewer have exit strategies. When I explained to one business owner just what the business was worth to a buyer, after first being highly offended by the derisory valuation of the best business in the land he said “Hell who cares, we have really good parties!” What shocked him more was what it could be worth if the whole corporate psychology was just a tad more robust and a little less ‘Happy Days.’

I hate recruiters who make just enough money to buy the Villa in the South of France and then become absentee parents and leave the blood, sweat and tears of the day-to-day operation to a team of good managers, who themselves quickly become disillusioned and start making plans to rip-off the database and form their own money machine in competition. The resulting legal action, fought from the South of France, which both parties enter into with the same teenage venom as a pair of young Rottweillers.

A more structured and focused approach; leading business development by reference to a well engineered plan and deviating only within measured and reported parameters, could make the experience more enjoyable; in a rewarding sense, and more rewarding; in a long term profitability and return sense. Entrepreneurs often believe their cavalier style and devil-may-care flamboyance will make up for all traditional business disciplines. Well, sadly they are wrong and all good entrepreneurs (like the Bransons of this world)quickly recognise that they can only be gung-ho within the constraints of a focused and profitable plan and with the right people around them to make it succeed.

Therefore I conclude that most recruiters need a mentor, probably with a few grey hairs and real and practical business experience and success, and preferably not just in recruitment, to help guide the formulation and delivery of the business’s full potential. This will also enable it to realise its true worth. And even better, to ensure you get the best service from your mentor give that chosen person authority by appointing them to the board as a Non-Executive Director. Then expect your NXD to tell it like it is, not pussyfoot around difficult subjects and take responsibility (at least in part) for your success.

Gareth