Advertising doesn’t always work – is there a better way?

We are seeing a significant increase in permanent job openings, however many companies are struggling to find the right candidates.

In 2021, there were many candidates available for work and not enough job openings, which was understandable given the economic challenges of Covid. However in 2022 recruitment is gaining momentum with lots more positivity and job opportunities, which wasn’t surprising many anticipated this. What may be surprising however, is that despite the high volume of potential available applicants in the market, many organisations are finding it difficult to recruit.

Whilst internal recruiters may have access to a lot of prospect candidates, very few good people in secure work want to switch jobs at the moment. Many organisations are therefore finding it increasingly difficult to attract the right candidates, to the point that many are realising that advertising simply doesn’t work.

When it comes to finding the best talent, or the right specialist skills what do you do? Advertising is evidently not working all the time so how do you ensure you have the right proactive search & selection strategy for the passive candidates in the market? More so than ever, recruiting the right person, the first time is paramount, so how do you win the race for the best talent and attract the right skillsets, if people are rightly risk-averse?

What is the solution?

Many factors attract people to leave their ‘safe’ secure role and seek a new career, flexible working, training, development, career progression, culture, financial and job security, to name a few. But none of these will matter if candidates are not aware of your company’s recruitment & career USP’s.

By getting to know clients and their requirements in-depth, we can really focus on the top-tier candidates for each role, whether they be passive or active candidates. A professional and informative approach and the fact that any hiring company have retained a specialist recruiter, gives a great first impression to candidates, presenting them as an organisation that allows serious candidates to want to find out more.

Most candidates seeking a new career move are now increasingly selective, so it’s important to position your business and the role correctly as you may get only one chance to make the pitch to your preferred candidate. Actively searching for the right talent match with the right promotional material, 360 capability assessment and other selection tools, also ensures candidates know they are a good fit, providing them with the confidence to make the move. This careful approach reduces the risks for the candidates and allows companies to access the best active and passive talent.

Good specialist recruiters know their market inside out. Through years of working with procurement & supply chain professionals globally, we have access to extensive networks of passive candidates seeking their next career move, most of whom will not actively apply to job adverts. Furthermore, they trust their preferred agents to be able to assess the right roles and represent them properly to ensure they are not lost in the recruitment process.

Hiring great talent does not got any easier, but we can help

Reach out for a confidential discussion and we can guide you through a range of innovative and flexible support options that will help you solve that challenge.

  • Contingent Permanent Search – fee on result
  • ‘Accredited’ Interim resource
  • 360-Degree Procurement & Supply Chain capability assessment – online testing to support the interview process
  • UK, US and International market expertise

 

Predictions for 2022 and how did we do in 2021?

Here are the 5 predictions we made for the Procurement & Supply Chain community in 2021 and our view for 2022.

1) An Increase in ‘Permanent’ Recruitment   Correct

Our 2020 annual survey confirmed that over 54% of organisations planned to maintain or grow their permanent teams in 2021.

Although the start to 2021 was slow, after the spring, permanent recruitment rose significantly based around the need to deliver key projects such as; Cost reduction, widening the supply base, reducing supply chain risk, developing robust supplier management, improving supplier partnerships to support innovation, sustainability projects, improving spend analytics and supply chain monitoring.

We expect this positive view to continue in 2022, however the challenge for a lot of organisations is and will continue to be finding the right talent. From our current experiences, internal recruiters are struggling to fill strategic appointments as they do not have the market reach or candidate network. We are increasingly working with talent acquisition teams to help them leverage their brand with ‘hard to find’ candidates.

2) Growth in ‘Greenfield’ leadership roles  ✓X Nearly

There are a surprising number of organisations in the SME and Mid-Cap market who still do not have a procurement team, or have limited access to strategic procurement & supply chain leadership.

It was evident from our own experiences in 2020 that more greenfield leadership roles were coming to market. We expected to see more of these in 2021 with a focus on transformation, strategy and building new teams.

In truth, this was partially correct, however the continued uncertainties equally led to an increase in management consulting support delivering some of these improvement projects. We expect an upturn in ‘greenfield’ procurement leadership roles in 2022.

3) Changes to our work-life balance  Correct

For some, the opportunity of a better work-life balance moving forward is one of the few positives to take away from the pandemic. Again, there will be a different approach in each sector.

The way organisations have adapted to remote working has seen a fundamental change in the landscape, to the extent that some will never go back to the 5-day ‘in the office’ working week. However, there will be a need to balance this, especially as all members of the team need to consider mental health awareness, training, guidance and personal interaction, not all of which can be delivered by Zoom or Teams.

In 2022, offering remote or blended hybrid working patterns will ease recruitment challenges by widening the talent search parameters for many organisations.

4) More uncertainty in the short-term  Correct

The key learning from this year, even though we’re optimistic for 2022, is that we must not get ahead of ourselves too soon.

There is a long way to go in the recovery stage and Procurement & Supply Chain functions must continue to focus on preparation for the unpredictable and ensuring their strategies are robust and this will be as important, if not more so in 2022.

This may help the increase in Interim consultancy opportunities now the challenges of IR35 are understood better. These will either be directly with clients, or as part of established management consultancies who are building greater flexibility in their delivery capability with the development of Interim Associate panels, to flex their capacity when needed.

5) Functional Visibility & Value to grow  Correct

Prior to Covid, most procurement and supply chain functions largely operated in the background, only receiving limited attention in the national media, or people’s day-to-day lives. Now however, the nation has an opinion on everything from international supply chain risks, to public sector procurement.

This elevation into the national psyche requires business leaders to ensure they hire and keep the best talent, whether it’s permanent, Interim, or external consulting project support, to improve bottom-line performance, manage risk and develop the ‘sustainability’ future proofing strategies that consumers now expect to be visible as part of any businesses brand values.

 

As we bring the year towards a close, we wish everyone a healthy 2022 and the resilience to any shifts in the pandemic, to help deliver strong economic recovery and greater business opportunities. 

HAPPY NEW YEAR TO EVERYONE

 

IR35 – understanding the risks & opportunities

Everyone will have their challenges & opportunities – Employers, Contractors, Management Consultants, Agencies and even HMRC.

Simply speaking, HMRC want to collect more tax, remove extreme contractor or self-employed (PSC) tax avoidance schemes and raise more Employers NI revenue.

It’s easy to see why HMRC saw this some years ago as a potential goldmine for the treasury, raising more tax and in a booming economy this could have been realised.

How is this impacting the Private Sector?

The economy is fragile, some experienced Interims have retired or withdrawn from the PSC contractor market, the pandemic and Brexit have increased economic uncertainty and although this could have been an opportunity, many Interim consultants and Contractors have found that projects they would normally access, being taken up by management consultancies.

Some larger employers having decided not to take the risk of any future tax challenges, have engaged with delivery/results based, fixed cost or gain share project consultants, which the majority of solus contractors cannot entertain.

At a time when the economy needs to be agile, when businesses need to access experience quickly and when the current private sector rules actually suit that, it seems strange that government would introduce legislation to restrict this. Combine this with the changing market conditions, is it really now going to attract a significant increase in tax revenues?

Although we should all be experts by now, there are grey areas to be considered and future changes to legislation will be needed.

How did we get here?

HMRC have operated IR35 across the Public Sector since 2017 following a number of high-profile tax avoidance schemes and were due to introduce it into the Private sector in 2020, deferring this until 6th April 2021 following the Covid19 outbreak. There may be another extension in the March 21 budget, however this is definitely not guaranteed and at present HMRC are committed to its introduction, even though they have openly admitted in online forums and support webinars that IR35 determinations are subjective and there are still areas of guidance required from government.

All this means that there will be employers and contractors who could misinterpret their status, which leaves the potential of retrospective claims for an incorrect status decision years later.

It’s therefore important to understand the risks involved, whether you’re a business with contractors, or an Interim contractor or freelancer working through your own (PSC) Limited Company.

Employers Responsibilities

Employers are now responsible for defining the status of any engagement and must issue an SDS (Status Determination Statement) at the outset when the contract is agreed. This will define whether the contract falls inside, or outside of IR35 and whether tax is collected at source through the PAYE/NIC company payroll, or the contractor can invoice and pay tax through the normal channels via their (PSC) Limited Company. If an agency is involved and they are deemed as the hiring company, they will manage this.

HMRC are encouraging everyone to use their CEST online assessment tool which can be used by employers, contractors and agencies to check if a specific engagement should be classed as employed, or self-employed for tax purposes. However, it is now the responsibility of the employer to issue the SDS to all parties in the chain when an engagement contract is agreed.

In essence, if employers have shown what is defined as ‘reasonable care’ in making this decision they should be free from future tax challenges, using the CEST tool supports this, however HMRC have been forced to admit that CEST usage is not a guarantee, it is solely reliant on the information put in and if incorrect, you will be liable.

Note: HMRC enquires into thousands of returns completed by UK taxpayers every year. If there is an error leading to a loss of tax, HMRC will often apply a tax-geared penalty for failure to take ‘reasonable care’. Penalties can apply in one of three circumstances where the outcome is a loss of tax:

  1. Where the taxpayer makes a careless error (when providing information to HMRC)
  2. When a 3rd-party supplies information that is false or deliberately withholds information, and
  3. When a taxpayer fails to notify HMRC that an assessment is too low.
Small Company Exemptions

Just to confuse matters, there is an exception. If during a 12-month period, a business (the hiring employer) is deemed to be a ‘small’ company, then the onus falls back on to the Interim consultant, or contractor to make their own decision on the taxable status.

Small clients are businesses that meet 2 or more of the following criteria:

  1. Turnover – not more than £10.2 million
  2. Balance sheet total – not more than 5.1 million
  3. Number of employees – no more than 50

Any contractors engaged by a small company will continue to operate the IR35 rules as they do currently – and the responsibility for determining their employment status will not pass to the client.

Key Contract Information

To ensure any contract is outside of IR35, it’s important to focus on process and compliance from the outset. Developing the right SDS assessment and drafting the correct engagement contract is essential. Simply adding a ‘Statement of Works’ and set of deliverables will not suffice, unless they are real and actually tied to the payment schedule. It is also useful to include a contract review every 3 to 6 months, to ensure the scope of work hasn’t changed. 

The contract needs to focus on the true nature of the engagement, the role and deliverables expected, also the ability to provide own personal equipment and freedom of control and the ability to work with other clients, the potential for substitution (this can be done with agreement of the hiring company) and the need for any contractor to manage and pay their own business costs without reliance on payment from the employer, all of which can be checked through the CEST tool. 

It’s also generally safe to assume that any contractor will be working inside IR35 if they are working in a ‘Business as usual’ role, working as any employee would, with equipment supplied and / or management responsibility, covering for a period of cover for another permanent employee, for example a maternity cover contract. In these circumstances the salary and tax would be payable through the company payroll and these roles will commonly become ‘fixed term’ roles rather than day rate contracts.

All this sounds simple, so what’s all the fuss about?

In the majority of cases, it will be simple to define whether any role is inside or outside of IR35, it will eventually settle down, everyone will get used to the new systems, contracts will become compliant and Interims operating at the ‘Interim consultancy’ higher end of the market will manage their risk, to ensure it works from a contract compliance basis.

However, what is the point? Companies in the current climate will be increasingly risk averse and may apply blanket PSC bans and although the permanent recruitment market is getting busier, there is a strong possibility that there will be less people employed and most of the contractor/consultancy roles will migrate towards the medium to large consultancy operations that will take up the vacuum and ‘offshore’ some elements of these activities.

Will this really increase tax revenues and will it create a more agile economy that can respond to the challenges all businesses will face over the next 3 to 5 years? Probably not.

Risks & Opportunities

HMRC

Risk – Is this the right time to fight this battle, in the middle of a global pandemic, potential for further economic downturn and Brexit? Creating more cost and inflexibility for employers, may not be what the government needs right now. 

Opportunity – very little in the short-term, however it will tighten up compliance simply by the threat of tax liabilities and when the economy is better, it may provide greater revenue. However, the private sector is very capable of shaping its response to heavy handed HMRC tax legislation, so unlikely.

Employers

Risk – Higher costs, increased workload, loss of key talent if employers introduce blanket in-scope bans on PSC’s (and the associated delays to key projects) and the threat of retrospective determination changes and future tax liabilities.

Opportunities – If you manage the process correctly, remove blanket bans on PSC’s and review each assignment as an individual case, you will get the pick of the best talent. Also, work with partners who can provide you with different ways to access that talent to reduce costs.

Conclusions

The jury is out, but expect to see innovation in the Management Consultancy market and it would make sense to take advice quickly if you haven’t already, establish the right processes and ideally access to a pool of talent to help you survive, thrive and importantly be compliant!

If you would like to discuss your concerns and questions and the support to give you peace of mind, contact Prosearch and set up a call with one of the Partners. For a free health check email: info@procurasearch.com

We provide free advice, access to professional IR35 guidance and the support to recruit solus accredited Interim consultants and project teams. 

 

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