Growth for de Poel

AS one of its biggest victims of the recession, the recruitment industry has done a good job to survive. A lack of active recruitment and a large number of redundancies across the UK as companies attempted to reduce their overall headcount and cut costs created a context of risk, uncertainty and massive competition for recruitment agencies. Indeed, from just March 2008 to April 2009, the value of the UK staffing industry fell by 17% from to a value of £22.5bn, its lowest value since the turn of the millennium.

But whilst a large proportion of the industry has suffered, another proportion has managed to stay afloat, grabbing hold of the opportunities the recession has to offer. This partly due to the efforts of one leading firm, whose status as the number-one procurer of temporary agency labour has given them a great deal of leverage within the industry. As well as managing the supply of temporary agency workers to save money and streamline the recruitment process for their clients, de Poel's work and product offerings have been extremely valuable in helping to maintain business for the UK's leading, top-quality agencies. The Recruiter International talks to the Chief Executive of de Poel, Matthew Sanders to find out why...

TEMPORARY agency recruitment is a business strategy favored by HR Directors across the board. In a climate that is constantly changing and evolving, whether this is due to a landslide of new employment legislation or the Government's latest sustainability targets, it is rare to find companies that do not rely on temporary agency workers at some stage of their business life. Like any other smart business practice, the value of temporary agency working hangs in its ability to ensure that companies are prepared for the future.

Perhaps this is why, during the early stages of the recession, when the value of the staffing industry as a whole fell to it's lowest in almost a decade, the temporary agency recruitment sector specifically dropped by only 13% in comparison to a massive decline of 39% for permanent. Reflecting the flexibility that temporary agency workers can bring to the UK's workforce management, the figures also reveal how temporary agency recruitment has become one of the most popular HR strategies of the day. Its ability to help companies continue business in the most trying of times, manage new business during periods of instability and fill the workforce void in any market left by skills shortages, high employee attrition rates and a lack of permanent staff, makes it appealing worldwide.

Unfortunately for so many recruiters, more often than not business survival depends solely upon job margins, and the outlook during a downturn tends to be a grim one. Luckily, those working with de Poel had opportunities to maintain new business, establish new revenue streams and streamline administrative tasks for increased efficiencies and cost savings. 

Maintaining business

Managing the supply of temporary agency workers in the context of a recession, when more and more companies are switching from permanent recruitment to temporary, it is not surprising that de Poel, who are currently the UK's number-one procurer of temporary agency labour, have continued to prosper through rocky economic times. The question is: how have their services benefitted the agencies they work with? The answer is fairly straight forward: The more clients they acquire, the more quality agencies needed to supply them.

From January 2009 to January 2010 for example, an increase of more than 30 new clients across industry sectors, all with very specific recruitment needs, meant massive opportunities for supplying agencies. In sectors such as care, retail, logistics and waste management particularly (de Poel's largest client sectors), there was room for specialist agencies as well as more general recruiters to supply. In addition, these sectors - who have always been among some of the biggest users of temporary agency staff - presented opportunities for compliant and reputable agencies to find and hire a broad range of temporary workers, with jobs in admin, warehouse, driving, nursing, management and trade available.

Perhaps most importantly, de Poel's appeal to agencies is there ability to make available long-term contracts with the UK's leading service providers, competing on service rather than on price. During a recession, not only are long-term contracts difficult to obtain due to the fall in the number of businesses taking on new business contracts and thus requiring any new staff, but the competition is fiercer than ever for agencies to establish relationships with the biggest industry players. Indeed, it is this competition which causes the 17,000 or so agencies across the UK to drive down margins to outrageously low levels, forcing some smaller recruiters out of business. The fact that pay rates and margins are set under de Poel means agencies are guaranteed an optimum income.

Providing other revenue streams

In a climate of instability, risk and uncertainty, no business can afford to rely upon one single revenue stream, but particularly not those in the recruitment industry. As well as being hit early by a dramatic fall in share prices, margins on jobs are bringing in less and less for recruitment firms due to an increase in industry regulation and the rise of standard pay and charge rates.

TempSure^TM is a product that was developed by de Poel for the benefit of their agencies, offering a broad range of lifestyle and insurance benefits to its members (temporary agency workers) and alternative revenue stream for recruiters. During 2009, the product substantially improved its value, increasing profits for struggling recruiters at the beginning of the year as well as allowing them to get ahead in the early stages of the upturn towards the end of the year. From January to December, those in control of the scheme at de Poel witnessed a massive 60% increase in the number of TempSure^TM members. 

Andrew Hetherington, who manages the sale of TempSure^TM across the 1500 agencies de Poel partner with said: "There are two reasons we have seen such a big increase in TempSure^TM memberships. One is because we now offer a much stronger range of benefits to the temps themselves, anything from gym membership, theme park tickets, travel and retail vouchers, with over 70 retailers listed, to dining, home furnishing benefits and insurance schemes. The other," he added, "is because of the innovative new revenue stream it offers to agencies. Although the recession increased the demand for temporary agency workers, it is not enough that agencies rely solely on worker margins. TempSure^TM gives them another option."

Of course, the next question is: where does the money actually come from? According to the TempSure^TM website, by offering the scheme to their workers, agencies can make as much £1 per week, per sign up. Thus, in practice, an agency or branch with an average of 20 new temps per week could make as much as £1,040 per year on those 20 temps alone. The added benefit, especially during a recession, is that it can help agencies to retain their candidate availability pool. With so many agencies in operation and unemployment figures reaching their lowest in a decade, the recession saw an increase in the number of recruitment agencies that candidates were registered at any one time. By offering TempSure^TM, de Poel's agencies were able to stand out from the crowd and encourage workers to approach them for work again in the future. According to de Poel's agencies, this also made for more satisfied clients, (who continue to value continuity of service provision), and increased the chances of repeat business.

Aiding compliance

With so many agencies in operation and a large number of agencies going into administration, the period of 2008-2009 saw a large number of companies clamp down on agency insurances. Not only were agencies required to have a number of very specific insurance policies in place, but the amount of cover required was increased across the board to somewhat costly levels. The added problem arose as clients compelled all supplying agencies to provide proof of each individual insurance policy - either through certificates or policy documents. Specifically, most clients or intermediary bodies began to require proof of a minimum cover for Employers' Liability, Public Liability, Professional Indemnity and Drivers' Negligence insurance where they were supplying drivers. The fact that all of these policies, even if already in place, would at some point require review and renewal meant the administrative and financial burden associated with agency insurances, was ongoing.

Witnessing more and more agencies struggling both to manage their client demands and locate associated documents, de Poel developed a product which would help them reduce costs whilst consolidating the relevant policies together. Not only did agencies run the risk of breaking the law without the relevant insurance policies, but they threatened to breach the terms of client contracts, exposing themselves to legal action and negligence claims, not to mention a loss of business. Covering recruitment specialists for all their insurance needs under one policy, AgencySure^TM aimed to cuts back on costs and remove the need to keep re-submitting schedules. With a rolling policy (i.e. with no renewal date), it also aimed to avoid the ongoing worry associated with managing insurance policies. Extended to include Office Insurance and Fidelity Bonding, AgencySure^TM also offered to protect agencies' office equipment, monies and securities at a time when theft and break ins were rife.

Recruitment International May 2010.pdf