Credit crunch prompts UK industry to get smarter on labour spend
Alison Harter, from de Poel Consulting explains that by examining labour spend, major organisations can tighten their belts, make significant savings and prevent redundancies amidst the growing climate of economic gloom
As the credit crunch takes hold of the UK's economy, there is a real need for businesses across a whole range of sectors to get smarter and streamline their operations.
As a result of this, the pressure is intensifying on HR and procurement professionals to evaluate and tailor their processes and to focus more than ever before on cutting back on existing recruitment and labour spend. The latest report on jobs stated for the x month the decline of permanent vacancies. During these turbulent times however, we see the demand for temporary labour increase.
The benefits of using temporary labour are numerous; flexibility and responsiveness being a huge factor in the current climate. Staff can be provided by agencies quickly, as and when they are required. At the moment it is extremely difficult for companies to predict staff usage and requirements beyond a certain date so using temporary workers makes better business sense.
Indeed, latest figures suggest that UK Plc spends more than £23.4 billion on temporary labour each year. For many of the larger blue chip companies who spend millions of pounds each year on temporary agency labour, making small savings with individual agencies or temps can have a huge impact on overall temporary spend.
Step 1 - Preferred agency panel
A primary objective for organisations, should be to operate with a preferred panel of agency suppliers. Implementing a system of control enables organisations to assess costs, alongside agency performance.
Providing agencies with opportunities to work on a greater volume of placements can assist them to develop a better understanding of organisations' operational needs.
Points to consider when selecting a preferred agency panel
Do they have access to workers with appropriate skill sets?
How reliable are they?
What is their geographic presence?
How would your operators rate their service level?
Are they complying with current legislation?
Traditionally, companies have put in place preferred suppliers lists (PSLs) with no operational input or used a master vendor solution to channel all placements. Neither approach allows adequately for operational requirements. Twelve months later, compliance to the supplier list is low and spend is once again uncontrolled and unregulated.
Step 2 - Standardised Fees
As organisations are squeezed by tougher trading conditions and battling with tighter budgets, the need to reduce and control their agency labour spend intensifies.
We regularly hear of companies negotiating fee levels and pay rates with agencies during or after placements. Not only does this compromise their negotiating position, but also has an adverse effect on their relationships with agencies. If fees are to be negotiated, this must happen prior to the commencement of placements.
Agreeing fixed, standard and overtime pay rates to various job types in advance with each approved panel agency, provides a level playing field for agencies tompete on. This alleviates the added responsibility placed on operational managers to negotiate fees on a supply and demand basis, allowing them to focus organisational objectives.
Finding the balance between the market-driven charge rate and a competitive pay rate, the optimum level, is the key to ensuring the continued supply of high quality temporary agency workers.
Step 3 -Terms
Whilst the recruitment industry remains a highly fragmented marketplace, the barriers to entry are low, it is relatively easy to set up a recruitment company. There are no standard industry terms and conditions, allowing agencies to operate under their own agreements.
Our work with major blue chip clients across varying sectors including retail, construction, waste, logistics, manufacturing, financial services, construction, transport and logistics clients resulted in direct cost savings of between 6-12% of total labour spend - many millions of pounds.
Ian Lathey, Director of Procurement for City Link explains how de Poel's unique process has helped them to make significant savings and process efficiencies: "From a procurement point of view margins are reduced and applied consistently across all suppliers and de Poel also ensures that statutory costs are calculated and applied at the correct level. The reporting capabilities of their system has provided us with unprecedented visibility of our spend on agency labour delivering benefits from an operational and resourcing perspective. This has enabled us to control a cost that can easily become invisible across a multi-sited operation. "
With a UK-wide spend of £26 billion on temporary and permanent labour, the potential to streamline and save is enormous, reducing the need for redundancies
The UK's primary purchaser of temporary agency labour is delighted to announce another new client within social housing - projecting savings of 10% a year for the company.
de Poel, renowned for cutting costs on temporary agency labour, identified these significant savings for the Metropolitan Support Trust as part of their unique solution to manage supply of agency staff.
As with other de Poel clients, the trust are benefitting from standardised rates and a managed 'panel' of agency suppliers providing significantly reduced charge rates and improving the quality of staff employed.
Also proving invaluable is use of de Poel's unique timesheet and invoice processing system e-tips®, in both eliminating heavy administration costs and doing away with paper invoices.
Managing Director of MST, Mark Austin, said: "de Poel are good people to work with, who deliver what they say they're going to.
"They have enabled our use of agency staff to be more clearly recorded, and their e-tips® system is user friendly with our staff picking it up well.
"The simplicity of the invoicing process is greatly appreciated by our finance team.
"But above all the chance to make significant savings with no detriment to the quality of service is hugely welcome. Controlling our agency costs to this degree really strengthens our financial position."
Part of the Metropolitan Housing Partnership, MST is a specialist care and support organization, with over 700 staff committed to helping over 5,000 vulnerable individuals to live independent lives.
They work with people with learning disabilities, mental health issues and drug and alcohol dependencies, as well as older people, refugees and asylum seekers, the latter through their Refugee Support brand.
In partnership with statutory and voluntary organizations, MST work to develop individually-tailored action plans to support individuals in achieving their potential.
Matthew Sanders, Chief Executive Officer for de Poel, commented: "MST is one of our biggest savers, and it's great to see such an important organization benefitting from our services.
"They are a fantastic company to work with, as they clearly recognize the importance of what we do. We hope to work with their other regions in the future."
Is temporary labour the answer during a recession?
Alison Harter of de Poel Consulting, examines how businesses can make the most of a more flexible and cost-effective workforce.
As with most things in business, temporary labour is not a 'one size fits all'. Temporary labour can be more or less effective depending on the organisation, the market it operates in and of course the impact the recession has on this market. Does, for example, a lower consumer demand reduce the need for warehouse and logistics workforce? Regardless, for most organisations access to visibility of spend enables a more strategic approach and better, more informed decision making.
The Do's
1) Know your spend.
Perhaps hard to believe, but many companies don't have proper visibility of what they are spending on temporary labour or where it's being spent. Often individual depots or sites are responsible for recruiting their own temporary workforce, and this unregulated procurement can lead to different levels of service and different charging structures across the organisation, ultimately meaning less standardisation, more admin and greater cost. Focus on knowing where the money is being spent, and gaining visibility of what was spent in the past in order to predict the future.
2) Understand your spend.
Once a company has gained insight into how much they are spending on a temporary workforce, it is essential that they understand where and why the spend is occurring. Knowledge of the skill sets required, local operational needs and shift patterns, all help companies to understand where, and more importantly, how, a temporary workforce is adding value to the business. This can lead to maximising the workforce and, a more strategic approach to temporary labour can be taken. This alone can help to reduce spend and reliance on a temporary workforce, whilst maximising the flexibility benefits.
3) Manage your spend.
By improving reporting to give visibility of spend, it is possible to then manage and control spend, even at operational level. Standardising fees enables companies to know in advance the cost of a temporary worker. Using systems to ascertain the length of supply allows companies to predict and forecast spend. Using tools such as electronic timesheets and reporting gives real-time management information, critical to helping organisations manage their spend
4) Tackle the basics.
Once spend is visible and better managed, it is necessary to tackle the basics. Companies should address the reasons behind using temporary labour and the benefits they gain by doing so. For example, do temporary workers provide better flexibility for the business and is the temporary workforce more responsive to commercial needs?
5) Focus on a robust supply chain.
Supply of temporary labour typically comes from multiple suppliers across a number of different locations. By selecting optimum panels of suppliers based on their strengths in order to meet demand supply in specific locations and specific skill sets, the most robust supply chain is built.
6) Manage your suppliers.
Performance of your suppliers is critical to your organisations performance not least in a recession. All suppliers should have key performance indicators, and be measured against these. All too often we identify a number of preferred measurements an organisation has put in place that are never measured against, or if they are, suppliers are not managed in or out of the process based on their performance.
7) Understand legislation.
Legislation relating to temporary workers is changing on a continual basis. In recent months the introduction of the immigration point's scheme and the Temporary Agency Workers Directive has been agreed. Both will have an effect on companies who do not understand the implications of not adhering to the legislation. By understanding the legislation companies can protect against any unexpected costs arising from litigation.
The Don'ts
1) Go for the cheapest rate.
Focus on negotiating the optimum rate for your own unique position. The cheapest rate can de-motivate suppliers and at best will have a negative impact on fill rates and quality of workers and service. At worst, the supplier may agree to rates that are simply not sustainable, leaving them financially exposed and at risk of bankruptcy. Whilst the cheapest rate may help in the short term the effect on a supplier going bankrupt at short notice represents a far more significant cost to the supply chain and business.
2) Extend payment terms.
Unlike many other suppliers, agencies cannot negotiate payment terms with their workers; A temporary worker is paid by the supplying agency at the end of each week, often waiting up to 30 days from invoice before being in a position to recoup this outlay. Extending payment terms further affects the sustainability of the agency business model and could result in an agency being forced into bankruptcy due to a cash flow crisis.
3) Put restrictive processes in place.
Control and management of temporary labour does not need to be restrictive and such processes should be avoided. By putting in processes that make the sourcing of temporary labour harder the most likely outcome is a lack of compliance from operations. There will almost always be a sound, commercial reason that operations use temporary labour, the best outcome is to control this labour in a more strategic, efficient way without effecting supply.
4) Ignore opportunities to increase revenue.
In a recession the pressure to focus on operational margin increases. Whilst a focus on cost should be considered, it is important to explore opportunities to promote a growth in revenue.
5) Rush into outsourcing to one supplier.
In hard economic times the lure of cost savings through a full outsourced solution can be strong. However it takes time to bed in and understand your business, and the long term gain often involves short term pain. During a recession, it is essential that focus should be maintained on the long term, but what is crucial is that this isnotat the expense of the short term.
There is no doubt that once the economy starts to stabilise, consumer confidence will increase. The timescales are hard to predict and the near future looks to be hard for all organisations. By implementing the above practices, it is possible to have a significant impact on the bottom line, and to build a long term strategic approach to temporary labour.
Should companies do a check of their current employees' status in terms of work permits as soon as possible?
"We would advise all our clients to check the employment status of their current employees, both temporary and permanent. In most cases personnel records will confirm the status of permanent employees. Our existing clients will have more control of the status of their temporary workers than perhaps other organisations. As part of the de Poel solution we ensure that all supplying agencies sign a standardised Service Level Agreement containing a number of terms and conditions (as well as Key Performance Indicators). These terms include the fact that the agency will warrant and confirm that all checks and verifications to confirm the temporary worker complies with the Border and Immigration rules have been carried out. However, the most common pitfall we see and hear is that organisations believe they are covered by a term in a contract alone. More importantly, our clients understand that we spot audit the agencies against the Service Level Agreement. It is this auditing process which increases the cover over and above a term in a contract."
"Prior to working with de Poel it is a common belief amongst our contacts that the responsibility to check the employment status of a temporary worker lies with the agency. This is simply not true, it is the employers responsibility to check any immigrant workers have the correct permits."
So far this year, 137 prosecutions have been successfully made under the new Home Office rules - ten times more than last year - resulting in fines of £500,000. Ministers said the new rules will cut the number of skilled migrants coming in from outside of the EEA by 12%.
If so, how should they go about it and what tactics can they use to ensure that they don't offend the staff?
"Failure to check that workers, both temporary and permanent, comply with the most up to date immigration rules can result in fines of up to £10,000 for each illegal worker, and possible imprisonment. At a time when the government has announced that its focus for the next year will be compliance to these rules (rather than the introduction of further laws) it is evident that companies should headline a project with some urgency and request the appropriate permits from their employees"
"For permanent employees the information is almost certainly already on file having been collated by HR at the same time as reference checks / CRB checks (where appropriate were take). If not this is a simple information gathering and paper checking exercise that can be carried out from the human resources records. For temporary workers the situation is more difficult since many companies cannot record the number of temporary workers on site at each location at any given time, never mind their names and employment status". de Poel clients all use our etipsTM system to record the workers names, booking agency and hours worked by both job code and location. Our clients can easily run reports showing the names of temporary workers by code and location which can be used to spot check against the agency. It is these audits which help to give peace of mind to our clients."
The Home Office has announced it will be publishing on the UK Border Agency website the names of companies and their directors who continue to break the law. This comes five months after the Government started its drive to prosecute anyone found hiring illegal labour.
How can HR managers ensure that when hiring staff, they are legally allowed to work at that company?
"With respect to permanent staff the responsibility lies with the employer to make the appropriate checks. Often this will be included in the reference checking prior to a permanent employee starting. Interestingly a recent CIPD survey showed that 25% of job offers were withdrawn after a follow up of reference procedures and nine out of ten organisations surveyed took up candidate references. Checks include:
Home Office UK Border Agency website provides help and support for employers, with a helpline service, the sponsorship and employers' helpline can be reached on 0845 010 6677.
"In many cases however the hiring of temporary workers sits outside the remit of HR and the responsibility lies with the depot or line manager who requires the temporary worker. It is control at this level, in terms of the agencies used, conditions associated with each contract and the audit process associated with the supply of temporary workers that is critical to ensure workers are legally allowed to work. Many organisations have in excess of 100 temporary workers in multiple locations at any one time. These workers may have come from one of sixty plus agencies being used on a sporadic basis by different line or depot managers. The starting point for all organisations should therefore be to understand their temporary labour workforce in terms of usage, location, supplying agencies, spend, pay rates and job types. Our work with clients starts with a true analysis of their temporary workforce. Following this analysis period it is then important for companies to have in place an agreed panel of agencies, all working to standardised terms and conditions which covers areas such as compliance to legislation, pay rates, supply rates, fulfilment and attendance (amongst others) and to then have in place an audit process, both internally and externally to ensure compliance. de Poel's unique etipsTM system gives true control and visibility over spend and the temporary workforce. Peter Shaw, Director of Accounting, TDG says"..., the company-wide implementation of de Poel's e-tipsTM system has enabled us to gain a previously unattainable level of visibility and control over spend and in turn dramatically reduce the cost of processing invoices from £750,000 to £2,000 per annum."
"Better clarity of legal issues is a driver for many of clients as the new legislation becomes more complex and the fines become increasingly harsh, This is particularly true in industries where the use of temporary workers is high, such as transport and logistics, waste services and facilities management. We have implemented the above solutions for companies such as TDG, Pilkington and SITA giving all not only some protection against risk of litigation but also a standardised pay and charge rate from a supplying panel of agencies and more streamlined processes and visibility associated with all aspects of temporary labour, delivering cost savings in the region of 6-8% of total spend."
Managing temporary agency labour
If your business relies heavily on temporary agency labour in order to fulfil seasonal trends and to stay flexible and competitive then you will be well aware of the pitfalls and challenges associated with the management of this type of workforce.
Each year the British industry spends in excess of £23 billion through more than 17,000 recruitment agencies, making temporary agency labour a highly fragmented market place with immense scope for improved efficiency.
Temporary labour is an extremely useful business resource in terms of offering employers reduced wage and benefit costs, increased workforce flexibility, assistance with special projects and staff replacement, as well as providing the perfect opportunity to preview candidates for full-time employment.
The advantages of using a contingent workforce however come at a high price. Employers need to seek legal advice to ensure that they are 100% compliant with the law and in doing so they can protect their company from a host of legal issues, including whether the temporary worker is considered to be an employee and as such can qualify for any company benefits.
It is also imperative to undertake supplier reviews, regularly re-assess pay, charge and overtime rates and implement formal service agreements encompassing carefully selected key performance indicators in order to stay competitive and ensure that you are getting a high level of service from your chosen suppliers, all of which can be costly and extremely time-consuming.
de Poel is an independent, vendor neutral cost reduction consultancy that specialises in helping businesses to overcome the obstacles of engaging and managing temporary workers, increase supplier and staff efficiency, delivering cost savings faster than any alternative in-house exercise.
Our innovative solutions and supplier rationalisation processes are designed to help companies who spend more than £3 million a year on temporary agency labour to significantly reduce these costs, delivering thousands of pounds of savings each year.
In addition to a cost reduction consultancy, de Poel's other unique services include e-tipsTM (an electronic timesheet and invoice processing system)
and addTM (the agency driver database), all of which are designed to facilitate contingent workforce management and in turn reduce costs, promote a greater level of control and visibility of temp usage throughout the business, provide complete transparency of process and improve service delivery from agencies.
de Poel has a lengthy track record of success within the temporary sector and clients who have already benefited from our services include Sainsbury's, TNT Express, Co-op Retail Logistics, Allied Bakeries and Somerfield.
For further information on all the unique ways in which de Poel can help you to manage your contingent workforce more effectively and save you money contact de Poel on 01565 682020 or at enquiries@depoelconsulting.com.
Government brokers equal pay deal for a million agency workers
More than one million agency workers will receive the same pay as permanent staff after they have been employed for 12 weeks under a deal brokered by the Government.
The agreement - hailed by the unions as a breakthrough on workers' rights but attacked by several business groups - was effectively forced on ministers after they failed to find allies in the EU to block a directive that would have cut the qualifying period for equal treatment on pay and conditions to six weeks.
Brussels is pressing for equal treatment from the first day of agency employment to become the norm.
But the CBI, which agreed the compromise with the TUC, had been pressing for a six-month interval before agency staff are entitled to the same treatment as other employees and appeared to have gone along with the deal as a preferable alternative to the European plan.
It called the outcome the "least worst outcome for business". Ministers said that it was the "right deal" for British industry.
"The agreement achieves our twin objectives of flexibility for British employers and fairness for workers," John Hutton, the Business Secretary, said.
The agreement will not cover sick pay or pension payments while temporary staff will have to work the same length of time as full-time workers to enjoy paid maternity leave.
But the Federation of Small Businesses led the way in attacking the concordat. "This is a disastrous deal for small businesses, which rely on the flexibility provided by agency workers," it said.
David Frost, director-general of the British Chambers of Commerce , said: "When the economy is weakening this is not the time to further reduce flexibility. With the Government seeking to move a million people back into work, a deal of this nature will not help."
Dave Prentis, the Unison leader, said: "The abuse of temporary agency workers is a shameful relic of another age that should be outlawed."
The agreement could pave the way for new European rules on the maximum working week.
The two controversial labour market issues have been on the negotiating table for years and are being seen as a package with trade-offs in one being compensated by concessions in the other.
Thus, Britain will be allowed to keep its opt-out in the European Union's recast Working Time Directive, but, in exchange, has been forced to concede the principle of equal treatment for agency employees.
Employment ministers are expected to discuss both items at their next meeting in Luxembourg on June 9 and to reach political agreement on the new legislation, which could then be formally approved before the end of the year.
Outsourcing for the Permanent Recruitment Industry
Does a full RPO Solution seem a leap of faith? Are you interested in outsourcing some parts of recruitment process but want to maintain control of key elements like your employee brand?
According to the latest industry figures, outsourcing is on the up, with the number of companies outsourcing critical business functions rising year on year. A recent survey of some 3,500 procurement, supply chain and finance professionals worldwide revealed that 95% of firms want to use procurement outsourcing to improve their sourcing strategy
Along with key findings from the Recruitment and Employment Confederation highlighting recruitment to be the primary problem for more than half of all UK companies, ahead of business strategy or management, it is not surprising that more UK companies are turning to RO (Recruitment Outsourcing).
Some companies are, however, reluctant to use the services of specialist recruitment outsource providers to outsource elements of their business. At the yearly CIPD event in Harrogate last September, HR Directors were surveyed about their attitudes to RO. The results showed that although 60% of respondents are frustrated that it takes between three and five months to fill a management position, 56% feel outsourcing recruitment is a risk to their organisation.
The search for a suitable RO provider can be confusing because suppliers come from various backgrounds and bring different skills. Some firms were born out of executive search companies while others are recruiters who have relabeled their staffing business as RO so they can offer a fully managed service. There are also software companies that have developed online recruitment tools and are moving into the service sector.
One of the more recent arrivals in the permanent recruitment outsourcing sector is de Poel Consulting. Although they have been in operation since 2001 their focus has been predominantly within the temporary labour industry working successfully with clients such as Sainsbury's, Royal Mail, TNT, Eddie Stobart, MFI and the Co-op. Since moving into the permanent sector a year ago de Poel can boast a similar success story. Their permanent recruitment service has attracted the attention of existing clients, as well as triggering interest from several new sectors, including a very prominent broadcasting station.
de Poel is an independent consultancy who implement workforce management solutions designed to facilitate the recruitment process, whilst reducing cost and improving service delivery from agencies. Their approach ensures that agency spend is manageable and visible across the business. Importantly, they do not ask clients to outsource their entire recruitment process, nor do they ask clients to outsource their relationships with agencies, limiting communication and possibly restricting understanding of company culture.
Their web based systems are used to ensure that communication with agencies is efficient, auditable and provides accurate, real-time management information. Their proven solution ensures that agencies compete on the quality of candidates interviewed as well as service delivery.
The system which is used by de Poel's clients significantly improves efficiency and reduces the burden of administration allowing staff to focus on their core competencies and deliver high levels of customer service.
Importantly, this type of outsourcing does not cost any money. de Poel's solutions require no capital expenditure as fees are based on a percentage of the direct savings achieved.
Outsourcing part (as companies do with de Poel), or all, of a business' recruitment workload can help a company to better track and manage their recruitment expenditure, suppliers and processes. Benefits include cost reduction, freeing HR managers from administrative tasks so that they can concentrate on strategic issues and improving competition by better brand management.
What are the biggest challenges (in managing labour costs in the current economic climate)?
At the moment it is crucial not to have a disjointed recruitment strategy or reduce costs in the wrong areas, such as salaries and hourly pay rates. Reviewing and standardising agency charge rates may assist in cost cutting without jeopardising the quality of staff.
What should you avoid doing?
It is extremely important not to make rash recruitment decisions or make assumptions on the severity of the economic downturn. There is a significant cost involved in letting staff go and then re-recruiting for the same positions.
What are your three top tips?
1. Make strategic decisions - don't panic
As the credit crunch continues, the pressure is increasing on HR and procurement professionals to streamline their processes and cut back on recruitment spend with a noticeable shift towards making efficiencies on labour spend. An area where the most significant savings can be made is temporary labour - a growing area of usage within the current climate. Latest figures suggest that UK Plc spends in excess of £23.4 billion on temporary labour every year. For many blue chip companies, making small savings with individual agencies or temps can have a huge impact in overall temporary spend.
Whilst cost savings are a priority for the majority of organisations, other issues such as staff quality and agency service levels are equally important.
Bu taking sensible steps such as operating with a preferred panel of suppliers, agreeing fixed agency rates and introducing standardised terms and conditions, it is possible to improve relationships with your agencies and enhance staff quality.
It is also worth examining your current invoicing software and opting for a system which will both streamline administration and provide management information, which is vital for forecasting and assessing agency labour usage and spend. There are some sophisticated web based timesheet and invoice processing systems available in the marketplace which can dramatically reduce the cost of processing timesheets and provide real time management information.
Businesses must ensure maximum efficiency, accountability and measurability at all times in order to develop a more strategic partnership with your agencies and ultimately make the process slicker and more cost effective.
Staffing Industry on the Rise
The UK's recruitment industry now employs 101,286 people, a 3.6% increase on last year's employment statistics and the first time this figure has risen above 100,000, according to the REC's Annual Industry Turnover and Key Volumes Survey.
The recruitment industry as a whole is booming with annual turnover rising by almost £2 billion to a staggering £26.65 billion. Notably it is the turnover from temporary and contract recruitment firms which represents the biggest chunk of this figure, with their revenue rising to £23.16 billion. Permanent recruitment however did still enjoy an increase in turnover from £3.27 billion to £3.51 billion.
In the last twelve months the staffing sector has grown by 7.4%, with temporary and contract firms placing 1,377,740 staff, an average of 46.5 placements per consultant. Permanent recruiters also made 787,280 placements, averaging 19.8 appointments per consultant.
As the UK's leading independent consultants de Poel consulting facilitate ????? temporary and permanent staff through over 750 agencies. In the last year they have also seen a significant rise in staff placements across the country.
Since de Poel was founded in 2001, the company has experienced rapid growth mirroring the impressive growth within the recruitment industry itself. In this time de Poel has established an enviable client base including Sainsbury's, TDG, Royal Mail, TNT MFI and the Co-op.
de Poel's expertise and knowledge of the industry is backed up by a sophisticated invoicing and timesheet processing system, e-tipsTM which is used by all of their clients.
e-tipsTM is a web based system which dramatically reduces the cost of processing timesheets and invoices by presenting clients with a single 100% accurate, consolidated invoice. The revolutionary system not only removes the administrative burden of processing timesheets and invoices but also provides clients with a wealth of management information and delivers a previously unattainable level of transparency, visibility and control.
The system has been operational for more than 5 years, processing over 25 million hours and consolidating over £200m of agency spend per annum for de Poel's clients. e-tipsTM is currently being utilised by 3,696 agency branches, holds details of 25,848 candidates and is fully compatible with all other de Poel applications.
Co-operative Retail Logistics in particular has "benefited enormously from the implementation of de Poel's web based electronic timesheet and invoice processing system (e-tipsTM), making considerable cost savings and successfully streamlining administrative procedures across all twenty of our sites."
The retail sector was never going to be the first area of British business to be hit by the credit crunch but now there is little doubt that the current economic slowdown has started to impact upon the retail industry.
But whilst the industry has escaped relatively unscathed to date, increases in petrol and energy prices are prompting more and more businesses in the retail sector to get smarter across a range of operations.
Retail is one of the biggest sectors of industry, with retail sales accounting for a fifth of the UK economy. Within the sector there is huge competition amongst retailers to enhance the shopping experience by continually extending product ranges and services and above all, to attain a high level of customer service.
In order to do this and at the same time accommodate the seasonal peaks and troughs synonymous with this sector, retail companies utilise an enormous amount of temporary workers, including drivers, warehouse operatives and administrative staff.
As companies within the sector strive to meet new challenges in a very different economic climate, the need for smarter working processes in this labour intensive industry becomes ever more crucial.
With inflation hitting petrol prices and making a huge impact on retail companies' overheads, managers are searching for innovative ways to save money without compromising on the quality of work.
One area which often comes under scrutiny at such times within the industry is businesses' labour spend - perhaps an obvious area to examine as a high user of manual labour. The retail industry employs over 3.0 million people in the UK, equating for 11% of the country's workforce and this is set to rise if current trends continue. As such a labour intensive industry, reducing workforce numbers is simply not an option for many companies.
So what is the answer? Well, it's not a simple off-the peg solution. Every company has its own unique requirements and demands, and every business has a different approach to it's spend on its workforce. But increasingly, the larger retail companies are working to gain a better understanding and more in-depth analysis of their spend in this area, ultimately looking to make their budgets work harder.
Shying away from redundancies - simply not an option for many of the larger players - retail sector companies also tend to be reluctant to hire new permanent staff when the economic outlook is bleak. In this vein, there is a noticeable downturn in permanent staff recruitment. Meanwhile, however, temporary labour is experiencing in upturn in demand.
The benefits of using temporary labour in this sector are invaluable; flexibility and responsiveness being a huge factor in the current climate. Staff can be provided by agencies quickly, as and when they are required - particularly useful for industries such as retail which are constantly going through periods of rapid change. In the current economic situation, it's difficult for companies to predict staff usage and requirements beyond a certain date; therefore using temporary workers makes better business sense.
Even with companies adapting their working patterns to rely more heavily on temporary workers, the retail sector still needs to work smarter with its recruitment to overcome the pressures of the economic climate. Temporary workers alone cannot solve the problem.
However, despite the numerous benefits of using temporary staff, the highly fragmented and largely unregulated nature of the industry, means that organisations that rely heavily on this type of labour can be faced with a number of difficulties.
With numerous labour suppliers at both national and regional level, many of the larger retail companies struggle to ensure consistency when it comes to quality, cost and service levels. The wide range of fees and terms and conditions can make it an expensive and often challenging area of the business to administer.
Additionally very few companies have any sort of centralised control or visibility over their use of temporary staff throughout the business, making it difficult to accurately assess the associated costs and budget for the future. Temporary staff are normally booked by site or depot managers operating independently and it can be extremely challenging to gain central control over the process.
Often ultimate line managers will have very little knowledge of their temporary workforce on site, making communication difficult and potentially impacting heavily in areas such as health and safety. Within the recruitment industry there are also a number of rogue recruitment agencies who do not have the correct procedures, controls and legislations in place. Such agencies can be difficult to identify and manage and can leave an organisation legally exposed.
For organisations that regularly use a contingent workforce it is important to remain up to date with current employment legislation, particularly in an industry such as retail where health and safety standards are stringent. By ensuring complete compliance with the law, companies can protect themselves from a host of legal issues, including whether the temporary worker is considered to be an employee and as such can qualify for any company benefits. However there is often a lack of clarity as to whether legal compliance is the client's or agency's responsibility and this can have very serious implications.
Another common frustration with temporary labour is the heavy reliance on paper-based timesheets and invoices. There is also an increased risk of error and inaccuracy within the temporary labour sector. The more recruitment agencies used by a company, the more temporary workers there are and, as a result, the more invoices and timesheets processed. Shockingly, 15,000 invoices are not uncommon for some of the larger retail companies we have been brought it to help. With a typical average invoice error of 15% this process can prove extremely costly.
But there are tools available to prevent the common pitfalls and with careful management, the right advice, and systems in place some impressive savings can be achieved.
Introducing software to cut down administration is one factor to consider. The introduction of timesheet software and invoicing systems companies can therefore dramatically also creating an additional saving when looking at a full service overhaul.
The effects of legislation change
Whilst making cost savings is the main concern for the majority of companies there are other important recruitment issues to consider, with staff quality and service levels at the forefront. It is therefore important for companies within the retail sector to stay clued up on the most up-to-date legislation surrounding permanent and temporary workers.
Legislation which could be brought in over the next few years could have an effect on companies who heavily rely on temporary workers for long periods of time, such as those in the retail sector.
The Agency Workers Directive aims to stabilise the imbalance of treatment, including benefits, between temporary and permanent workers. The legislation, which will entitle agency workers to equal treatment with comparable permanent employees after 12 weeks of employment, is due for a second reading in Europe with a further six months to allow for amendments. It is looking highly likely that the law will be implemented in the UK in a little over two years.
This could mean the useful reliance of temporary workers during times of economic instability may not have as many advantages in the future for the retail sector as it does today.
Furthermore as this sector historically uses a high number of immigrant workers it is necessary for companies to closely audit their agencies to ensure that they are compliant with the necessary legislation. The recent legislation on the Immigration Points System has already resulted in the prosecution of 137 companies this year and this figure is set to rise as the Government has already committed significant budget to the enforcement of this law.
The future
The retail sector has always been, and always will be extensive users of temporary labour, as a result more and more companies within the sector are looking to work smarter by turning to strategic consultancies to fulfil and streamline their recruitment requirements and reduce their labour spend. The strategic procurement of temporary or permanent staff (through a vendor neutral consultancy) can deliver impressive results, easing the pressure on HR and procurement departments and enhancing both company performance and overall profit.
Our work with major retail industry clients has resulted in direct cost savings of between 6-12% of total labour spend - several million pounds. With a UK-wide spend of £26 billion on temporary and permanent labour; the potential to streamline and save is enormous, not least in the retail sector.
For further information please visit www.depoelconsulting.com or contact aharter@depoelconsulting.com
Maximise your recruitment budget and slash your labour spend
As the economic downturn intensifies/credit crunch tightens (either or), the pressure is increasing on HR and procurement professionals to streamline their processes and to focus more than ever before on cutting back on existing recruitment spend. Although many organisations are as yet reluctant to make redundancies, there is a noticeable shift towards making efficiencies on labour spend - a considerable outlay for any business.
An area of spend where the most significant savings can be made is temporary labour - a growing area of usage within the current economic climate. Indeed, latest figures suggest that UK Plc spends in excess of £23.4 billion on temporary labour every year. For many of the larger blue chip companies who spend many millions of pounds each year on this area of the business staff, making small savings with individual agencies or temps can have a huge impact in overall temporary spend.
Here, Alison Harter, Sales & Marketing Director, of de Poel Consulting, explains the steps that can be taken to achieve more efficient recruitment processes, reducing costs, whilst simultaneously improving service delivery.
Whilst the predicted turndown may give rise to considerable risks for companies, it will also present an opportunity for procurement departments to work smarter and demonstrate just what they can do.
Whilst cost savings are a priority for the majority of organisations, other important issues such as staff quality and agency service levels are viewed as equally important.
A primary objective for organisations, should be to operate with a preferred panel of agency suppliers. Implementing a system of control enables organisations to assess costs, alongside agency performance.
Providing agencies with opportunities to work on a greater volume of placements can assist them to develop a better understanding of organisations' operational needs.
Points to consider when selecting a preferred agency panel
Traditionally, companies have put in place preferred suppliers lists (PSLs) with no operational input or used a master vendor solution to channel all placements. Neither approach allows adequately for operational requirements. Twelve months later, compliance to the supplier list is low and spend is once again uncontrolled and unregulated.
Step 2 - Standardised Fees
As organisations are squeezed by tougher trading conditions and battling with tighter budgets, the need to reduce and control their agency labour spend intensifies.
We regularly hear of companies negotiating fee levels and pay rates with agencies during or after placements. Not only does this compromise their negotiating position, but also has an adverse effect on their relationships with agencies. If fees are to be negotiated, this must happen prior to the commencement of placements.
Agreeing fixed, standard and overtime pay rates to various job types in advance with each approved panel agency, provides a level playing field for agencies to compete on. This alleviates the added responsibility placed on operational managers to negotiate fees on a supply and demand basis, allowing them to focus organisational objectives.
Finding the balance between the market-driven charge rate and a competitive pay rate, the optimum level, is the key to ensuring the continued supply of high quality temporary agency workers.
Step 3 -Terms
Whilst the recruitment industry remains a highly fragmented marketplace, the barriers to entry are low, it is relatively easy to set up a recruitment company. There are no standard industry terms and conditions, allowing agencies to operate under their own agreements.
Not only does this provide little comeback, in the event that things don't work out it can also leave organisations exposed to additional fees further down the line.
Organisations should compile their own set of terms and conditions, providing a standardised service agreement to be adhered to and agreed by existing suppliers prior to commencing assignments.
We highly recommend including Key Performance Indicators (KPI's) within the service agreement. KPI's should reflect the service criteria most important to their organisation, for example;
§ Requirement fulfilment
Organisations can often be left, unknowingly, legally exposed. This year alone, the Government has not only introduced several new laws relating to employment, but been extremely active in auditing their implementation. There have been 137 prosecutions so far this year for the employment of illegal immigrants with individual fines of £10k. Organisations need to be confident their agencies are legitimately checking their temporary workers and be clear who is legally accountable.
Step 4 - Monitor/Review
Perception of performance is often influenced by the relationship with an agency consultant and not by actual facts and figures. Service agreements with measurable kPI's form the basis of a review process.
Quarterly reviews, regularly re-assessing pay and charge rates, provide a more structured approach to performance and more importantly, ensures a perpetual review of the preferred agency panel.
Step 5 - Streamlined Administration
The recruitment industry relies heavily on the processing of paper based timesheets and invoices. They have an increased risk of error and inaccuracy, with a 15% typical error rate. The more recruitment agencies used by an organisation, the more temporary workers there are, as a result the more invoices and timesheets processed. The administrative burden of processing can be expensive .
The conventional means of handling multiple time sheets and the collation, reconciliation and payment of invoices typically adds around 12% to agency service costs.
The indirect costs to companies of handling the associated timesheets and invoices are enormous. Combined with an average agency invoice accuracy level of 85% or less, this amounts to an estimated £2.1 billion a year.
There are currently some sophisticated web based timesheet and invoice processing systems available in the marketplace which dramatically reduce the cost of processing timesheets and allow organisations to receive a single 100% accurate, consolidated invoice.
Points to consider when selecting a system:
Step 6 - Management Information
Typically, large organisations have very little, or in some cases, no visibility of temporary agency labour usage and spend, which in turn can present difficulties when forecasting or leveraging spend. Companies are often unaware of the amount they spend on temporary labour or which different pay and charge rates are in existence within their organisation.
Operating with an appropriate software system which provides real time management information, is a vital tool when attempting to take control of agency spend.
Points to consider when reviewing management information options;
It is evident during this climate of economic unrest and instability that organisations must reduce and control both agency fees and spend on temporary labour. They must ensure maximum efficiency, accountability and be measurable at all times.
This structure develops a more strategic partnership with agencies, making the process slicker, simpler and ultimately more cost effective.
de Poel took centre stage at the 2008 CIPD Recruitment and Retention Exhibition to discuss Recruitment Process Outsourcing
With HR issues currently at the forefront of UK business strategy, attendance at this year's Annual CIPD Recruitment and Retention Exhibition reached an all time high.
The CIPD's Barometer of HR Trends and Prospects 2008 published earlier this year reported a challenging year for HR professionals.
The pressures brought about by the recent economic slowdown have already culminated in a tough year, with an increased focus on efficiencies and measurements.
It is anticipated that employers will adapt to the slowdown by cutting back on recruitment, associated costs and hours of work rather than going through large scale redundancy programmes.
As a result of this the war for talent may deepen as it becomes more critical that the recruitment budget is used to greater effect and that the best talent is hired to enhance an organisations performance and competitiveness. Recent years have shown that even during periods of economic slowdown, skills shortages have not eased and the vast majority of employers believe turnover has a detrimental effect on organisational performance. The need to contain costs is likely to limit average pay rises throughout the remainder of the year, which may well have an impact on retention of key employees in 2008.
The most challenging trend to come from this will be the need for organisations to secure true value for money from their recruitment and reward budgets. This will mean HR departments will have to account more closely for money spent in areas such as the use of the internet to attract candidates and the progression of skill sets as well as trying to counteract the problems caused by the drop in migrant workers.
The ever popular exhibition covered areas such as the recent slowdown, HR software, outsourcing, employment law, talent management, employer branding and employee engagement and offered solutions to key issues such as recruiting for business growth, building an online presence and flexible working.
de Poel consulting, the UK's leading vendor neutral consultants was approached by the CIPD to present at their showcase conference.
In response to their request Alison Harter, de Poel's Sales and Marketing Director took centre stage to discuss the benefits and pitfalls of using a full RPO solution. The presentation, entitled, "Does a full RPO Solution seem a leap of faith?" discussed the current recruitment marketplace, and covered issues such as why to outsource recruitment, the various outsourcing options and the best solution for your company. In conclusion the presentation urged the HR community to consider whether niche outsourcing providers who specialise in different areas of the recruitment life cycle and process may represent a lower risk that engaging a full RPO solution with one organisation.
According to the latest industry figures, outsourcing is on the up, with the number of companies outsourcing critical business functions rising year on year. A recent survey of some 3,500 procurement, supply chain and finance professionals worldwide revealed that 95% of firms want to use procurement outsourcing to improve their sourcing strategy.
The search for a suitable RO provider can be confusing because suppliers come from various backgrounds and bring different skills. Some firms were born out of executive search companies while others are recruiters who have relabeled their staffing business as RO so they can offer a fully managed service. There are also software companies that have developed online recruitment tools and are moving into the service sector.
As an independent consultancy de Poel implements workforce management solutions designed to facilitate the permanent and/or temporary recruitment process, whilst reducing cost and improving service delivery from agencies. Our approach ensures that agency spend is manageable and visible across the business. Importantly, we do not ask clients to outsource their entire recruitment process, nor do we ask clients to outsource their relationships with agencies, limiting communication and restricting understanding of company culture.
Our web based systems are used to ensure that communication with agencies is efficient, auditable and provides accurate, real-time management information. Our proven solution ensures that agencies compete on the quality of candidates interviewed as well as service delivery.
PermPortTM, our ground-breaking vendor management and invoice processing system significantly improves efficiency and reduces the burden of administration, allowing staff to focus on their core competencies and deliver high levels of customer service.
Importantly, this type of outsourcing does not require any budgetary outlay. Our solutions require no capital expenditure as fees are based on a percentage of the direct savings achieved. Unlike a full RPO solution where it may take years to realise potential savings, these savings can be seen immediately
Outsourcing part (as companies do with de Poel), or all, of a business' recruitment workload can help a company to better track and manage their recruitment expenditure, suppliers and processes. Benefits include cost reduction, freeing HR managers from administrative tasks so that they can concentrate on strategic issues and improving competition by better brand management.
The response to Alison's presentation was overwhelming with an enormous amount of positive feedback and requests for further information.
Are UK company's misleading us about not making redundancies in the current economic climate and in fact making their temporary workforce redundant? Is this ethical?
By the very nature of the industry's role within the UK labour force and indeed economy, temporary workers are what they are - temporary. According to research, the 69% of temporary workers are happy with their current temporary status.
Ironically companies operating with a significant temporary workforce, are able to protect their permanent employees, providing job safety during low points of their financial year. "Operating with a temporary workforce is an honest and open strategy which allows those not wishing to take on permanent employment to work on a temporary basis, suiting their needs, they expect their status to be as it should be - temporary", John Simmonds, de Poel Consulting
Temporary labour is proving to be an extremely valuable tool within today's UK's labour market. Indeed, latest figures suggest that UK Plc spends in excess of £23.4 billion on temporary labour every year.
However, businesses must ensure maximum efficiency, accountability and measurability at all times in order to develop a more strategic partnership with agencies and ultimately make the process slicker and more cost effective.
Typically, large organisations have very little, or in some cases, no visibility of temporary agency labour usage and spend, which in turn can present difficulties when forecasting or leveraging spend. Companies are often unaware of the amount they spend on temporary labour or which different pay and charge rates are in existence within their organisation.
In addition the indirect costs to companies of handling the associated timesheets and invoices are enormous. Combined with an average agency invoice accuracy level of 85% or less, this amounts to an estimated £2.1 billion a year.
In today's era of technology there is no excuse for businesses not to utilise the benefits of available software to increase efficiencies and reduce costs. Operating with an appropriate software system which provides real time management information, is a vital tool when attempting to take control of agency spend and avoid redundancies.
It is evident during this climate of economic unrest and instability that organisations must reduce and control both agency fees and spend on temporary labour.
Client Quote - Mark Fletcher, Business Integration Manager, Sita
In order to accommodate the seasonal requirements of our business we
often require additional temporary labour. Over the last couple of years we have made significant savings in this area. We have achieved this through strategic management rather than reducing our temporary workforce. We work in partnership with a vendor neutral provider, de Poel Consulting and with thier help we have been able to significantly reduce agency labour costs and streamline administration. This has resulted in a more efficient and manageable process.
Care Challenges
In the current economic climate, a number of industries are suffering from a cross-sector skills shortage, added to tightening credit conditions, rising inflation and increasing red tape. As the most vulnerable industry of all, the care sector has most at stake. Their need for quality staff supercedes that of other sectors, and the risks associated with endless bureaucracy are heightened by the potential real-life consequences of non-compliance.
And yet we seem to put the most pressure on care. Earlier this month, when they were already facing the challenge of implementing an imminent new Vetting and Barring Scheme (VBS), the Home Office accepted 16 proposals from the Migrant Advisory Committee (MAC) to tighten up the points-based immigration system.
As expected, these measures have been far from welcomed with open arms.
Concerns about the VBS begin with the employers themselves. Compelled to ensure that all employees are registered with the Independent Safeguarding Authority at a cost of £64 per person, employers could be discouraged from taking on or replacing staff for fear of a heavy administrative burden and excessive costs amidst the height of the recession. With fines of £5000 or imprisonment for those who employ an unregistered person, the stakes are even higher for employers who fail to implement the directive effectively. Limited scheme knowledge, busy work schedules and budget cuts could however, present barriers to compliance. Of course, prospective care workers may also become reluctant to apply for work in case of discrimination and subsequent exclusion from the sector.
The tip of the iceberg, was the government's decision to accept the MAC proposals, arguably the more hasardous move. As partner agencies continue to report hundreds of vacancies for social workers, changes to the points-based system which make it more difficult for migrants to work in the UK, might be rendered disastrous. Care organisations across the country are in fact becoming increasingly reliant upon migrants to make up a large proportion of their workforce. In London, 60% of all care workers are migrants.
That said, the problem with these measures lies not so much in the immediate results as it does in the knock-on effects. Should the staffing shortages within care intensify as expected, there will be more pressure on the sector to supplement its workforce with temporary agency workers - a risky and somewhat expensive process if not properly managed. Indeed, it is during times of acute staff shortages when agencies tend to cut corners in the recruitment process by not carrying out the necessary checks on new workers, leaving care organisations liable. Alternatively, staff shortages could induce a poor quality workforce, and most likely, increases in agency overcharging due to an upsurge in demand within a fragmented and unregulated recruitment industry. These trends may go some way to explaining why de Poel has already witnessed a rise in the number of care organisations using our vendor-neutral management services.
For the public sector, the consequences are particularly worrying. With escalating pressures to cut costs but retain quality, the argument for change in the laws might be transcended into one about change in the public sector supply base. If Government organisations realise the potential benefits of outsourcing their management of temporary agency labour, for example, they may find their increasing reliance upon agency staff less daunting.
Matthews Sanders, CEO, de Poel, the number one procurer of temporary agency labour in the UK
How to leverage the temp sector in your favour
The UK recruitment industry
The UK's recruitment industry is booming with an all time high turnover of £26.65 billion. Interestingly it is the turnover from temporary and contract recruitment firms which represents the biggest chunk of this figure (87%), with their revenue rising to £23.16 billion for the period ending March 2007.
The industry has grown significantly since the 1990's. Accordingly to the REC there were 9,500 recruitment agencies in 1991, the latest figures indicate that there were approximately 13,000 in 2007.
Although it supports a large number of companies the recruitment industry remains a highly fragmented marketplace, with high staff turnover. Recent figures indicate that the number of consultants working on both temporary and permanent positions in the year ending March 2007 was 19,531. The total number of people working within the industry, including administrative staff, was just over 101,000, an increase of more than 3,000 since the end of March 2006.
The number of temporary workers has also risen sharply over the last eighteen years and has more than quadrupled in terms of turnover since 1994. According to National Statistics the number of temporary workers rose by 71,000 to more than 1.5 million at the end of 2006.
The industry is comprised of thousands of small firms, serving a fairly narrow client base, which make up the lifeblood of the industry. The largest ten firms are unlikely to control more than 15% of the market between them, with no one firm commanding a 5% market share.
As the barriers to entry are low, it is easy to set up a recruitment company. REC research indicates that more than half of the UK's agencies are less than 10 years old and that there is a high turnover of firms as companies merge, are acquired or go out of business.
The benefits of using temporary labour
UK businesses use and rely so heavily on temporary labour for a number of reasons, the most beneficial of which being its flexibility and responsiveness. Staff can be provided by agencies quickly, as and when they are required. This is a particularly useful facility for companies going through periods of rapid change or that experience regular/seasonal peaks and troughs in activity. By outsourcing their seasonal recruitment requirements, companies can rely on their agencies to balance staff across different non-synchronous peaks and troughs in different supply chains.
Temporary labour is also an extremely useful resource when existing members of staff are off work sick or on a period of maternity leave, or when companies require a new member of staff for a fixed time whilst they choose a permanent member of staff.
Similarly if companies are unable to predict their staff usage and requirements beyond a certain date, using temporary workers makes better commercial sense. Often companies have an urgent need for staff for a limited, specific timescale, for example when experiencing periods of rapid change.
In addition to this many firms simply struggle to find the right staff and approach employment agencies to help them source suitable candidates. Often, organisations prefer to use the services of an agency rather than employing internal resource.
The difficulties of using temporary labour
As the recruitment industry is so fragmented and largely unregulated, organisations that regularly use recruitment agencies are faced with a number of difficulties.
With numerous suppliers on board, companies are often subject to a wide range of fees and terms and conditions, making it an expensive and often challenging area of the business to administer.
Additionally very few companies have any sort of centralised control or visibility over their use of temporary staff throughout the business, making it difficult to accurately assess the associated costs and budget for the future. Temporary staff are normally booked by line managers operating independently from individual sites with little or no control centrally.
Often line managers will have very little knowledge of their temporary workforce on site, making communication difficult and impacting heavily on health and safety.
Within the industry there are also an increasing number of rogue recruitment agencies who do not have the correct procedures, controls and legislations in place. Such agencies can be difficult to identify and manage and can leave an organisation legally exposed.
For organisations that regularly use a contingent workforce it is important to remain up to date with current employment legislation. By ensuring complete compliance with the law, companies can protect themselves from a host of legal issues, including whether the temporary worker is considered to be an employee and as such can qualify for any company benefits. However there is some doubt as to whether legal compliance is a client's or an agency's responsibility and this can have serious implications.
As an industry which relies heavily on the paper-based processing of timesheets and invoices, there is an increased risk of error and inaccuracy. The more recruitment agencies used by a company, the more temporary workers there are and, as a result, the more invoices and timesheets processed. With a typical average invoice error of 15% this process can prove extremely costly.
The Solution
de Poel is the UK's leading, independent, cost reduction company, specialising in the strategic procurement of labour and the management of recruitment agencies. de Poel helps organisations to maximise their relationships with recruitment agencies, adding value and saving money.
The company has a compelling track record of reducing labour costs, typically delivering annual cost savings of approximately 6-10%, whilst also improving standards and producing highly visible, real time management information.
As one of the UK's top five purchasers of temporary labour, channelling some £300 million de Poel's expertise and leverage within the recruitment industry provides them with an unrivalled insight into the effective use of labour.
de Poel's primary offerings are cost reduction, process improvement and standardisation for the procurement of contingent labour. Their solutions are supported by e-tipsTM, a unique web based timesheet and invoice processing system and PermPortTM, a vendor management system, both of which virtually eliminate transactional costs, reduce administration and provide users with increased visibility and control over agency spend and staff usage.
Over the past seven years the company has experienced rapid growth and has built up an impressive portfolio of blue chip clients from a wide range of sectors, including manufacturing, financial services, construction, engineering and transport and logistics. de Poel's clients include; Sainsbury's, Parcelforce, the Co-op, MFI, Provident, WRG, Carlsberg, SITA and British Sugar.
The revolutionary systems are used by de Poel's clients to great acclaim:
Keith Wilkinson, Purchasing Manager for international glass and glazing manufacturers, Pilkington comments:
"Not only has e-tipsTM successfully condensed the amount of agency invoices and timesheets processed to just one per week, but it has improved administrative efficiency and considerably enhanced visibility and control over our contingent workforce spend. The extensive range of real time management information delivered by the system has already proved invaluable for analysing staff usage and seasonal trends as well as budgeting for future usage."
TNT Post's Operations Development Manager, Dave Baker agrees:
"de Poel's e-tipsTM system has provided TNT Post with a full range of management information which has already proved invaluable when forecasting the cost of temporary labour and providing a clear picture of agency usage."
Whilst making cost savings is a concern for the majority of companies there are other important recruitment issues to consider, with staff quality and service levels at the forefront.
de Poel works hard to ensure that their clients receive the best possible industry advice and bespoke solutions, all of which are tailored to meet their individual requirements and solve their specific recruitment issues.
By working in partnership with their clients de Poel is able to build bespoke agency panels and individually tailored Service Agreements and KPI's, which are regularly monitored to ensure that the required standards are being met by their agencies. A perpetual review of this panel ensures continued best practise.
de Poel is also able to identify rogue recruitment agencies and ensure that their clients do not have any dealings with them.
Mark Fletcher, Business Integration Manager of SITA, a de Poel client and one the UK's leading recycling and waste management companies, comments:
"We were keen to improve service delivery and enhance relationships with our suppliers. By reducing the number of agencies from 150 to a select panel of 48 regularly audited suppliers and introducing standard service agreements and a fixed pricing structure we have noticed a distinct improvement in performance, quality, and in our own processes."
A dedicated Relationship Manager with specific industry knowledge is appointed to each client to ensure that de Poel fully understands their requirements and to enable the company to work closely with their clients on a day to day basis and manage each account separately.
In addition to providing regular management information, detailed savings reports and weekly progress reports, de Poel's Relationship Management Team work alongside clients to help them maximise relationships with their select agency panel and ensure 100% compliance.
Somerfield is one of the UK's largest high street supermarket chains and a long-standing client of de Poel's. They are delighted with the service offered by de Poel and feel that it has made a significant impact on their business. Somerfield's Distribution Director Andy Monk explains:
"de Poel's service has transformed the way in which we interact with our agencies, enabling us to build strong business partnerships, and ensuring that the operational management is still involved in the selection and review process. Our agencies now view Somerfield as a preferred client and make a concerted effort to consistently deliver high levels of service."
de Poel prides themselves on keeping up to date with changes in employment law and considering the impact they may have on both their clients and associated agencies. Their dedicated on-site legal department continually monitors new legislation and keeps abreast of government plans which may have a direct impact on their clients and agencies. This helps to highlight areas within their clients' businesses where there may be a risk of litigation.
Already this year there have been some important changes in the law. The Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) came in to force on 6 April 2008 and the Temporary and Agency Workers (Equal Treatment) Bill which will have considerable impact on the use of agency workers has been through its second reading and proceeds to committee stage later this year.
As the year progresses businesses will not only be compelled to scrutinise the economic movement, but to diligently monitor new legislation which effects employers, employees, recruitment agencies and temporary workers to ensure compliance and avoid inadvertently conducting illegal practices.
de Poel continues to stringently observe the impact of new legislation and takes appropriate action to protect their clients and agencies. Regular legislatives updates can be found on de Poel's website www.depoelconsulting.com.
MANAGING TEMPORARY LABOUR
de Poel is a fully independent cost reduction consultancy that specialises in helping major blue chip companies control costs and other issues associated with temporary labour, by engaging with over 600 recruitment agencies on a weekly basis .
Each year British industry spends in excess of £23 billion through more than 17,000 recruitment agencies, making temporary agency labour a highly fragmented market place with immense scope for improved efficiency.
Temporary labour is an extremely useful business resource in terms of offering employers reduced wage and benefit costs, increased workforce flexibility, assistance with special projects and staff replacement.
The advantages of using a contingent workforce, however, come at a high price. Employers need to seek legal advice to ensure that they are 100% compliant with the law so they can protect their company from a host of legal issues, including establishing whether the temporary worker is considered to be an employee and as such can qualify for any company benefits.
However, if your business relies heavily on temporary agency labour in order to fulfil seasonal trends and to stay flexible and competitive, then you will be well aware of the pitfalls and challenges associated with the management of this type of workforce.
Since de Poel was founded in 2001 by Michael Campbell and Matthew Sanders, the company has experienced rapid growth and developed a prestigious client base including Sainsbury's, Royal Mail, TNT, Eddie Stobart, MFI, Palmer and Harvey, Co-op, GVA Grimley, and Teleperformance.
"to create a level playing field of agency supply"
John Simmonds was appointed as the new managing director of de Poel in December 2006 and has since assumed full operational control of the company. He explains the service the company provides: "We conduct a thorough analysis of sites, invoice charges and pay rates and overtime calculations. As part of the analysis we spend time with operational staff to understand the nature of local agreements and existing relationships. Our objective is to create a level playing field of agency supply where business allocation depends on staff quality and service levels."
Companies who operate with a large temporary workforce must keep control of pay rates and costs which is no easy task, as Jim Glover, director of Human Resources at Palmer Harvey explains: "Temporary agency labour is essential in enabling us to accommodate our seasonal trading patterns and we identified the opportunity to reduce the costs of this resource by rationalising and improving our temporary agency labour procurement processes. We chose to work with de Poel due to their experience and knowledge of the market in addition to the speed with which they could deliver a fully implemented solution. "
As part of the process, de Poel provides a Service Level Agreement which helps provide mutual protection and security for both employers and agencies, as Simmonds explains: "The agreement is designed to provide comprehensive legal protection for our clients, in addition to ensuring agency service levels. Supplier performance will then be measured continually using key performance indicators. The agreements bring a further benefit by giving the successful agencies a guarantee of commitment based on service delivery for, typically, 12 months. This gives them further motivation to maintain the very highest service levels."
It is understandable to see why some recruitment agencies would be cynical with this approach. However, de Poel is keen to change any misconceptions held by recruitment agencies that have, previously, been sceptical about de Poel's rates and service agreements.
Continues Simmonds: "Entering into a Service Level Agreement guarantees demand, reduces the agencies' costs, enables them to concentrate on developing the relationship with the client, and provides opportunities for increased turnover through more in depth account presentation. We are constantly being chastised for margins being too low, but that is a severe misrepresentation. There are agencies within the industry offering 10p an hour less than our lowest rates. de Poel has a real desire to improve standards in the industry; it is not just about margins".
"a typical average invoice error of 15%"
The final journey of the temporary worker is not complete until the invoice has been sent, received and corresponds with timesheets before being approved for payment. The more recruitment agencies used, the more temporary workers there are and, consequently, the more invoices and timesheets. With a typical average invoice error of 15% this process can be extremely expensive. Recognising the hidden administration costs and burden associated with this process instigated the development of e-tipsTM - a unique electronic timesheet and invoice processing system.
"The indirect costs to clients of handling the associated timesheets and invoices are enormous and, combined with an average agency invoice accuracy of 89% or less, amount to an estimated £2.1 billion a year. ,e-tipsTM presents clients with a single, 100% accurate, consolidated invoice, regardless of the number of agencies being used. It also provides real time management information giving clients high visibility and control," explains Simmonds.
Jim Glover at Palmer Harvey, who has used the system, say: "de Poel's supplier solution was delivered efficiently and professionally with very little disruption to the day to day operations of the business. Implementation of panel agencies have already obtained savings and with the introduction of e-tipsTM the administration cost of consolidating and processing invoices has all but disappeared; an immeasurable benefit."
de Poel has now adapted their formula to operate within the permanent recruitment and sub-contracting sectors. Their latest product, PermPortTM, immediately attracted the attention of existing clients, as well as triggering interest from several new sectors, including a very prominent broadcasting station!
"they more than surpassed our expectations
by achieving a remarkable saving of 22.5%"
The company's solutions require no upfront capital expenditure as their fees are based on a percentage of direct savings achieved. Joanne Regan-Brown, Recruitment and People Development director at Teleperformance explains: "Initially de Poel promised to deliver savings of 10% on the cost of our temporary agency labour procurement, however they more than surpassed this and our expectations by achieving a remarkable saving of 22.5%. "
de Poel are playing an integral part in 'raising the bar' in terms of service quality within the recruitment industry, as well as helping to grow and modernise the industry as a whole. Key to this will be changing the industry's perceived image where recruitment agencies are still considered 'a necessary evil' in some cases, when in fact they can provide a resourceful, effective and efficient employment service solution.
Good communication between the client and de Poel is an important part of the relationship, as Regan-Brown illustrates: "de Poel took the time necessary to fully understand the specific needs of our sophisticated customer communications business. They also offered us excellent strategic support and had a consultative approach to the client relationship."
The company's recently launched "Gold Standard" initiative is another clear example of mutual benefits for both client and agency, where good quality service is received and maintained. The scheme allows 30 top performing agencies to have access to all de Poel's clients, accepting lower margins but allowing them an excellent vehicle to grow their businesses. The agencies are regularly audited by de Poel to ensure quality service is provided, but also to help these agencies to reach their maximum potential.
Concludes Joanne Regan-Brown at Teleperformance: "de Poel ensured we received the outstanding levels of service and availability needed for us to deliver unrivalled value and service to our own clients and their customers. Outsourcing this aspect of the business has freed up precious management time, enabling us to focus further on our core business of delivering successful contact centre solutions."
How to get the best out of RPO
Outsourcing part or all of a business's recruitment workload can help a company better track and manage their recruitment suppliers, processes and ultimately expenditure. But how do companies ensure they are getting the best out of their RPO consultancies? Alison Harter, Director of de Poel Consulting, reports.
The current economic climate has seen companies large and small seeking new ways to improve efficiencies across their working practices; and many of the strategies adopted have allowed companies to streamline their processes and work more efficiently to achieve valuable savings, not least in their recruitment processes.
Before making the decision to engage with an RPO consultancy companies should consider the degree to which they want to outsource. In a true RPO relationship the supplier will be responsible for the end to end processes of the complete resourcing and recruitment lifecycle; the organisation itself has little ownership of the process. According to a survey by the CIPD at their conference in Harrogate, 56% of HR Directors feel outsourcing recruitment is a risk to their organization. With this in mind many companies are now considering alternatives to a full RPO solution and looking at outsourcing certain functions of the resourcing strategy where some ownership of the process, and therefore control against risk, is retained.
The Economy
Since the beginning of 2008 there has been much deliberation and extensive press coverage over the UK's economic outlook. The Bank of England's decision to cut the Bank rate from 5.75% in December 2007 to 5.0% in April 2008 indicates the degree to which the perceived risk of a sharp economic slowdown has intensified.
Certainly slower economic growth than originally anticipated is now expected this year. Whilst recession is not seen as inevitable, the predicted growth rate is likely to be zero, or at a maximum of 2%. The pressures brought about from this slowdown will culminate in a tough year for HR and procurements professionals, with an increased focus on efficiencies and measurements likely. Procurement and HR professionals will need to reinvent themselves and to demonstrate their effectiveness by adopting and implementing smarter and more efficient recruitment processes and strategies. Whilst the predicted turndown will carry considerable risks it will also present an opportunity for purchasing and procurement departments to demonstrate what they can do.
It is anticipated that employers will adapt to the economic slowdown by cutting back on recruitment, associated costs and hours of work rather than going through large scale redundancy programmes.
In order to reduce their staff sourcing costs more and more companies are turning to vendor neutral providers like de Poel to fulfil and streamline their recruitment requirements. Recruitment outsourcing whether for temporary or permanent staff can deliver impressive results, easing the pressure on HR and procurement departments and enhancing both company performance and overall profit.
The Marketplace
The UK recruitment industry as a whole has an annual turnover of a staggering £26 billion. Notably it is the turnover from temporary and contract recruitment firms which represents the biggest chunk of this figure, with their revenue rising to £23.16 billion for the period ending March 2007.
In the last twelve months alone the staffing sector has grown by 7.4%, with temporary and contract firms placing 1,377,740 staff.
Within the industry as a whole the number of temporary workers has also risen sharply over the last eighteen years and has more than quadrupled in terms of turnover since 1994. The number of job vacancies (both permanent and temporary) has risen, reaching well over 600,000 by the end of 2006 whilst the number of recruitment agencies in the UK currently stands at circa 17,000.
The Solution
de Poel is the UK's leading, independent, cost reduction company, specialising in the strategic procurement of labour and the management of recruitment agencies. de Poel helps organisations to maximise their relationships with recruitment agencies, adding value and saving money.
The company has a compelling track record of reducing labour costs, typically delivering annual cost savings of approximately 6-10%, whilst also improving standards and producing real time management information.
As one of the UK's top five purchasers of temporary labour, de Poel's expertise and leverage within the recruitment industry provides them with an unrivalled insight into the effective use of labour.
Systems
de Poel's primary offerings are cost reduction, process improvement and standardisation for the procurement of contingent labour. Their solutions are supported by e-tipsTM, a unique web based timesheet and invoice processing system and PermPortTM, a vendor management system, which virtually eliminate transactional costs, reduce administration and provide users with increased visibility and control over agency spend and staff usage.
Over the past seven years the company has experienced rapid growth and has a prestigious client base including blue chip organisations from a wide range of sectors, including manufacturing, financial services, construction, engineering and transport and logistics. de Poel's clients include; Sainsbury's, Parcelforce, the Co-op, MFI, Provident, WRG, Carlsberg, SITA and British Sugar.
The revolutionary systems are used by de Poel's clients to great acclaim:
Keith Wilkinson, UK purchasing for international glass and glazing manufacturers, Pilkington comments:
Not only has e-tipsTM successfully condensed the amount of agency invoices and timesheets processed to just one per week, but it has improved administrative efficiency and considerably enhanced visibility and control over our contingent workforce spend. The extensive range of real time management information delivered by the system has already proved invaluable for analysing staff usage and seasonal trends as well as budgeting for future usage."
Cost Savings
TNT Post's Operations Development Manager, Dave Baker agrees:
"de Poel's e-tipsTM system has provided TNT Post with a full range of management information which has already proved invaluable when forecasting the cost of temporary labour and providing a clear picture of agency usage."
Whilst making cost savings is the main concern for the majority of companies there are other important recruitment issues to consider, with staff quality and service levels at the forefront.
de Poel works hard to ensure that their clients receive the best possible industry advice and bespoke solutions, which is tailored to meet their individual requirements and solve their specific recruitment issues.
By working in partnership with their clients de Poel is able to build individually tailored Service Agreements and KPI's, which are regularly monitored to ensure that the required standards are being met.
Mark Fletcher, Business Integration Manager of SITA, a de Poel client and one the UK's leading recycling and waste management companies, comments:
"We were keen to improve service delivery and enhance relationships with our suppliers. By reducing the number of agencies from 150 to a select panel of 48 regularly audited suppliers and introducing standard service agreements and a fixed pricing structure we have noticed a distinct improvement in performance, quality, and in our own processes."
A dedicated Relationship Manager with specific industry knowledge is appointed to each client to ensure that de Poel fully understands their requirements and to enable the company to work closely with their clients on a day to day basis and manage each account separately.
Control
In addition to providing regular management information, detailed savings reports and weekly progress reports, de Poel's Relationship Management Team work alongside clients to help them maximise relationships with their select agency panel and ensure 100% compliance.
Jim Wilson, Managing Director of Stafforce Recruitment, one of de Poel's Gold Standard Agencies, believes, "de Poel's clients are happy to work with their systems (rather than try and circumvent them) and the fact that de Poel encourage the trust and relationship side of the business that is so fundamental to recruitment means that our consultants enjoy working with de Poel clients too."
Somerfield is one of the UK's largest high street supermarket chains and a long-standing client of de Poel's. They are delighted with the service offered by de Poel and feel that it has made a significant impact on their business. Somerfield's Distribution Director Andy Monk explains:
"de Poel's service has also transformed the way in which we interact with our agencies, enabling us to build strong business partnerships, and ensuring that the operational management is still involved in the selection and review process. Our agencies now view Somerfield as a preferred client and make a concerted effort to consistently deliver high levels of service."
Legal Compliance
de Poel prides themselves on keeping up to date with changes in employment law and considering the impact they may have on both their clients and associated agencies. Their dedicated on-site legal department continually monitors new legislation and keeps abreast of government plans which may have a direct impact on their clients and agencies. This helps to highlight areas within their clients' businesses where there may be a risk of litigation.
Already this year there have been some important changes in the law. The Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) came in to force on 6 April 2008 and the Temporary and Agency Workers (Equal Treatment) Bill which will have considerable impact on the use of agency workers has been through its second reading and proceeds to committee stage later this year.
As the year progresses businesses will not only be compelled to scrutinise the economic movement, but to diligently monitor new legislation which effects employers, employees, recruitment agencies and temporary workers to ensure compliance and avoid inadvertently conducting illegal practices.
de Poel continues to stringently observe the impact of new legislation and takes appropriate action to protect their clients and agencies. Regular legislatives updates can be found on de Poel's website www.depoelconsulting.com.
Further Information
The company has also recently produced a landmark piece of research on the Temporary Labour Industry. To receive a copy of this report or for further information please contact Alison Harter, Sales & Marketing Director on 01565 682047.
There are some key practices to pursue in order to maximize the effectiveness of the partnership:
1) Define clear, realistic targets. Align your team to focus on the strategic tasks. Determine targets based on results that will have the largest impact on commercial success.
2) Don't outsource a problem. To be effective HR should retain responsibility for the delivery of HR services..
3) Prepare to change. Outsourcing changes internal processes and the implementation process can take months.
4) Manage the supplier. Perception of performance is often influenced by the relationship and not by facts and figures. Use real time management information that you can access at any time to give an accurate reflection of performance.
A primary objective for many companies will be to operate with a preferred panel of agency suppliers, implementing this system of control enables organisations to assess costs, alongside agency performance. Working with a vendor neutral organisation will help to allow adequately for operational requirements, maintain the relationship between hiring manager and supplier. .
Outsourcing part or all of a business's recruitment workload can help a company better track and manage their recruitment suppliers, processes and ultimately expenditure
de Poel has links with more then 750 agencies across the UK, processing over 25 million hours and consolidating over £200 million invoices (stratagems article).
Our unique insight enables us to recommend appropriate pay rates for a variety of skill sets, whilst our buying power of temporary labour ensures we negotiate favourable agency rates for our clients.
Agency Preferred Panel
British businesses depend on the services of temporary workers, supplied by in excess of 19,000 agencies. With this resource frequently sourced at point of use it is easy to see why it is poorly leveraged and badly managed. One of de Poel's primary objectives is to ensure our clients operate with a preferred agency panel. This assures our clients their requirements are met and puts in place a manageable process.
The Agency Panel Selection Process
This process has been carefully designed to identify the agencies that are most capable of delivering consistently high service levels.
In the first instance de Poel visits the client to meet with operational staff and analyse agency invoices in order to fully understand the nature of local agreements and existing relationships.
Working along side the client de Poel then establishes standardised pricing recommendations which are based on current spend levels and the cost of supply.
Existing agencies are asked to attend a series of presentations explaining the new supply process and formally invited to submit proposals accepting the pricing structure and outlining their ability to service the contract.
de Poel will then evaluate the agency responses and advise the client on the formulation of an Agency Panel.
Ongoing Support
In order to ensure that clients and agency panels always have a single point of contact, de Poel appoints dedicated Relationship Managers to manage each separate account effectively.
In addition to providing regular management information and progress reports, our Relationship Managers work alongside clients to help them maximise relationships with their select agency panel. This ensures that any issues such as out of panel spend or underperforming agencies can be quickly identified and addressed.
Agency Panels are continually reviewed by Relationship Managers through site specific reviews and quarterly client meetings. In addition to this, Relationship Managers receive weekly update reports from e-tipsTM (de Poel's electronic timesheet and invoice processing system) which enables them to monitor the volume of business going through the Panel and manage the selected suppliers more effectively.
In order to ensure that agency service levels are upheld and that clients are fully protected, de Poel put in place legally binding Service Agreements. Supplier performance is then monitored using a series of client specific Key Performance Indicators (KPI's), which are written in to the Service Agreement. By helping clients to select and negotiate a series of KPI's that accurately reflect the service criteria most important to their business we can ensure that their specific requirements are met.
In addition to this we undertake quarterly client surveys which are circulated to all levels of staff from depot managers to administrators. This enables de Poel to accurately assess the quality of temporary staff provided, agency performance and the effectiveness of Relationship Managers as well as picking up on any outstanding issues.
"By condensing the number of our suppliers, introducing a cutting-edge invoice processing system, and compiling a panel of hand-picked recruitment agencies who were prepared to work with us on fixed standardised rates, we have been able to see remarkable results in only a few short months." (Mike Weston, Banner Business Supplies)
"The implementation of panel agencies has already obtained savings and with the introduction of e-tipsTM the administrative cost of consolidating and processing invoices has all but disappeared - an immeasurable benefit." (Jim Glover, Palmer & Harvey McLane Ltd)
Agency Liaison Team
de Poel has also appointed an Agency Liaison Team to provide a central point of contact for all agencies, enhance communication and develop stronger supplier relationships.
In addition to continually monitoring agency service delivery and panel performance, de Poel's Agency Liaison Managers oversee agency audits and provide support at agency presentations. By liaising with key supplier representatives on a regular basis, the Agency Liaison Team are able to ensure that agencies are constantly maximising new business opportunities and increasing their revenue accordingly.
"By appointing Agency Liaison Managers de Poel has enhanced communication and enabled us to have a specific point of contact for assistance and clarification." (Katrina Brown MREC, Vary Recruitment)
"..we enjoy a great working relationship with our Agency Liaison Manager, who is motivated to increasing our supply - a huge benefit to our business." (Mark Neilson FREC, Aligra Personnel)
"Communication with de Poel is always open and honest and de Poel's two Agency Liaison Managers take an extremely proactive approach in the promotion of the Gold Standard initiative, which we believe is beneficial to both parties." (Emma Ceballos, Gap Personnel)
"Since joining the panel we have been extremely impressed by the support and guidance offered by our dedicated Agency Liaison Manager Lara Watson." (Ian Burton, Interaction)
The selected agencies also enjoy an attractive range of benefits including; increased revenue and profitability, a contractual commitment from clients, standardised pay rates, reduced administration costs and improved payment terms.
Agency Audits
As part of our service our Panel Agencies are audited on a regular basis by our Agency Liaison Managers to ensure that the required standards are being upheld and that the necessary regulatory checks are being carried out.
Agencies that meet our strict requirements are issued with a confirmation certificate and clients are sent a comprehensive audit report to ensure they are made aware of the excellent service provided by our agencies.
Gold Standard Initiative
In May 2007 we launched our Gold Standard Initiative to help raise the levels of service reliability and cost effectiveness experienced by clients.
The initiative, which is fully managed by our Agency Liaison Team offers further added value to temporary recruitment agencies with a proven history of delivering good service to de Poel clients.
By agreeing to the scheme's terms of business and rates, agencies achieve Gold Standard accreditation and benefit from unlimited access to all of de Poel's current and future accounts, resulting in an increased volume of opportunities within our client base.
There are currently 50 agencies on the Gold Standard Panel.
de Poel hits back at polls against sustainable procurement
THE LARGEST purchaser of temporary agency labour in the UK has this month rejected claims that sustainable procurement isn't providing buyers with 'significant savings'.
de Poel rebuffed the views obtained in a survey by Supply Management of 100 private purchasers around the world, which suggested that 64 per cent of buyers surveyed had not secured financial benefit from sustainability.
The number one cost-saving consultancy also disagreed with findings that private companies put sustainable procurement low on their agendas during the current economic climate.
Sustainability, they argued, was critical in the present climate, not only in ensuring savings but in improving company efficiency and productivity, crucial to business survival.
Chief Executive of de Poel, Matthew Sanders, said: "de Poel's solutions almost certainly come under the heading of sustainable procurement, but the responses we've had completely contradict the results of this survey.
"Every single one of our clients has reported savings of between 6 and 12% each year, and most claim to have benefitted almost immediately after implementing our solutions.
"If anything, sustainable procurement, at least as far as we're concerned, has been high on the agenda for companies during the credit crunch. Our solutions help reduce organisations' temporary agency labour spend and improve company productivity by optimising the quality of staff supplied."
Mr Sanders added that since de Poel's fees are taken as a percentage of the direct savings achieved rather than through a hefty set-up charge, their solutions are often more attractive than some of the short-term cost-saving solutions currently advertised.
Supporting the benefits of sustainable procurement at a time of financial instability, the new trend within the retail sector to implement more sustainable HR strategies is proving popular.
Focusing on initiatives to retain and attract more quality staff rather than merely reducing overall headcount, high street names such as Sainsbury's and large fashion retailers are showing how long-term plans can also have short-term benefits.
Meanwhile, the public sector, who remain under massive pressure to cut spending, have become notorious for adopting a more sustainable approach, recognising the direct savings possibilities as well positive side-effects.
Incidentally, the importance of the added advantages of sustainable procurement was also echoed by a number of respondents in the SM 100 poll, who identified factors such as reduced energy and water outlay in some cases.
Experts in their field, de Poel was quick to reject any remaining negative assumptions about sustainable procurement, which is typically associated with a long, inconvenient implementation process.
Predominantly, they drew attention to e-tipsTM, their web-based, electronic timesheet and invoice-processing system, which they say is easily accessible to clients and their agencies.
Somewhat of a fix
Contractors will have to wait until the Office of Fair Trading releases full details of its investigation into a labour price-fixing cartel before they know exactly how they have been financially affected.
Six recruitment firms who supplied construction labour and formed a cartel to fix prices and frees out a new competitor have been fined up to almost £40 million.
Insiders say some of the country's largest contractors could have been hit by the group which included Hays Specialist Recruitment.
Agency charges are made up of several elements, including pay rate, NI, WT and of course the agency margin, however quite often clients will only see the invoice total, with the description detailing hours worked etc. Companies are unknowingly often overcharge with NI an WT, not to mention the variance of agency margin. As the industry is unregulated agencies are permitted to work to their own terms and conditions, allowing this practice to be un-noticed.
de Poel is the largest purchaser of temporary agency labour within the UK. Their main objective is to standardise pay and agency margins, to ensure not just equal pay for temporary workers but place all agencies on a level playing field. As part of their process they analyse invoices and timesheets over a 13 week period, which identifies such variances ranging from x agency margin to x agency margin, inaccurate NI and WT
Quote (made up of course) stating how surprised clients are to find they have been overcharge.
Equally alarming is the responsibility on employers for temporary agency workers to comply with legislation such as the immigration points. If companies operate with agencies who do not check their work to work in the UK companies will be liable for the penalty
As the recession continues into the autumn, the pressures on the public sector are the most they have been since the 1990s. Government spending remains under public surveillance, not to mention the critical eye of the Tories, leaving public bodies across the country in a precarious position.
Just a day after the Treasury ordered hundreds of public organisations to provide data on their back-office spending in an attempt to cut costs, the NHS was told it needed to lose 10 per cent of its workforce in order to achieve its target savings by 2010.
At the same time, the effects of a cross-sector skills shortage and a nationwide reluctance of individuals to take up permanent positions in industries such as care are pushing more public service providers to rely on temporary agency labour - an expensive and often risk-filled practice given the fragmented nature of the market and absence of a government regulator.
Together, these problems equate to a huge pressure on the public sector to reduce and better manage it's spend on temporary agency workers, which currently amounts to approximately £1.6B every year.
The issue for the public sector, recognised by the Treasury themselves following a study published alongside the Budget, is that they have only an estimate of public sector spend on back-office operations. Meanwhile, the public organisations themselves seem unaware of varying fee and pay rates implemented by agencies for temporary workers, and have limited access to critical management information regarding their expenditure here. Spend analysis, according to the Office of Government Commerce, is crucial in controlling expenditure and obtaining the best out of the supply base.
Thus if there was ever a time for the public sector to bring in a cost-saving consultancy in relation to temporary agency labour, that time is now. But upon approaching public sector departments with the ability to save millions of pounds for their HR and procurement departments, it seems that prospective consultancy companies are being continually turned away on the grounds of problems within the government tendering process.
One such firm, de Poel, who already manage the supply of temporary agency labour for both private and third sector organisations, have been pitching to the public sector for some time.
Ceo, Matthew Sanders, said: "This is an extremely frustrating situation. We have identified ways to increase visibility and control over use and spend on temporary agency labour just as the public sector needs.
"This not only reduces costs, but it also optimises the supply of agency workers, which is particularly important for public organisations employing care workers.
"We already save millions of pounds for social housing and charitable care organisations every year, and we are more than confident we could do the same for the public sector if it weren't for the tendering issues."
As the largest purchaser of temporary agency workers in the UK, the public sector is likely to play a massive part in an economic upturn.
But whether or not it comes out of the recession in a strong position may depend on whether there is increased flexibility and transparency in the government tendering process.
In a bid to showcase the proven advantages of their intervention, de Poel are currently offering to forgo their savings fee and pass on 100 per cent cost savings to their first public sector client.
Maximise your recruitment budget and cut your labour spend
By Matthew Sanders, CEO de Poel Consulting
As the recession tightens, the pressure is increasing for Finance Directors to make savings. As one of a company's biggest outlays, labour spend is one of the first areas which comes under scrutiny. Many organisations have turned to redundancies to cut costs, but there are plenty of other less drastic ways to reduce spend as a first step.
For the vast majority of businesses, uncertain economic times generate a reluctance to commit to long-term significant expenditure, including labour. During a recession, temporary labour becomes a far more attractive proposition to the Financial Director.
Some see temporary labour as a complete solution during harder economic times. But whilst temporary labour certainly does have its advantages (flexibility and responsiveness, low cost and risk too a business in terms of holidays, sickness pay etc), if not managed carefully, using temporary workers can be hugely inefficient.
In my experience, the average British blue chip company can shave up to 12% off its spend on temporary labour by following a few steps. Naturally, each company is different and will need a different approach, as will different sectors. And let's not forget that whilst cost saving is a key priority for most businesses, other issues such as staff quality and recruitment agency service levels are equally important. What's needed is an approach that satisfies both sets of demands, to ultimately produce a slicker, more cost-effective solution all-round.
Step 1 - Preferred agency panel
A primary objective for organisations should be to operate with a preferred panel of agency suppliers. Implementing a system of control enables organisations to assess costs, alongside agency performance.
Step 2 - Standardised Fees
As organisations and Finance Directors are squeezed by tougher trading conditions and battling with tighter budgets, the need to reduce and control their agency labour spend intensifies.
We regularly hear of companies negotiating fee levels and pay rates with agencies during or after placements. Not only does this compromise their negotiating position, but also has an adverse effect on their relationships with agencies. If fees are to be negotiated, this must happen prior to the commencement of placements.
Step 3 - Terms
Organisations should compile their own set of terms and conditions, providing a standardised service agreement to be adhered to and agreed by existing suppliers prior to commencing assignments.
Organisations can often be left, unknowingly, legally exposed, particularly with the constantly changing legislative landscape that we have seen recently. This year alone, the Government has not only introduced several new laws relating to employment, but been extremely active in auditing their implementation. There have been over 130 prosecutions so far this year for the employment of illegal immigrants with individual fines of £10,000. By working closely, Finance Directors and HR departments can help to safeguard against this extra cost. This is also an area where a specialist consultant such as de Poel can prove invaluable.
Step 4 - Monitor/Review
Perception of performance is often influenced by the relationship HR departments have with an agency consultant and not by actual facts and figures. Service agreements with measurable KPI's form the basis of a review process which is presentable to FDs and Boards alike.
Quarterly reviews, regularly re-assessing pay and charge rates, provide a more structured approach to performance and more importantly, ensures a perpetual review of the preferred agency panel.
Step 5 - Streamlined Administration
The recruitment industry relies heavily on the processing of paper based timesheets and invoices. They have an increased risk of error and inaccuracy, with a 15% typical error rate. The more recruitment agencies employed by an organisation, the more temporary workers there are, as a result the more invoices and timesheets processed - it is not unusual for a large organisation to have to process 50,000 invoices a year. The administrative burden of processing can be expensive, with some putting the figure at £2.1 billion a year UK-wide.
The conventional means of handling multiple time sheets and the collation, reconciliation and payment of invoices typically adds around 15% to agency service costs.
The indirect costs to companies of handling the associated timesheets and invoices are enormous, but through a simple web-based time sheet system, the number of invoices can be drastically cut - often to just one per week.
Step 6 - Management Information
Typically, large organisations have very little, or in some cases, no visibility of temporary agency labour usage and spend, which in turn can present difficulties when forecasting or leveraging spend. Companies are often unaware of the amount they spend on temporary labour or which different pay and charge rates are in existence within their organisation.
Operating with an appropriate software system which provides real time management information, is a vital tool when attempting to take control of agency spend. Therefore, helping an organisation to adopt a more strategic approach and making better more informed decisions.
It is evident during this climate of economic unrest and instability that FDs have the opportunity to seek more modern, efficient and innovative ways to reduce and control spend on labour whilst ensuring maximum efficiency, accountability and measurability at all times.
This structure develops a more strategic partnership with suppliers, making the process slicker, simpler and ultimately more cost effective.
For further information please visit www.depoelconsulting.com or email cdoherty@depoelconsulting.com
Definition of a temporary worker
There are no special provisions in UK statutes which specifically define 'temporary' workers. The term is often used to denote staff engaged on a non-permanent basis who may be:
At present the rights afforded to temporary employees depend upon whether:
By definition a temporary worker is an individual who is employed on a temporary basis for several days, weeks or even months. The temporary worker can be employed directly by an organisation, work for a recruitment agency or alternatively, be self-employed. In most cases temporary workers are employed by recruitment agencies and clients are charged either on an hourly or daily basis for their services and invoiced either on a weekly or monthly basis.
The settlement of accounts by clients varies to such an extent that recruitment agencies can often wait for as much as two months before receiving payment. This can impact heavily on recruitment companies and cause serious cashflow problems, necessitating the involvement of a factoring company. For a fee, a factoring company, usually a bank or subsidiary will advance approximately 80% of the value of a client's invoice and may also take on responsibility for chasing up a late payment.
Temporary workers can be found in every sector of the economy including: professionals (such as IT and financial staff); white-collar workers (such as receptionists, secretaries and call-centre staff), and manual workers (such as building workers, catering staff, machine operatives and packers). Sectors such as retail, hotel and catering and agriculture have seasonal peaks of activity and especially reliant on temporary workers.
According to the REC, whilst the suppliers of temporary workers usually work under the direction, control and supervision of the client, the recruitment company themselves will often brief the temporary worker on their forthcoming assignment and play some part in supervising them in their role.
The conditions and manner of employment of a temporary worker are extremely important in defining their legal status. Court cases involving temporary workers are on the rise, most of which have been brought about by a worker who has had their employment terminated. Such cases tend to be quite lengthy and are usually centred around the confusion over a workers' employment status e.g. whilst a worker has been designated a temporary position, they may have been working in that capacity for several years.
Facts and Figures
The recruitment industry is worth £26.6 billion to the British economy
The growth represents a 7% increase on last year
The recruitment industry directly employs 101,286 individuals, a 3. 6% increase on the previous year's figure and the first time this figure has risen above 100,000
1.377 million temporary workers go out on assignment in the UK every week
*Source: REC Annual Industry & Key Volumes Survey 2006/07
56% say they are satisfied with their temporary work
40% have worked on a temporary basis through a recruitment agency or employment agency for more than 12 months, 20% had done so for three years or more
81% of respondents were either currently working on a temporary basis or they had done so in the last six months
57% were engaged on a temporary assignment at the time of the survey
9% had worked in a temporary capacity between 7 and 12 months ago
43% said that they were working on a temporary contract through an agency
* Source: Job Satisfaction Among Temporary Agency Work 2006
There are 1.5 million temporary workers in the UK.
There are 13,000 agencies in the UK
Spend on temporary labour in the UK is 23.16 billion
The majority of temporary workers are happy with their current employment status
69% of temporary workers said that they would prefer to remain in their current long-term flexible assignment rather than take on a permanent position
The UK recruitment market is the second largest in the world after the US
Recruitment consultants placed an average 46.5 placements last year.
The number of job vacancies (both permanent and temporary) rose to 600,000 by the end of 2006
Temporary placements in the professional and managerial sector rose by 8% in 2007.
18% of all temporary placements come from the secretarial/clerical sector
There were severe shortages of temporary workers in the technical and engineering sector in 2007
Growth in demand for temporary workers in the hotel/catering sector has grown with placements up 20% since 2006.
According to recent CIPD statistics, industrial and blue collar staff account for 22% of overall temporary placements, whilst construction staff account for 7%.
The accountancy/financial sector has increased in size by nearly 50% since 2004, making up 3% of the total temporary placements
Which legislation governs temporary workers?
An assortment of legislation has an impact on temporary workers without mentioning them specifically. For example, many temporary workers will satisfy the statutory definition of 'worker' and accordingly legislation designed to protect 'workers' generally may have an impact upon many temporary workers, including:
A wide range of other legislation has an impact on the position of temporary workers, including:
A draft European Union Directive on working conditions for temporary workers was abandoned in September 2005 as part of the European Commission decision to cut red tape and over-regulation in Europe. This Directive will be revisited at some future, but as yet, unknown point - see the question below on future developments.
What is the difference between temporary agency workers supplied by an employment agency and those supplied by an employment business?
The Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 make the distinction between employment agencies and employment businesses and regulate the agencies standards of conduct generally.
What is the legal status of temporary agency workers supplied by an employment business to an end user?
Temporary agency workers supplied by an employment business to an end user are often referred to as 'temps'. Their status has generated a great deal of case law. In essence such people may be:
Two main issues arise in such cases:
The most recent guidance suggests that as a general rule when determining the legal status of a temporary agency worker, an employment tribunal should look to see if an implied contract has arisen between the worker and the end user. Such an implied contract will only arise when it is necessary. A number of points arise from the complex and vast amount of case law which may assist in determining the status of any particular worker.
Who will the claimant bring proceedings against?
Both the employment business and the end user will normally be a party to the proceedings. The Employment Appeal Tribunal (EAT) has emphasised that where there is a triangular case involving a worker, an employment business and the end-user, a tribunal must examine what is going on in day-to-day practice at the end-user's premises. All three parties should be joined to the proceedings if all three are not included from the outset - see Astbury v Gist Ltd (unreported, EAT/619/06 14 March 2007, EAT) and Astbury v Bentley Motors Ltd (unreported, EAT/1844/06 9 May 2007, EAT).
At what stage will an implied contract arise with the end user?
There are some cases which suggest that if the agency arrangement continues for at least one year rather than months, if the worker is then dismissed, they may be able to establish employee status and claim compensation for unfair dismissal. Where the agency arrangement is genuinely temporary, the potential employee will normally simply not satisfy the qualifying period requirement of one year.However using the one year period as a magic figure is not reliable as an indicator of when an agency worker becomes an employee.
Two important Court of Appeal judgments on this issue are Franks v Reuters [2003] IRLR 423, CA and Dacas v Brook Street Bureau (UK) Ltd [2004] IRLR 358, CA which outlined the circumstances in which a contract of employment could be implied between the agency worker and the client company. The facts of the Dacas case were that Mrs Dacas worked as a temporary cleaner. The Brook Street Bureau agency found a job for her with Wandsworth Council. After four years of working for Wandworth she had an argument with a visitor to the Council premises where she worked and Brook Street Bureau immediately terminated her contract. She claimed unfair dismissal against both Brook Street Bureau and Wandsworth Council. It was therefore necessary to decide if she was an employee, and if so whether of Brook Street or the Council. Her contract with Brook Street Bureau expressly stated that it did not give rise to a contract of employment between Brook Street and Mrs Dacas, or Mrs Dacas and Wandsworth Council. By the time the case reached the Court of Appeal the case no longer involved the Council. However, the Court of Appeal indicated that although there was no express written employment contract between the Council and Mrs Dacas, there probably was an implied contract which meant that she would be employed by the Council.
One of the judges in the case gave the opinion that for purposes such as unfair dismissal, most agency workers are likely to become an employee of the end user client where a period of around a year has elapsed. However the passage of a year or more does not, by itself, justify the implication of a contract according to the James and Craigie cases referred to below.
Will an implied contract always arise with the end user?
No, an implied contract will not always arise with the end user. Despite the cases referred to immediately above there has been some good news for employers in that the EAT has recently been cautious to find an employment relationship often arising with the end user. The main issue is whether the reality of the relationship is only consistent with the implication of an employment contract between the agency worker and the end user. A contract will only be implied when it is necessary to do so, and not where it is merely desirable.
In both James v Greenwich Council (unreported, [2008] EWCA Civ 35, 5 February 2008, CA)and Craigie v London Borough of Haringey (unreported, UKEAT/0556/06 12 January 2007, EAT) agency workers were held not to be employees of the client company. The main features pointing away from employment status, summarised in the CA and EAT guidance are as follows:
In Cairns v Visteon UK Ltd 2006 [2007] IRLR 175 the EAT considered the possibility of the agency worker having two parallel contracts with both the agency and the end user. Although this may be possible the EAT held that there was no good reason to imply an employment contract with the end user, where there was already an express employment contract between the worker and the agency.
Other examples include:
In Heatherwood and Wexham Park Hospitals NHS Trust v Kulubowila and Others (unreported, [2007] EAT/0633/06 EAT) the EAT held that a contact of employment could not be implied between an agency worker who had applied for a permanent post at a hospital but was unsuccessful. In the meantime, he had continued to work at the hospital as an agency worker. The EAT repeated that there is usually no employer/employee relationship between an agency worker and an end-user. Where an agency worker seeks to show that he is an employee of an end-user, he will be required to show that it is necessary for a contract of employment to be implied.
In Astbury v Bentley Motors Ltd (unreported, EAT/1844/06 9 May 2007, EAT) an agency worker alleged that the contract of employment with the agency was fictitious and that from the first day of his employment he had been controlled by the end-user and that no mutuality of obligation had ever been intended between him and the agency. He argued that there should be an implied contract between him and the end-user. The EAT said a contract of employment will only be implied where this is necessary and this will only occur in exceptional cases. An implied contract of employment will not arise if there is an ostensible contract of employment between the agency worker and the agency.
The Conduct of Employment Agencies and Employment Businesses Regulations 2003 ensure that from 6 April 2004 the precise contractual position between agency, end user client and worker must be agreed and set out in a single document before the hiring starts. However, tribunals will continue to examine all factors when trying to ascertain an agency worker's employment status. What is contained in the documentation is one factor to take into account (see for example Royal National Lifeboat Institution v Bushaway [2005] IRLR 674). See also the question below on if a temporary worker is not an employee.
How can an employer avoid a temporary agency worker supplied by an employment business or agency becoming an employee?
The short answer is that an employer cannot guarantee that any worker supplied by an employment business or agency will not become an employee if the reality of the relationship indicates that an implied contract has arisen.
Any contrived arrangements designed to escape employment obligations are likely to fail, for example engaging 'consultants' via an intermediary company. If the reality of the relationship has evolved into employment arrangement with the end user, then consider simply accepting that there is a normal ongoing or fixed-term employment contract with them.
However, there are some things an end user can do to minimise the risk of the worker attracting employee status. These must genuinely reflect the real arrangements. The end user should:
Can an employer avoid employment rights by using temporary agency workers who supply services through their own limited companies?
Many temporary agency workers have their own limited company, and supply their services through that company either through an agency or directly to the end user. The use of such a company does not prevent employee status arising.
For example in Cable and Wireless plc v Muscat ([2006] IRLR 354, CA it was made clear that the implied contract principle in the Dacas case applied in the same way to an individual providing their services to an end-user via their own service company. Such a worker can be the employee of that end-user even though the arrangement is set up through an independent employment agency and even though the contract expressly states that the individual is self-employed. In this case the employee had started out as an employee of the end user and the arrangements subsequently made for contracting out his services via an employment business did not obscure that continuance of the employment relationship.
What is the effect of breaks in periods of temporary work assignments on the legal status of temporary agency workers?
The fact that there are breaks in periods of temporary work assignments will not affect the basic points concerning mutuality of obligation explained in our Employee status FAQ
If a temporary worker works on an intermittent basis, even if there is no mutuality of obligation between assignments, that individual can still be an employee provided normal mutuality exists.
For example, in Cornwall County Council v Prater [2006] IRLR 362, a tutor worked for Cornwall County Council's Home Tutor Service teaching children who were unable to attend school for example because of serious illness or injury injury. Tutors were always entitled to refuse a particular pupil. There was no contractual obligation on the Council to offer pupils to tutors. Over the ten years or so that Mrs Prater operated under the scheme she never once refused to take on a pupil. Apart from August, with isolated exceptions, she was paid for work in every month. The duration of the individual assignments varied from a few months to one lasting for five years. There was no close level of control over Mrs Prater and she had no right to substitute another teacher if she were unable to teach. Crucially, the Council asserted that because Mrs Prater was under no obligation to accept any further engagements once each engagement came to an end, and because there was no obligation on the Council to offer her further work, the essential mutuality of obligation needed to establish a contract of employment was missing. The Court of Appeal rejected the Council's argument and said that where that arrangement is one of a series there is no need to look for additional mutuality of obligation such as an agreement that further similar work would be offered and/or accepted.
If a temporary agency worker is not an employee, what rights do they have?
If a temporary worker is unable to establish employee status or perhaps does not have one year's continuity of employment they will still have the benefit of some rights, just not as many rights as if they were employed.
Firstly, a 'non-employee' temporary worker will be entitled to all their contractual rights.
Secondly, a non-employee temporary worker will probably fall within the definition of 'worker'. If so, they will be entitled to rights granted by the legislation to workers, eg the rights of all workers:
For example, in respect of temporary agency workers, the Working Time Regulations 1998 provide that the person responsible for ensuring compliance with the Regulations (including providing them with paid holiday) is the person responsible for paying the temps. If neither is technically responsible for making such payments then the duty falls on whichever of them actually pays in practice - Working Time Regulations 1998, Regulation 36(2).
Other less important protection for temporary workers may arise under special regulations governing the conduct of employment agencies and employment businesses. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 (SI 2003/3319) essentially ensure that the precise contractual position between agency, end-user client and worker must be agreed and set out in a single document.
The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007(SI (2007/ 3575) which came into force on 6 April 2008 brought in extensive amendments to the 2003 Regulations to ensure that work-seekers can cancel or withdraw from agencies' additional services without penalty and that there is a seven day cooling off period for contracts between agencies and work-seekers in the entertainment and modelling occupations. The paperwork is also reduced if a temporary worker is provided for five days or less together with other minor clarifications.
When does a temporary worker become entitled to a permanent contract?
The starting point for finding out when a temporary worker becomes entitled to a permanent contract is to look at the contract.
Many temporary workers will be engaged on fixed term contracts. Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034), a fixed-term contract is normally automatically converted by law into a contract of indefinite duration (i.e. a permanent contract) once the employee has completed four years continuous employment under it or renewals of it (unless an exception applies).
The expiration and non-renewal of a fixed-term contract is a dismissal. If an employee has at least one year's service, they will therefore also have a claim for unfair dismissal if the employer fails to renew their fixed-term contract without a fair reason and without following a fair procedure - see our Unfair dismissal FAQ for more information. If a temporary worker's contract is terminated, the statutory disciplinary and dismissal procedures must be complied with in the usual way.
Can a temporary agency worker bring a discrimination claim against the organisation where they are working temporarily?
Yes, temporary agency workers can, and do, bring a discrimination claim against the organisation where they are working temporarily. Anti-discrimination legislation widely defines the concept of employee so agency workers are likely to be 'employees' of the supplying agency for purposes of this legislation.
The organisation where they are working temporarily (the end user) is made specifically liable to compensate the worker for any unlawful discrimination under the relevant legislation including the:
For Sex Discrimination Act purposes (and by analogy in other discrimination cases) a temporary worker supplied by an employment agency to an end user may pursue a sex discrimination claim against both the end user and the agency.
Are there any future developments expected in the area of temporary workers?
The possibility of significant legal reform affecting temporary workers has been a focus of both European Union (EU) and United Kingdom attention for some time. From a UK perspective temporary agency work is far more prevalent than in any other member state. Agency workers constitute at least 2.6% of the workforce, and if a broad definition is used the real figure may be closer to 5.1%, according to a report by the European Foundation for the Improvement of Living and Working Conditions published in March 2006.
There has been so much focus, debate and activity concerning temporary workers in the domestic and EU arena over the last few years that one of these initiatives must eventually produce some legislative changes. The possible sources of future developments include the following :
The Temporary and Agency Workers (Equal Treatment) Bill
A private members bill entitled the Temporary and Agency Workers (Equal Treatment) Bill was re-introduced in December 2007. These proposals would:
There are obvious similarities between this Bill and the delayed EU agency directive - see below. The Bill is supported by a coalition of trade unions and would give agency workers the same rights to pay, sick leave and overtime as directly employed staff. Gordon Brown has said that he wants a new commission to investigate the issue.
Draft EU Directives
A previous draft EU Directive on working conditions for temporary workers may be revived at some stage. The negotiations between the social partners concerning this Directive had been continuing since June 2000, but were abandoned in September 2005 as part of the European Commission decision to cut red tape and over-regulation in Europe. The government confirmed in October 2007 that it will seek to progress the Agency Workers Directive and the press have reported that the Prime Minister may be conducting secret discussions with the EU about it. Apparently Gordon Brown is looking for a more flexible, affordable approach. The EU presidency's attempt to get approval for the draft Agency Workers Directive last failed in December in 2007. The EU deal proposed required the UK to compromise on its reluctance to give temporary and agency workers full employment rights after six weeks. In return the UK would secure its exemption from a 48-hour limit to the working week.
When it is finally implemented the Directive is designed to ensure that temporary agency workers:
Since the beginning of the year there has been much debate and extensive press coverage on the UK's economic outlook. With an economic slowdown predicted, there is a huge opportunity for both procurement and HR professionals to demonstrate their effectiveness by adopting and implementing smarter and more efficient recruitment processes and strategies.
In order to reduce their staff sourcing costs more and more companies are turning to recruitment outsourcing providers like de Poel to fulfil and streamline their recruitment requirements. Recruitment outsourcing whether for temporary or permanent staff can deliver impressive results, easing the pressure on HR and procurement departments and enhancing both company performance and overall profit.
Indeed, recruitment is now the top problem, ahead of business strategy, and an issue of extreme importance for more than 50% of all UK companies, according to from KPMG and the Recruitment and Employment Confederation (REC).
de Poel is the UK's leading, independent, cost reduction company, specialising in the strategic procurement of labour and the management of recruitment agencies. de Poel helps organisations to maximise their relationships with recruitment agencies, adding value and saving money.
The company has a compelling track record of reducing labour costs, typically delivering annual cost savings of approximately 6-10%, whilst also improving standards and producing real time management information.
As one of the UK's top five purchasers of temporary labour, de Poel's expertise and leverage within the recruitment industry provides them with an unrivalled insight into the effective use of contingent labour.
de Poel's primary offerings are cost reduction, process improvement and standardisation for the procurement of contingent labour. Their solutions are supported by e-tipsTM, a unique web based timesheet and invoice processing system, which virtually eliminates transactional costs, reduces administration and provides users with increased visibility and control over agency spend and staff usage.
Over the past seven years the company has experienced rapid growth and has a prestigious client base including blue chip organisations from a wide range of sectors, including manufacturing, financial services, construction, engineering and transport and logistics. de Poel's clients include; Sainsbury's, Parcelforce, the Co-op, MFI, Provident, WRG, Carlsberg, SITA and British Sugar.
The revolutionary e-tipsTM system is used by all of de Poel's clients to great acclaim:
Keith Wilkinson, UK purchasing for international glass and glazing manufacturers, Pilkington comments:
Not only has e-tipsTM successfully condensed the amount of agency invoices and timesheets processed to just one per week, but it has improved administrative efficiency and considerably enhanced visibility and control over our contingent workforce spend. The extensive range of real time management information delivered by the system has already proved invaluable for analysing staff usage and seasonal trends as well as budgeting for future usage."
TNT Post's Operations Development Manager, Dave Baker agrees:
"de Poel's e-tipsTM system has provided TNT Post with a full range of management information which has already proved invaluable when forecasting the cost of temporary labour and providing a clear picture of agency usage."
Whilst making cost savings is the main concern for the majority of companies there are other important recruitment issues to consider, with staff quality and service levels at the forefront.
de Poel works hard to ensure that their clients receive the best possible industry advice and bespoke solutions, which is tailored to meet their individual requirements and solve their specific recruitment issues.
By working in partnership with their clients de Poel is able to build individually tailored Service Agreements and KPI's, which are regularly monitored to ensure that the required standards are being met.
Mark Fletcher, Business Integration Manager of SITA, a de Poel client and one the UK's leading recycling and waste management companies, comments:
"We were keen to improve service delivery and enhance relationships with our suppliers. By reducing the number of agencies from 150 to a select panel of 48 regularly audited suppliers and introducing standard service agreements and a fixed pricing structure we have noticed a distinct improvement in performance, quality, and in our own processes."
A dedicated Relationship Manager with specific industry knowledge is appointed to each client to ensure that de Poel fully understands their requirements and to enable the company to work closely with their clients on a day to day basis and manage each account separately.
In addition to providing regular management information, detailed savings reports and weekly progress reports, de Poel's Relationship Management Team work alongside clients to help them maximise relationships with their select agency panel and ensure 100% compliance.
Jim Wilson, Managing Director of Stafforce Recruitment, one of de Poel's Gold Standard Agencies, believes, "de Poel's clients are happy to work with their systems (rather than try and circumvent them) and the fact that de Poel encourage the trust and relationship side of the business that is so fundamental to recruitment means that our consultants enjoy working with de Poel clients too."
Somerfield is one of the UK's largest high street supermarket chains and a long-standing client of de Poel's. They are delighted with the service offered by de Poel and feel that it has made a significant impact on their business. Somerfield's Distribution Director Andy Monk explains:
"de Poel's service has also transformed the way in which we interact with our agencies, enabling us to build strong business partnerships, and ensuring that the operational management is still involved in the selection and review process. Our agencies now view Somerfield as a preferred client and make a concerted effort to consistently deliver high levels of service."
de Poel prides themselves on keeping up to date with changes in employment law and considering the impact they may have on both their clients and associated agencies. Their dedicated on-site legal department continually monitors new legislation and keeps abreast of government plans which may have a direct impact on their clients and agencies. This helps to highlight areas within their clients' businesses where there may be a risk of litigation.
Already this year there have been some important changes in the law. The Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) came in to force on 6 April 2008 and the Temporary and Agency Workers (Equal Treatment) Bill which will have considerable impact on the use of agency workers has been through its second reading and proceeds to committee stage later this year.
As the year progresses businesses will not only be compelled to scrutinise the economic movement, but to diligently monitor new legislation which effects employers, employees, recruitment agencies and temporary workers to ensure compliance and avoid inadvertently conducting illegal practices.
de Poel continues to stringently observe the impact of new legislation and take appropriate action to protect their clients and agencies.
"de Poel's extensive knowledge of the temporary labour industry coupled with their innovative and far-reaching vendor management solutions has enabled us to improve not only our supply and retention of quality temporary agency staff, but also the levels of service given by our nominated agencies".
