Posted on Monday 14 February 2011 byUlster Business
Eunice Campbell, Mark McBride and Donna Parker. Diamond's divisional management team
Ulster Business talks to Diamond Recruitment Group's Gary Irvine and Rick Butterworth to find out why they believe implementing a new business model now will move the company ahead of its competitors in a changing landscape for recruitment
The days of "bums-on-seats recruitment" are well and truly over, according to Diamond Recruitment's new Managing Director Rick Butterworth.
In post a little over three months, Butterworth is forthright in his assessment of how the economy has changed the way recruitment is done, believing that clients are now rightly demanding more from the agencies they work with.
"The recession is a real one this time, and so it is shaking out the weak and leaving the strong. Those that are left are here because they represent the professional vanguard of the industry. The easy days for recruitment companies have gone, in the good times agencies didn't have to try too hard, so it wasn't easy to differentiate yourself. That is all about to change. Clients in our industry are now demanding more bang for their buck and I think that's a good thing," he told Ulster Business.
"The last 10 years, when the economy was growing, there were fewer candidates than there were jobs. Now, across the majority of markets there are fewer jobs than there are candidates, so our clients are looking for us to add more value to their business. That's where Diamond believe they can differentiate themselves."
The appointment of Butterworth – who has 25 years experience in logistics, recruitment and business support services, and previously headed Exel Logistics Retail Ireland – is a key part of Diamond founder and chief executive Gary Irvine's ambitious plans to expand and revamp the company's business model.
Since Irvine started Diamond almost 22 years ago, it has grown into a major player in the Northern Ireland recruitment industry. It has turnover of £35m, 52 staff and places 2,300 agency workers every day. Working solely in the Northern Ireland market it operates across the industrial, commercial, sales and marketing, food and drinks, care and IT sectors.
Despite this extensive reach, Irvine decided that to move the company on to the next level it needed a strategy that redefined the way it provided services to its clients, in tune with the way their demands were changing in a mature marketplace.
A former national chair of the UK-wide industry body the Recruitment & Employment Confederation and member of the CBI Council, Irvine felt Butterworth's skills and experience would complement his own, and has tasked Diamond's new MD with driving the organisation's strategic direction.
"Rick is our strategy for growth," he said. "He is coming in to transform the organisation and has already started to implement the new structure. It is an invigorating time for the whole organisation."
The new structure will see Diamond operate under three main banners. Diamond Recruitment Group will encompass the traditional recruitment business under the leadership of regional managers Donna Parker and Eunice Campbell.
Diamond IT, the sector the company first specialised in, will be led by Mark McBride.
The third area, Diamond Staffing Solutions will be led initially by Butterworth and cover the increasing amount of work Diamond undertakes in the HR services and managed workforce arena.
Underpinning all of this will be Diamond's shared services centre, which looks after functions such as payroll, HR, administration and marketing, and recently received a quarter of a million pounds investment in a state-of-the-art candidate management IT system.
Butterworth explains that the traditional recruitment requirement, where client companies came to an agency if they needed someone to fill a particular temporary or permanent role, has evolved significantly in the past ten years. Traditional recruitment, including services such as job evaluation, search and advertisement, interviews and reference checks, still form a core part of its business.
But increasingly clients are asking Diamond to provide HR services and administration alongside their in-house HR team – such as workforce planning, testing, induction training and performance management tools.
"Traditional recruitment still very much has a place in our business model and the agency world at large. However, many of our larger clients only require part of the standard recruitment service and ask us to work alongside their HR departments, focusing on such services as response handling and shortlisting," said Butterworth.
"Many companies now have much smaller HR departments," adds CEO Irvine. "If you are out there advertising in a market where there is high unemployment, you are going to be inundated with applications. So it makes sense to outsource that facility. But you're not just going to give this to any agency, you need to make sure they have the competence and experience to cope. We have a proven record of doing it with major clients including Bombardier, Michelin and Gallaher."
The next step up from HR services – and an area Diamond believes will really take off in the near future – is managed workforce services, where large organisations ask the agency to manage their temporary workforce, looking after payroll, performance management and monitoring time and attendance against a strict service level agreement that complements their own workforce planning and resourcing strategy. It already has large contracts with Moy Park and FG Wilson to manage their agency workforces.
The Diamond team are confident that more companies will see value in managed workforce arrangements in future.
However, key to companies being able to continue using large temporary workforces will be how they manage the impact of new legislation, which Butterworth says will "change the recruitment landscape for ever".
The Agency Workers Directive (AWD) – which comes into force in October in the UK and in December in Northern Ireland – is designed to give temporary workers parity in pay and employment conditions with the entitlements of those hired directly into the same job. Under the new legislation agency workers will be entitled to the same basic employment conditions – including pay, overtime and shift allowances – after 12 weeks as those staff directly employed by the company. DEL's consultation ends on March 11.
It is predicted that local employers could face a bill of £33.5m for implementation of new legislation around agency workers – £27m in the private sector and £6.5m in the public sector – due to increased pay and compliance costs.
The UK is the biggest user of agency workers in Europe and many manufacturers need to operate a flexible workforce model to respond to fluctuating demand – making agency workers essential to keeping the economic recovery on track.
"You've got rising unemployment in the UK, rising inflation, and GDP is down. The last thing the UK or any economy needs right now is a piece of legislation that says to employ people it will cost more. It is inevitable that, whether it's a direct cost of pay going up or because of bureaucracy, there will be more cost in using agency workers. The processes that will have to be implemented to monitor it will be colossal," comments Irvine.
Diamond, which represents over 10% of the 22,000 agency workers in Northern Ireland, has gone on the front foot with the AWD. The day before our interview they held a high profile seminar in Belfast's Stormont Hotel for over 100 representatives from public and private sector companies to provide advice on the game changing legislation. It is also providing follow up impact assessments and has created an AWD section on its website.
"Diamond is already exploring options for reducing the operational and financial burden of the new regulations, ensuring that the benefits of engaging a flexible workforce remain and we will be consulting heavily with local businesses in coming months to make sure they are ready for it," said Butterworth, who believes some of Diamond's existing managed workforce contracts already come close to meeting the employment rights requirements in the new legislation.
"The AWD is going to increase cost for industry but I don't believe it will obviate the need for flexible agency workers. I don't think this will mean clients stop using agency workers, they've just got choices to make. We believe there are solutions there and once the consultation is complete we will be sharing those with clients."
Gary Irvine stresses that while 50% of companies who use agency workers won't be impacted by the directive because they employ them for less than 12 weeks, the other 50% should be seriously investigating their options.
"We are saying to them, look, if you are not thinking about this and burying your head in the sand, you may have an unpleasant surprise coming your way at the end of the year," he said.
The Diamond chief notes that currently many workers register with several agencies, but he expects that clients will consolidate the number of agencies they work with in future because of the need for tighter monitoring of whether they have worked more than the 12 week period. With fewer parties able to deliver this, he believes Diamond will benefit and expects the agency workforce it looks after to grow significantly from 2,300 over the next few years.
With that in mind, Irvine is optimistic that Diamond is in a better position than many of its competitors post-recession.
"We went through the recession like everyone else," says Irvine, noting that as clients cut back on hiring it too consolidated between 2007 and 2009.
"But we definitely saw confidence return to the marketplace in 2010. Clients were starting to increase their temporary workforces as demand came back because they had downsized and were finding they were under-resourced. A rise in temporary workers is typical coming out of recession, clients don't want to be rash. But we also saw permanent recruitment, which really suffered, start to tentatively pick up at the end of last year, which is encouraging," he adds.
Irvine notes that having recently sourced and won a number of large managed workforce contracts, this has really placed the company very much on a firm financial footing.
The service it provides has evolved from traditional recruitment, into HR services and through to the agency managed workforce model, and Irvine says the company is well resourced with expert staff to meet the wide ranging needs of its clients.
"Our market is so small that for us to be the size we are today would have been impossible if we'd just specialised in one thing. We have different divisions and within those divisions we put consultants who specialise within those particular fields. But we don't turn away anyone who wants to register, from CEO to shop floor worker," he adds.
"We've been doing this for 21 years and have dealt with every size of companies and all categories of people. There isn't a role that Diamond would struggle to fill. We are the recruitment specialists afterall."
Diamond has produced a briefing document for hiring companies on the Agency Workers Directive and an Impact Assessment Checklist to help employers measure the potential impact on them. More details can be found at www.diamondrg.com/AWD