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Do you know the true extent of your contractor workforce? Have you struggled to identify and audit your contractors during the national lockdowns? Is your recruitment process overcomplicated? And are you concerned about the financial and regulatory implications associated with ‘hidden’ contractors?
Operations Support Manager Mark Goodwin and Head of Client Engagement Samantha Price discuss the benefits of undergoing a contractor audit to help streamline your business.
Businesses with expansive teams spread across multiple locations can find it a struggle to keep on top of the ins and outs of every single contractor on their books.
Typically, information on contractors isn’t captured within organisational charts or on central HR streams but, particularly in the wake of Covid-19, and with the upcoming IR35 legislation in mind, businesses have faced increased pressure to identify contractors within their workforce – and they’ve struggled.
It’s easier for HR and finance teams to track the job titles, salary bandings, working hours, geographical locations and specific needs of permanent staff – not only is it their responsibility but they hold that data in-house. But for businesses with flexible workforces – a mixture of contractors and full-time employees – there can be a lack of strategy, meaning not all recruitment processes are followed compliantly.
Plus, for those who liaise with multiple recruitment agencies to manage labour, the process can become overwhelming and noisy. It presents further risk – financially and legislatively, but also in terms of broader company processes and the candidate experience which, if poor, can both damage a brand’s reputation, visibility, approach to ED&I and commercial benefits.
To support businesses in any of these situations, we’ve launched an audit service that we are rolling out to make the recruitment experience more positive for both the candidate and the client. It’s designed to assess attitudes to recruitment, how processes are currently set up, internal and external frustrations and more. We walk ourselves through our clients’ and their candidates’ journeys, using data and qualitative learnings to draw up ways the experiences can be improved, but also assess how cost savings and time efficiencies can be made.
What we present back to the client is a report of outcomes which, if amended with some small changes, can create a new, tangible roadmap of success. Typically, an audit will reveal where efficiencies can be made in the following areas:
An audit is a deep dive into a company’s recruitment spend. We look at their entire population to find out various salaries, if consultants are being hidden as contractors but being paid a higher margin, and more.
Then we look at the commercial impact of working with multiple agencies at once. Usually, this means a company is working to varying sets of terms and mark ups, and paying different commissions, so are simply not realising best value.
Recruiting the right type of talent can also become a cost drain. Long term, a contractor will cost a business more than a full time employee, but for specialist or short-term projects contractors or even statements of work prove to deliver best value. An audit will show if a company is making the best use of talent and therefore, if the commercial benefits of an existing recruitment model are being achieved.
In partnership with our clients, we explore the numerous routes which can be taken to reduce costs, suggesting various recruitment models – a supplier rationalisation, MSP, RPO, hiring manager training or EVP overhaul or consolidation of their recruiter pool being just two options – which could be implemented to save the client what could be hundreds of thousands of pounds each year.
Contractors in highly technical industries are subject to certain regulations, while the introduction of IR35 for the private sector will put extra responsibility on businesses to take account of their contractor workforce, assessing whether they fall in or out of scope.
Auditing can make this a more transparent element, firstly in terms of assessing who is supplying your talent; if you do not know this, you cannot be sure of compliance across your supply chain. And secondly, in terms of the candidates themselves; with responsibility falling on employers to know which of their team members are subject to IR35, an audit can help to identify those which might currently fall under the radar but who, without a change to working practices, could lead to costly fines and penalties.
As part of the audit process, we work with hiring managers to understand how much they know about legislation, detailing parts of our trail which shows the wider business is failing in its compliance. We can then feedback to clients on the ways they can upskill their team to ensure this becomes a priority, meaning that the business is futureproofed from regulatory risk.
An immediate benefit to a company of an audit is that it acts as an independent review of their wider processes, and how they perform in reality, rather than on paper.
For example, are communications processes sophisticated enough to ensure every potential contractor is informed they have not been successful in their application? This can often span to more than 12 contractors – is each receiving a timely update with enough clarity on why they did not get the role?
Additionally, is there hidden bias in the hiring process? Are the people undertaking interviews sufficiently trained to do so?
Also, are there any rogue practices hindering the efficacy of recruitment? Are managers favouring one agency over another? Is more money being paid to a single agency than another without evidence as to why?
Auditing can flag all these elements and more. And with some simple changes, the efficiency of an entire business can be improved.
Another objective of an audit might be to identify the reasons why a business is struggling to recruit either permanent staff, or contractors with niche talent sets.
Data will prove if there is a bias in a technical talent pool for contract roles, which will really hinder a recruitment campaign for a permanent role. Similarly, data will also show how simple changes – such as contributing remuneration, developing cross-sector skills insights and improving work-life balance – can transform a role from being difficult to hire to easier to fill. For example, are you paying below the average industry rate for this role compared to your competitors? Something as simple as a higher salary band for the role might attract better talent and result in a longer-term saving, as you will be able to relinquish several contractors charging a higher day rate.
Not all changes should centre on financials, though. Consider this – are you working with the right agencies to secure niche skills? If you are hiring for a specialist campaign and aren’t hitting your recruitment milestones, could the problem be a case of the agencies not having the right talent on their books? As part of your audit, we’ll examine your supply chain as well as your business, to ensure you’re working with the best.
There are two ways to work with Morson on a contractor audit; either directly through us – which is preferential for those looking to move to an MSP model with us – or via an external, Morson-approved, independent contractor. We understand how recruitment works in a way that you may not which means we’re best placed to undertake this task, but we work around you, your technology and systems, and in-line with your processes. We will anonymise all data to protect individual parties within your form and utilise your branded communications channels to fully embed within your business. That way, the resulting outcomes benefits you, and only you.
Getting your audit right can be a turning point for your business, empowering you to transform processes that make you a more attractive option for candidates, and more accountable at every level of regulation.
Get in touch today if you’d like our help to achieve it.