Talent / HR to clear up the mess – yet again…
In April 2020 new legislation (IR35/off-payroll) is coming into effect in the private sector that will change the face of flexible resourcing in the UK. In fact, it already has. Some organisations, mainly very large ones, have already implemented operational decisions in advance of its arrival.
At this point I must own up to having skin in this particular game. I am the CEO of a recruitment/resourcing firm whose business model is partly based on supplying contractors, including a large number of IT contractors, to large private sector organisations. So please feel free to assume that I’m biased.
The new legislation will have a dramatically disruptive effect on how my firm will conduct business in the future. But that’s our problem – and we’re dealing with it. What interests – and intrigues - me mostly is how organisations are dealing with it – or not.
I am not thinking simply about short - to medium - term operational issues, although these are important. Yes, in the short term, its effects will be operationally disruptive. But organisations will manage – or at least muddle through – these. The bigger question is whether HMRC’s grab for more tax revenue represents, totally inadvertently, a further milestone on a journey that is reshaping our view of the nature of work in society, let alone in the economy.
What has bemused – and occasionally amused – me in our preparations is how much contractors – especially IT contractors - are resented at an institutional level. Broadly speaking the reaction has been, “they’re bloody well paid – and should have been paying tax anyway”. In corporate UK, contractor sympathisers as a species are endangered and possibly extinct.
This view is remarkable because it positions contractors on a very distant and cold planet in the new universe of flexible working. Inhabitants of its other planets are warmed by more benign opinions: “gig” workers are normally viewed differently, and more sympathetically. Perhaps it is because they are often depicted as the pioneers of a future world of work that is intellectually creative and, ironically, technology rich. But at what point, if ever, will unreliable freelance plumbers join hands with ubertalented (pun intended) web designers to march together towards a working paradise? And turning to those on another planet dangerously close to the sun of flexibility, do many people approve morally or emotionally of zero-hour contracts?
These are clearly big questions that transcend strictly operational issues. But do they? During preparations for the forthcoming legislation, I have been surprised, sometimes shocked, by the emotional current powering some organisations approach to it. Some planned responses have been closer to fevered cull than rational, surgical intervention. Quite literally, the phrase “get rid of the lot” has recurred. It will never be easy to manage a work-universe which is populated, it would appear, by pampered IT contractors, zero-hour victims and fulfilled, flexible freedom-fighters. We appeared to have entered the universe of Star Wars, not workforce planning.
But manage it, we must. But are we doing so? What is continuing to astonish me about the actions of large and presumably sophisticated, organisations, is just how tactical, rather than strategic, they could turn out to be. An increasing number of organisations are choosing to cease engaging altogether with personal service companies (aka limited company contractors). That may reflect a desire to pre-empt any accusation of making a “blanket determination” (it’s worth googling that phrase). But by any definition it is mass culling. But what is as worrying is who may have made these decisions. Our conversations with various organisations, from medium through to large, has frequently revealed that line managers and talent professionals have not even been in the room – as opposed to finance, legal and procurement.
Once again, I must declare that I cannot be disinterested. But given how many key systems (financial, infrastructural and industrial) are currently being developed, enhanced or supported by an interim workforce with specialist knowledge, the possibility that a resource cull morphs into an essential skills cull cannot be lightly discounted.
My overall sense is that (apart from HMRC’s self-confessed “show me the money” motivator) many of the reactions to IR35 have, from C suite down, been emotional and instinctive as much as rational. Like much that is happening – de-globalisation, Brexit, general election etc, positions being taken are, to use a fashionable adjective, tribal. They are founded on a sense of identity and disputed entitlement rather than cool-headed risk - and cost-analysis – even at the highest level of organisations. This is anecdotally confirmed by discussions with smaller organisations for whom the specific, critical importance of individual contractors is more easily identifiable. Such firms, often without the significant infrastructural support (HR, legal etc) are not sharpening their knives for a cull – they are forensically assessing the impact on their firm.
This brings me back to the title of this piece. Which part of an organisation is going to have to clear up the mess after the abrupt, major disruption of a flexible marketplace that comprises tens of thousands of highly skilled workers? Here’s a clue. It begins with a “T”.
And the final question I will ask is whether things would have been done differently if Talent had been in the room from the start when key strategic decisions were being taken? No prizes for guessing right.
Laurie Boyall is McGregor Boyall’s Founder and Group CEO.