The Real Future of Work is Your Company Attitude: Here’s Why

FUTURE OF WORK
FUTURE OF WORK

The Real Future of Work is Your Company Attitude: Here’s Why

Over the past few weeks, I’ve been writing about the effects of the skills gap, the cost of employment and the value of contractors.

As well as giving me some great insights, the research for these pieces also got me thinking: Why has recruiting become so complicated in recent years?

At ClearHub, we spend every day matching highly skilled technical talent to our clients. The more I’ve thought about it, the more I’ve realised the process of matching we use bears little resemblance to the recruitment I’ve done in the past.

As part of my job, I regularly work with hiring managers of technical teams. Many of these people are what you call “digitally savvy,” – and highly respected in their fields. They know their areas of expertise inside out. And starting a few years ago, they all started saying the same thing:

“We’re struggling to hire skilled Millennial employees.”

This troubled me. Why were they struggling? And what’s happening in recruitment today?

Digital Disruption has Transformed Recruitment

The answer to this seems like an obvious one.

Back in my parents’ day, finding a job meant responding to newspaper ads, sending CVs in the post and travelling miles for interviews.

The first time I was responsible for recruiting, I lost days updating job boards, wading through CVs and meeting applicant after applicant – only to find they were lacking some of the critical skills we needed.

It was slow

Recruitment is Easier Than Ever

Technology has made the recruitment process faster, slicker and more intuitive than ever:

Social media,advanced online recruiting platforms, data analytics, automated scheduling; and artificial intelligence have had a major impact on modern day recruiting.

CVs now act as a starting point for recruiters; an initial high overview screening – before they dive into each person’s online portfolio of information, using:

  • Linkedin;
  • Facebook;
  • blogs; and
  • personal websites.

– Plus a host of other data sources to determine if candidates are suitable.

However, even with all these techniques and information available to them, recruiters are finding it harder than ever to fill roles.

Why is this?

Hiring managers spend an average of 27.59 days (one month) recruiting for new roles. And, in spite of best practices and new techniques, 95% of companies have admitted to hiring the wrong people every year.

“95% of companies have admitted to hiring the wrong people every year.”

Fast Company

I discussed some possible reasons for this in my article: “The Cost of the Skills Gap – and How You Can Solve It”.

As well as a shortage of skills, it makes me wonder:

Is it possible that hiring managers are simply failing to identify and attract the right candidates amongst all the digital noise? – Or is there more to it?

I believe that there is a generational shift in progress, one that is causing disparity between us ‘Gen X’s’ (pre-1980) and our younger ‘Millennial’ coworkers.

Digital Growth Has Created a Generational Divide

“The generation currently entering working age are the first true digital natives. They have never known life without tablets and smartphones, but most importantly they are empowered by digital technology.”

City A.M.
ATTITUDE

Here’s the thing...

As a ‘Gen X’, you’re probably already one step behind in embracing new technology into your recruiting process: For the younger generation, IT is second nature.

And, if your recruitment process gives the impression that your company is behind the times, top young talent is not going to be drawn to working for you.

That’s my truth.

It’s important you also understand other implications this may have on your recruitment.

The importance of digital technology may indicate that you should only hire people that have an in-depth understanding of of it.

But – as we’ve already established – the younger generation have been bought up with these skills as second nature. They no longer feel the necessity to prove their technical skills with qualifications and certificates.

They already live and breathe the digital landscape.

Conclusion

In an age where software developers are self-taught through YouTube videos, e-learning courses are rapidly growing in popularity and toddlers are using iPads – technical knowledge is now a soft skill, akin to communication.

And, truthfully, isn’t it patronising of us Gen X’s to expect otherwise?


The way companies need to recruit is changing: It’s no longer enough to post on a couple of job boards, or send off a vague job description to some recruitment agency.

Yes, Millennials face a different employment landscape. But so do you.

In order to find the best talent in today’s market, you need to be ready to embrace new technology and a new way of thinking to attract top professionals to your company.

Avoid making the mistakes above, and you can hire happy, multi-skilled Millennials who want to be on your team.


Do you consider technology as a soft skill? Tell me in the comments below!

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The Cost of the Skills Gap – and How You Can Solve It

The-Cost-of-the-Skills-Gap-How-Employers-Can-Help

The Cost of the Skills Gap – and How You Can Solve It

There is a skills gap in the UK economy that costs companies over £2 billion a year.

The Open University study highlighted that, due to this, employers plan to change the training they offer.

Most significantly with more apprenticeships.

Yet, in the first quarter of 2018, growth in the British economy slowed to just 0.1 percent – and employers are being warned that the skills gap may be to blame

It is Far Harder to Find the Right Candidate Now

The skills gap is the gap between the roles and skills that employers are looking to hire, and the skills of people looking for jobs.

There are several factors that contribute to the misalignment of open positions with available, skilled workers.

The first is that the UK currently has its lowest unemployment rates in over ten years – so, there are less people out of work.

Secondly, those in your employment may be reluctant to leave: Due to uncertainty from Brexit – also a deterrent for EU nationals – who may have looked to work in the UK.

It Takes Longer to Fill Job Roles

75% of employers say that filling job roles has become a problem for them.

Companies are losing money through recruiting fees and the cost of temporary staff.

In addition, some skills are in more demand now then they were; particularly in highly specialised areas; such as technology and software development.

Of course, candidates with these skills are in high demand – and command a higher salary.

For both your businesses and the economy, the skills gap could lead to a lack of productivity, innovation and growth – as more jobs and industries become heavily dependant on digital skills that are in low supply.

“In order to navigate this changing landscape, you will need people who possess the right skills to maximise on digital resources. Unfortunately these individuals are paradoxically both in short supply and in incredibly high demand, creating an expensive and difficult dilemma for employers.”  

Onrec: 2018

The Steps Needed to Help Your Business

It may seem as though the skills gap is a problem to tackle.

Your business will be the first to feel the effects – so you should be proactive in becoming part of the solution.

Government must lead the way on this, but it will be up to both the businesses and the academic institutions across all levels to show commitment and support for government efforts to narrow the skills gap.”

 Uktech: 2018

An important step you should be taking is to assess the skills in your teams – to identify any gaps early. Once you have, you’ll know what to start focusing on.

Need any help identifying your skills gaps? Check out our free, quick and easy 5-step checklist to help you do just that!

Many businesses are already taking steps to building the skills they need for the future. With apprenticeships and internal training to help fill the gaps.

Admittedly, these provide a slightly more long term solution.

What should you do if you’re already feeling the effects of the skills gap in your business?

More People than Ever are Freelancing

Due to the growing ‘Gig Economy’, more and more highly skilled professionals are turning to freelance work.

“The new modern way of working for British industry is the answer to this problem. Employers are increasingly turning to contractors and freelancers to deliver the skills they need and that means there are a wealth of opportunities for self-employed people.”

DANBRO: 2018

Evidence shows that you’ll have a better chance increasing the speed of production by finding a contractor who fits your organisation than you will by up-skilling a full time employee. Here’s why:

  • Contract length – you set the contract to fit you and your projects.
  • High motivation – as their next job will depend on good reviews, contractors are often highly motivated.
  • Fast onboarding – contractors are used to coming into new organisations.
  • Reskilling – they’ll be self-driven to learn and sharpen their skills
  • In-house expert – working with together, contractors can help advance the skills of your existing teams.
  • Cost effective – the perceived cost risk of hiring contractors over permanent staff is slim (once you factor in benefits, pension schemes, holidays and so on).

By using contractors you are also giving these professionals the chance to build experience in their skills, and so encouraging them to grow and develop skills that are high in demand.

“Most high-demand careers need only minimal formal schooling to begin entry-level freelancing, and the portfolio of work and recommendations gained from working in the gig economy are at least as valuable as a degree or job training program.”

Quartz at Work: 2018

The-benefits-of-hiring-contractors

Match Your Team and Your Culture

At ClearHub, we have a global network of technical contractors.

When we match you, we look at the skills you need, and then use Smart Profiling to make sure they’re a powerful cultural fit for your team too.

Get Ahead of Your Competitors

Being aware of the skills gap, and being proactive about it early, gets you ahead of your competitors – by getting your products to market – fast!

But, it can also help to future-proof the growth of the economy.

With World Youth Skills Day coming up (July 15), this topic is more relevant than ever.

It is up to us as employers to help encourage young professionals to follow the career paths that will help our economy to grow.

And, by offering them the opportunities to learn – through work experience, apprenticeships, and freelance work – you can guarantee your company’s future alongside theirs.

Do you currently use technical contractors to fill your skills gaps? Leave a comment below –  I’d love to hear your thoughts!

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What Everybody Ought to Know About The Real Cost of Employment [Infographic]

The-Hidden-Cost-of-Employment-Infographic-ClearHub

What Everybody Ought to Know About The Real Cost of Employment [Infographic]

Many modern businesses underestimate the true cost of their workforce.

And, I’m not just talking about the direct cost of staff employment. It includes wages, training, tax and benefits.

But – are you overlooking the indirect costs?

The financial burden, the impact of bad hires, poor leadership, reduced productivity cycles and lost management time could open a door to employment alternatives you may previously have thought expensive.

After all, the rise of the global workforce, virtual assistants, artificial intelligence, collaboration tools, agency contractors and freelance workers mean that hiring managers have never before had so many alternatives available to them.

The Future of Work Belongs to the Freelancer

Do you assume that contractors are highly-skilled specialists, used for short-term bursts of focused work – whereas employees are loyal, tend to have more transferable skills and are less expensive?

So did I.

I realised that as the contractor market continues to grow, and entire sectors are disrupted by gig economy workers, the lines between employment and contracting are harder to see.

The arguments between choosing one over another were not as simple as I first thought!

First, I addressed the issue of ‘up-front’ cost:

The average cost of a software developer with ten years experience in the UK is £42,000 a year.

The average cost of a software developer contractor in the UK (excluding London) is £385 a day.

Average UK employees work 229 days a year.

So – if we take the contractor day rate of £385 and times it by 229 days – we create our opening position:

Simple Price Comparison for a Software Developer 

  • Employee (annual salary) = £42,000
  • Contractor (for a year) = £88,165  

On first inspection, the maths shows a stark difference: Contractors are more than twice as expensive as permanent staff.

However this crude comparison does not even start to tell the whole story.

The Hidden Costs of Employment

You must consider the full cost of employing staff versus the real cost of contracting.

Let’s group everything included in the cost of employment – and compare that to everything included in the cost of contracting.

Additional costs typically include bonus payments, employee benefit packages, tax contributions and admin support.

Average Employee Costs UK

Recruitment Costs (employee premium)£3,000
Bonus and KPI (contractors N/A)£2,000
NI Contributions (contractors N/A)£5,000
Pension (contractors N/A)£1,000
Training (employee premium)£1,000
Overhead Costs£5,000
Absence/Sickness/Holidays (Employee only)£4,000
HR/Benefits and Other (Employee only)£4,000
Total Cost£25,000

You can see that by adding the associated additional costs of employment, the gap between the two is hugely narrowed:

  • Employee (salary plus costs) = £67,000
  • Contractor (for a year) = £88,165   

Research shows the calculations do not stop there…

The average time to recruit in-house or through an agency for a full-time person is 11 weeks, according to QUARSH.

If you use a contractor matching service, such as ClearHub, this can be as low as two to three weeks…

…and you musn’t forget another massive hidden cost.

Business Impact Cost

Quarsh estimates that the cost of lost productivity is £7,800 on average, across all industries.

As software developers are paid almost twice the average national wage, it is fair for us to assume this cost is also higher. 

Cost of New hire (impact on business)

Average Interview Cost£1,000
Average Onboarding Cost (not inc training)£1,000
Management Time£2,600
Productivity Lost (speed Vs Contracting)£7,800
Sub Total£12,400
Adjustment vs Average (55%)£6,820
Total cost of new software developer hire£19,220
  • Employee (salary plus costs, plus new hire costs) = £86,220
  • Contractor (for a year) = £88,165   

Now we have reached a true price balance.

Once you add all the costs of employment AND take into consideration the impact of hiring on the business, the cost savings do not exist.  

But – this is based on both the contractor and the employee being hired successfully.

That’s quite an assumption!

The Cost of Unsuccessful Recruitment

As many as two in five new recruits are later deemed not right for the role, according to Collingwood.

Most good technical contractor providers (such as ClearHub), offer a free ‘switch out’ service if your contractor fails to fit your need.

The same can not be said for your employed staff.   

The figures for the UK are pretty alarming:

  • 62% of employers reported a bad hire [within the last 12 months]
  • 27% of companies say a bad hiring decision cost them over £50,000
  • 23% of employers reported a loss of productivity
  • 22% negative effect on morale
  • 16% negative effect on customer relations
  • 12% reported fewer sales

You can see how extremely difficult it is to estimate the costs of bad hires.

UK businesses are failing to hire the right person for two out of five roles – and that’s despite the significant financial costs of making mistakes.

And the negative impact of ‘bad hires’ affects employee morale, client relationships, sales, IT and productivity.

So, how do you factor the cost of this?

One fifth of all employees fail to pass their probation periods according to The Telegraph.

If we add the average cost of recruitment to the impact of new hires on business we end up with a total of £22,220 – one fifth of this is £4,444.

  • Employee (plus costs, plus new hire cost, plus re-hire costs) = £90,664
  • Contractor (for a year) = £88,165
emplotment-vs-contractor-sign

(At this point, I feel that it’s important to say that this is not just a UK trend. Here’s a similar comparison for the US market.)

What do these costs mean for your business?

Of course, this doesn’t mean your traditional employees are the wrong choice for your business. You must still consider your individual circumstance.

But – once you understand price balance – you can consider the full benefits of both contracting and employment to your company. And make the best decision.

Full comparison of the advantages and disadvantages of recruitment versus consultancy

Whilst I know that plenty of assumptions in this article can be challenged, the overriding theme is conclusive:

Most business drastically underestimate the cost of recruitment and significantly overstate the cost of consultancy.

This is a BIG mistake as it forces poor management choices based on flawed budgets.

In reality, vetted and qualified contractors can provide your team with a major knowledge and skills lift.


If you currently work in an office then up until now you may have been fairly insulated from the disruptive forces of the gig economy.

But, disruption in your industry is coming.

And it will be sooner and have a deeper impact than you probably imagine.

Discover more about how digital disruption is fueling the rising gig economy, or Click the image below to download the full “Hidden Costs of Employment” infographic.


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