IR35 – is this really as complicated as it sounds?

At MyFM we seem to have inboxes full of messages offering help and advice and telling us how complicated the latest changes to IR35 will be – but they really aren’t.

Naturally, we’ve been carefully studying the potential impact the IR35 changes will have on our own business and I’m sure many of you are taking steps to get your house in order ahead of the April 6 deadline.

Some people are surprised when we say that the measures that we are planning at MyFM, which at any given time has between 50 to 100 associate contractors working with FM clients, are largely based on the free advice and assessment tool from HMRC:

For our purposes and for our clients who have asked for our help, we haven’t yet found anything so complicated that we couldn’t resolve it using the HMRC resources. Yes, you need to be methodical and systematic in your approach, and if you are dealing with a large number of contractors this is potentially time consuming, but it really isn’t that complicated.

There is plenty of specialist advice available from accountancy firms, lawyers and consultants, all with varying price tags attached, if you want it. But from what we can see, if an individual is a true contractor, that will remain the case. But if a hirer or individual have been using the contractor model when someone should have been classed as an employee, then things are about to change.

The way we have got our heads around this at MyFM is by considering what is staying the same and what is about to change. The rules around IR35 itself are not changing, not noticeably anyway. But what is changing is that private companies, along with the public sector, will now be responsible as hirers for making the assessment on whether an individual is inside or outside IR35, they will be accountable to HMRC on that decision and responsible for arranging for the tax and national insurance to be paid.

To start to get you thinking on this and to help bust a few of the myths, we have collated a quick guide to the high-level changes on this topic.

Who will these changes apply to?

For the first time, medium and large-sized hirers in the private sector (based on annual turnover of more than £10.2million/ balance sheet total of more than £5.1 million and/or more than 50 employees) will need to assess and communicate the employment status of individuals.

Public sector hirers already make these assessments and have been doing so for several years, this will continue – some extra responsibilities are listed in the HMRC guidance.

Small companies (those under the criteria above) are classed as exempt and when they hire, individual contractors will remain responsible for determining their own employment status.

If you are a contractor, or freelancer, providing a service to a large or medium-sized company, you should expect that company to assess whether you should be on or off payroll and notify you of the outcomes of this assessment and any implications.

What will medium and large companies be required to do from April?

For every contract agreed with an agency or worker, companies will need to decide the employment status of an individual, pass this decision to the worker and keep detailed records of reasons – the HMRC tool can help companies to do this.

They will need to have processes in place to deal with any disagreements – details of what is expected are listed in the HMRC guidance.

Individual contractors can also use the tool to make their own assessment.

Who is responsible for tax and national insurance payment?

Now this varies depending on the scenario affecting you or your organisation and is too detailed to include in a blog. So, the best thing to do is to look closely at the HMRC guidance on this, so you can understand how the rules should be applied – https://www.gov.uk/topic/business-tax/ir35

There are a few general principles to bear in mind:

  • If you are the organisation which makes the assessment on status and off-payroll working rules apply, then you will be responsible for deducting tax and national insurance from your workers’ fees and paying it to HMRC.
  • If you are an intermediary, such as an agency, you will be responsible for deducting employer National Insurance contributions from the fees for the services which your worker provides.
  • If you are a contractor and you are providing services to a small company which is exempt, then your situation will continue as is – you will continue to make the payments.

What criteria should be applied to determine status?

The HMRC assessment tool takes you through this in detail and looks at criteria such as the contract in place, substitution arrangement, the working pattern, equipment required, and the length of time services will be provided.

Next steps

If your business doesn’t work with contractors, or you are not a contractor yourself, then you don’t really need to worry about these changes. But if you are either of these things, you should be taking clear steps to prepare, so you are ready to meet your responsibilities under the new arrangements.

If you are a contractor working with private sector clients, then you should assess your own situation, using the tools provided by HMRC. If you provide services to just to small companies, you must make your own assessment. In any event, it is important that you keep lines of communication open between those commissioning work and those providing services, so that all parties fully understand who has responsibility for what.

Our advice is to start your preparation now, if you haven’t already, particularly if you are involved in hiring a large number of contractors. MyFM is able to help clients but we firmly stand by our earlier remarks. Time consuming? Possibly. But are these changes to IR35 complicated? No. In most situations, it shouldn’t be daunting for companies provided they follow the advice on offer.

How do you decide how many people to interview?

Deciding how many individuals to interview for a job opportunity is a problematic and challenging task. For many, one of the easiest and simplest solutions is to interview everyone that appears to be suitable for the opportunity and has the necessary qualifications. Whilst this may seem like a good idea on paper, a large pool of applicants does not necessarily mean that they are all competent individuals suitable for the role in question. Whilst there are obvious benefits to this approach such as the ability to directly compare the skill sets of all candidates to make more informed decisions, it in fact presents several issues that can be very difficult to overcome.

For example, it takes a great amount of time & effort to interview large amounts of candidates; significantly more than a smaller and more focussed group. This has an added disadvantage of additional administration & HR work and can slow down the feedback process after interviews, further hindering the overall timing of decisions. Additionally, a bigger pool of candidates can almost certainly mean that in some instances, it will take longer to make a final decision on who will be hired.

Perhaps you would be right then, to assume that the easiest solution is to simply interview less individuals? In fact, this solution comes with its own unique set of benefits and challenges.

The answer it seems is not a simple one.

Generally, it is good to narrow down the individuals you wish to interview to 3-5. This is a good amount that still allows for direct comparison with meaningful results and means that more time can be spent compiling a meaningful job description and specification to better attract more suitable candidates.
In addition to this, screening tools such as personality and aptitude tests can be utilised to narrow down the selection even further with results more suited to desired need. This also means employers can make a more informed decision on hiring for culture add vs culture fit and how the candidates will benefit the organisation in question.

Overall, there is no real way of knowing how many individuals to interview for a job opportunity. In truth it depends on the job opening itself; some job opportunities may attract more applicants than others and, in some instances may require more than just 1 hire. Each opportunity presents its own unique challenges which is why it is important to identify exactly what you are looking for from the onset and to also consider the benefits and disadvantages of interviewing more than 5 people as opposed to interviewing less.

Facilities Management is Dead

What exactly are we talking about when we discuss facilities management?

For many people who regularly procure and implement FM services for the offices, shopping centres, hospitals and airports who rely on them, it is quite simply what it says on the tin: the fundamentals of keeping a building and a company going.
The industry’s selling pitch to their end-user audience has traditionally never strayed to far from this line. Washrooms, waste, fire safety, computers and compliance all require careful and consistent attention, and a service provider that can operationalise the delivery of FM into a clear and predictable cost. This presents a clear solution to the client, they need FM in order to function, but rarely have they been excited or intellectually engaged by what a service provider can offer.

What the FM industry can often be slow to leverage is how well positioned it is to supply creative solutions that can positively impact the success of the client’s core business. At the London FM Expo this July, it was noticeable how comprehensive the health and wellbeing exhibitors were compared to previous years. A range of products concerning everything from workplace yoga studios to green technology indicate a simple truth; the market is increasingly turning to services that can create a pleasant, and not just a functional, place to work.

This should be an important buying factor for building users for several reasons. But crucially, this evolution of FM is aligned with their own business objectives and KPI’s. Increasingly, companies are prioritising how the quality of their facilities can improve staff retention, talent acquisition, productivity and turnover. Aligning FM more closely with end-user success requires service providers to completely rethink what facilities management is for, and from an operational perspective requires far greater investment in creative industries, disruptive workplace technologies and the wellbeing sector.

End-users are also keen to embrace technology and service integrations as a means of improving operational efficiency and a quality workplace experience. The internet of things, in which technology and smart office appliances are leveraged to consolidate workplace facilities into an easily manageable stream of data.

In almost all respects, this will move the industry on from the realm of “facilities management” to the realm of “workspace management.” Whereas facilities management has traditionally worked like a series of individual musical instruments, Workspace management is like an orchestra, where the main aim of the process is to harmonise all the service streams and deliver a positive experience to the building user in a workplace.

If it’s an old adage that a tidy desk is a tidy mind, then a tidy office support service is a well-functioning company. What service providers need to do now is expand their understanding of what constitutes “tidiness”. If the FM market can learn to make that leap, its clients will go from seeing it merely as a necessary evil and an overhead to keep the building running, to an engaging, intuitive and creative process with real end-value.

Coming to terms with the integrator model.

Efficiency is doing things right; effectiveness is doing the right things.

The integrator model, whereby all the functions, processes and competencies within a facilities contract are brought together into one operational programme, has long been lauded for the efficiency improvements it brings. Together with technological improvements that allow for the “internet of things” to be implemented practically in the workplace, FM Integration is effective primarily at leveraging one crucial thing, information.

When different elements of a facilities contract operate largely independently from one-another, there is a tendency for information to be inefficiently and inaccurately shared. A disjointed relationship between contract-managers, subcontractors and senior management will inevitably lead to the proliferation of silos of information that only certain people will have access to. This not only pushes up the risk profile of a contract beyond any suitable limits, the delays in data-management and decision making will also inevitably raise operational costs that will bite deep into profit margins.

Many of our larger clients have increasingly turned to integrator platforms to transform their contract performance and alleviate these issues, but it is in the hidden benefits of integration where the effectiveness becomes clear.

Change management, and in particular the management of big data, can be achieved far more effectively when information is more readily available and can be acted on in real time. Crucially, FM integration allows for a much closer evaluation of service KPI’s, lean, on-demand maintenance and improvement processes and far greater cost control for contract managers, who are more able to implement more sophisticated service delivery processes.

When hiring for project management capabilities in the future, service providers will need associates with the most erudite possible understandings of FM integration, to ensure that the quality of that service can meet increasingly robust consumer demand.

Permanent recruitment solutions with Myfm.

When FM service providers are looking to make a permanent recruitment, they have several different options at their disposal.

For many of them, the more obvious solutions can be the most salient for their specific needs. there are numerous large recruitment companies that can supply an on-demand service for the relevant talent. The likes of Michael Page have a good, workable understanding of the FM market in their ranks and an unrivalled pool of CV’s. The problem with using a solution like this is that most often, they are recruiters first and FM professionals second. Many of our own clients have let us know that recruitment companies can be a bit hit and miss, as they often fail to understand the intricacies of performance variation and ‘culture fit’ that determine how well an FM manager can slot into a contract or organisation.

Other service providers thus prefer to keep most of their recruitment and HR capabilities in-house. Many FM Directors find this option allows for better alignment between business objectives and the candidates they consider but it sacrifices a thoroughness in the resourcing process you might get elsewhere. In-house recruitment is inherently more reactive. Less resources are available to devote entirely to talent acquisition, and the CV pool is far shallower.

The permanent recruitment service offered by Myfm perfectly covers the deficiencies in all these options. Our unparalleled depth of experience and range of capabilities in the FM market ensure that we have the expertise to pre-empt our client’s more complex, intangible needs. Our permanent recruitment capabilities are complimented by a consultancy service, ensuring that our approach is always solution-based, rather than just placing a bum on a seat.

But we also maintain a deep network of associate FM professionals that ensures we can respond to assignments even more quickly than a recruitment agency, without sacrificing quality service provision.

A flexible, dependable, solution-orientated approach to permanent FM recruiting is what you can expect from Myfm.

An Outsourced solution that makes sense

Keeping a grip on overheads is one of the most persistent challenges faced by FM professionals. It doesn’t matter whether its hard or soft services, public or private sector, a £5 million or £25 million contract valuation, our clients face an almost daily struggle to find where they can make haircuts on the cost of logistics, sub-contracting, and crucially, staffing and mobilisation.

In a business where margins are often wafer-thin, it can be useful for contract-directors to pull the trigger on an outsourced solution to a resource requirement. Not only does it free up the use of internal capabilities and funds that would otherwise be tied up in an ancillary HR department, it can ensure that expertise is utilised as efficiently as possible and only when needed.

Making use of an outsourced solution in the interim management space can be a particularly nimble way of dealing with a performance issue. Interims can be placed at very short notice, are proactive problem-solvers, and can be aimed directly at resolving a problem without taking on a long-term commitment.

Whilst it is true that end user clients can be put off by what might appear to be a reactive, uncosted exercise, there are many situations where an out-of-house mobilisation solution makes sense, both as a check on overheads and as a performance enhancement.

The interim management support services we provide for instance are carefully calibrated to solve both issues simultaneously.

Not carrying the overhead associated with internal resourcing would allow a contract director to take full advantage of the kind of integrated service solutions Myfm provides, which holds many advantages over a traditional temp agency. A service that can go beyond placing a ‘bum on a seat’ for a specific role and instead offers to “manage the problem” for as long as it exists, allows a far greater degree of flexibility.

A managed service is solution orientated, rather than requirement orientated. Rather than merely placing specific associates into specific roles whilst our clients continue to go around fighting fires as they come up, we tailor and oversee the resources we offer specifically to each client’s needs, so that performance issues are permanently dealt with. This not only allows our clients to shift much of the associated risk with using an outsourced service, but also maintains all the advantages of using an in-house resource.

The importance of the “Culture Fit”

A few days ago, Myfm were in discussions with one of our most important clients concerning our future relationship. Whilst it was clear that they valued our dependability of service and strong commercial expertise, what was mentioned as a factor that singled us out from the competition is how intimately we understood the inner workings of the client’s company; their needs, their procedures, and how our associates were able to easily adapt to the various processes and idiosyncrasies unique to their business. In short, we understood the “culture fit”.

But what is the culture fit? And why do businesses consider it so important?

A Company’s “culture” can be a particularly difficult concept to define, it does not fit easily into any understanding of either the technical acumen or “soft skills” that all employers and HR departments consider, but it can still be quantified and objectively assessed.

Every company, and particularly large ones, has a unique modus operandi build on an exceptional set of interactions between management structure, the communications channels between employees, and company values. If for instance, you had a company where management believed in creativity, open collaboration and free channels of communication between departments, it would be a mistake to take on employees and line-managers who believed in an introverted, compartmentalised working culture.

With larger service providers, the company culture becomes intrinsically tied to the kind of service that the clients expect, which is why the “culture fit” goes from being an HR issue to a performance issue. In areas such as contract delivery, clients prefer the familiarity that comes from a uniform company culture and “method” of doing business.

Crucially, such an understanding of cultural norms in a given workplace allow for more stable and intimate working relationships to be formed between service provider and client.
When working in business to business relationships, the significance of cultural cohesion cannot be understated. The ability to fit, neatly placed into your client’s operational structure, almost as if you were part of the firm yourself, is invaluable to the long-term stability of any business relationship.

Introducing Maxcene Crowe

There is no doubt that Maxcene Crowe, Myfm’s newest Director, will bring a cool head and an experienced hand to the business. Maxcene’ s breath of all-round experience in FM ensures she is perfectly placed to provide end to end solutions to her clients, but her expertise really shines in the transition and mobilisation space. Her unique skillset is the ability to problem solve and see beyond the issues, communicate at all levels and deliver solutions consistently.

In her own words, Maxcene notes that she took and interesting route into the FM world.

“My career started in retail manufacturing at the age of 13. I was a separator (the person who separated pieces of a garment into bundles for machinists to sew). By the age of 16, I was promoted to quality assurance and supervised remote piece workers and factories that were completing orders on our behalf. I would also carry out administration and accounting (processing and payment of wages, tax calculations and piece work rates). An interesting start to my career. My first involvement in FM came after I graduated with a BA Hons in Business and Psychology in 1995. I worked in the estate’s management department of a healthcare trust as a contracts administrator and lease car manager (managing a fleet of 140 vehicles), this was my first involvement in FM. My first FM role stemmed from this experience and launched my FM career in earnest 1997. I worked for Xerox as an Assistant facilities manager supporting the team to manage total hard and soft services for 1000 occupants in 250k square ft. of prime real estate in Marlow.”

Maxcene’ s extensive background in service support and interim provision attracted her to Myfm, as she has been eager to work within a platform that is flexible, adaptable and competitively priced.

“I became an interim in 2004, I developed and worked with a very similar business model to what myfm is today. For many years I have operated as a single entity working for clients for fixed periods of time and then moving on. I must be honest and say after some soul searching and financial pain dealing directly with Clients, I decided it was time to change my business model in order to scale and grow the business, as well as a solution that would give me a back-office solution and resource platform to offer multiple Clients FM solutions simultaneously. This was what attracted me to Myfm, the back-office platform and access to a professional vetted resource pool across a breadth of facilities management areas of expertise.”

Whilst moving from associate to Unit director does represent a considerable change of pace, Maxcene is confident that the positive and productive relationships she builds with the people she works with will not change.

“My relationships with Clients and associates stem from a position of openness and honesty. It is very important for me early in the relationship to understand the clients and associate’s needs, pain points and get personal, this helps establish trust and confidence in my ability to deliver a solution for them. I am very friendly and welcoming. I like to work collaborative 95% of the time. The other 5% tends to be the more contractual and commercial elements which need to be negotiated and dealt with firmly but fairly”.

We warmly welcome Maxcene to the Myfm family and are excited to get to work.

Reliability Begets Loyalty

It can often be remarkable just how strong a longstanding associate relationship can be.

Many companies that facilitate the sale of interim human resources rely heavily, at least at first, on a relatively modest-sized pool of reliable associate talent. Myfm isn’t really an exception to the rule. Whilst we are confident that our associate pool is regularly replenished to provide the depth of experience and expertise that our clients require, we do often find ourselves consistently returning to a very familiar list of names. They know us, we know them, the client knows them, and all parties involved have developed a relationship of mutual trust and understanding over several years.

One of the first things you learn in marketing is that there are essentially two ways to drive growth.

1. Give loyal customers an incentive to keep using your service or product.

2. Try to penetrate new markets to reach new customers.

A lot of companies make the mistake of jumping into the deep end with the second option without first considering how much they can gain from really paying close attention to the first. In 2011, American Express released a customer survey report that indicated 3 out of every 5 customers would be happy to ditch a formerly favourite brand in order to gain a better service experience. Another report, published the same year, stated that 9 out of 10 Americans are willing to spend considerably more for a service they believe is of a higher quality.

In such a marketplace it can be easy to think that keeping customers onside will constantly be an uphill struggle. But focussing on your core product and making sure its provision is reliable, dependable and cost-efficient ensures that the same clientele will keep returning again and again.

For interim management companies, where our people are the marque product, this usually means building continuous contact and trust between ourselves and the associates we know to be amongst the best in the business at what they do, so when a client makes a purchase order, we are already at the races and ready to deliver.

Expanding your range of services and reaching new gaps in the market is always a useful pursuit. But when your business is dealing with people at both ends, it’s crucial to not get distracted and keep your core competencies running smoothly. It’s the foundation of the business, the part that quite simply, must deliver.

Why flexibility is crucial

The customer in the modern economy is very demanding. It’s no longer enough for a service to be delivered efficiently and professionally. The delivery must be on OUR time, in OUR budget and tailored specifically to OUR unique needs and requirements. This kind of demand for sophistication in the services we use often clashes with logistical and operational standards of those providing the service.

In any kind of service provision, be it product delivery or high-end consultancy and management, the needs of the client are expected, at least in some capacity, to be malleable to the business process. Many companies in the service industry view their operational process as almost sacrosanct. They prefer the journey from a purchase order to a completed piece of business to be as stable, predictable and by-the-numbers as possible. When a client asks for certain special provisions to be made to suit their particular needs, most service providers will make many of the necessary changes, but in numerous cases these kinds of compromises risk being viewed as a challenge or inconvenience to be overcome, rather than an opportunity to make the service more malleable to the client’s needs. The service can compromise with the customer, but it’s hardly à la carte.

Flexibility, the capacity of companies to continuously tailor and reconstruct their method of service delivery to suit the customer’s more complex and intangible requirements, is becoming increasingly vital as market competition becomes more intense. A more malleable approach to the business process, where the completion each new purchase order is tailored comprehensively to the client needs, is not only highly desirable, it is more efficient.

A Client who feels their requests are not being adequately met via a by-the-numbers approach can hold up the delivery of a contract indefinitely, but if, through the brokering process, the Client’s needs are extensively outlined from the outset, less time and money is wasted in the delivery of the dependable service you provide.