Time for a new approach?

During lockdown we have researched over 600 contractors and carried out in depth interviews with industry leaders. The aim is to give recruiters clear insights to help them survive and thrive in the Post-Covid World. Fundamentally, we all need to look at our businesses, our beliefs and how we’ll succeed in the future. We should think differently.

1. Old Thinking:
“Placing more people more often is the only way to be successful”

We work in a results-based industry. Obviously, placing people is the main source of revenue for an agency. But there are other ways to drive success which can also make a huge difference to your business. This has become particularly important because, for some recruiters, the opportunity just isn’t there to place more people right now.

What the Leaders say

In our ‘People Talk’ interviews with recruitment leaders we focussed on what they learned in previous recessions. Our leaders didn’t talk about placing more people. They talked about efficiencies, optimising processes and smartly managing cashflow. Strong communication between teams, innovation and being agile were also seen as being key.

I think KPI’s are wrong for this market. You use drivers – give yourself 2 hour sprints to achieve the next goal… then, once a month, use KPI’s to find out where your training needs are… Also, I wouldn’t fill in the whole of my diary – I’d make sure I have thinking time every week, I’d also make sure that I’d only filled in half a day (maybe a bit more), but I need the rest of the day to plan what’s necessary to do next. So, making sure I can still be incredibly agile… And use some of these really good systems that are out there…that help you with some of these processes.

Gary Goldsmith, Founder of the Recruitment Directors Lunch Club, Champion to Recruitment, Growth Coach, Mentor, NED.

We are all having conversations about the fact that we do believe it’s going to be a slower recovery and the focus, of course, is liquidity and cash and making sure we are making the right decisions to rise out of this.

Rhona Driggs, Chief Executive of Empresaria Group PLC.

If you look at managing your business as a series of levers that you can pull and calibrate to run your machine, it’s dangerous to just focus on the ‘place candidates’ lever. Especially if, as now, that lever’s out of order for a lot of recruiters. Your costs are a lever, contractor satisfaction is a lever, overheads are a lever, cashflow is a lever. Payroll is a lever.

For example: By switching your payroll to People Pay’s HMRC recognised and reviewed Professional Employment Organisation (PEO) PAYE model, only 1% of the invoice attracts VAT. Compared to 20% VAT being applied to all of the Umbrella invoice. This positively impacts your cashflow by over 19%.

Try our PEO Calculator to see how PEO could help your cashflow

Link here: https://portal.peoplegroupservices.com/PEOvUmbrella/

Thinking Differently:
Commercial success can be realised by optimising the processes that underpin recruitment

Sales are important, that’s a given. But a business is more than sales. At People Group, we optimise the processes that underpin work so that they’re as efficient as they can be. This could involve a payroll solution that improves your cashflow or a compliance solution that gets applicants to work faster. So they save you money. So that they’re as simple and rewarding as they can be. So they drive up contractor and client satisfaction. Ultimately, these factors will drive commercial success and sales as much as, if not more than, 50 cold calls a day.

2. Old Thinking:
“Payroll is just an outsourced admin function, the cheaper the better”

We get it. Payroll’s not the most exciting subject in the world, but it’s essential. It’s viewed a bit like electricity. A utility that you can just ignore as long as the lights are kept on. Why not just choose the cheapest, or the supplier that takes you out on the town?

What candidates think

The COVID-19 pandemic has demonstrated the impact your payroll product has on contractors and, ultimately, your business. Umbrella providers that haven’t updated their contracts to eliminate discretionary pay haven’t paid contractors, which reflects on any agency that uses the provider.

Here is a handful of contractor comments on social media as a result of their Umbrella Provider’s failure to support them through this crisis:

In contrast here is a comment from a contractor supported by People Group:

“I wasn’t expecting to be furloughed – I was expecting to be abandoned. The agency has exceeded my expectations.“

Notice that the contractor talks about ‘My Agency’. If they’re treated well by their payroll provider, the agency gets the kudos. And the loyalty. This should concern recruiters if their payroll providers have let contractors down. They will see it as their agency letting them down. Typically the agency recommends the payroll provider, so it’s on you.

Our research backs this up:

Contractor sentiment towards their agency increased by 21pp from 55% to 76% satisfaction when they were taken care of when furloughed.

There was also a marked difference in contractor satisfaction between PEO and Umbrella.

Umbrella has come in for a bit of a hammering in recent months. From a contractor’s point of view, it’s too complicated and never seems to pay what it promises. In our research, 85% of furloughed contractors were happy with PEO while only 16% of contractors on Umbrella said they were going to stick with Umbrella.

Thinking Differently:
Your reputation is in your payroll provider’s hands  

When payroll works it’s easy to ignore it. But never forget that your reputation is in your payroll provider’s hands. If the lights go off, as they have in recent months, it’ll be the recruiter’s reputation that suffers. At People Group, we paid contractors 80% of their salary from week one. We believe that payroll can help drive contractor loyalty through providing the most simple, rewarding and easy experience. We’re there for contractors and deliver for them. Because that’s how we deliver for recruiters.

‘It’s very important for us to have the right suppliers and one of the things that’s important to us is to be true to our values… so when we did the management buyout we reviewed all our suppliers, including our payroll suppliers. Since then we’ve worked predominantly with People Group, so for us that furloughing process has been relatively easy because it’s all been taken out of our hands. There’s been a lot of legislation we haven’t had to navigate, it’s been a headache I haven’t had to have because People Group did it so efficiently.’

Katy Rees, MD of Smile Education & Education Chair for APSCo.

3. Old Thinking:
“Contractors only care about the highest rate”

It’s all about the rate, that’s what motivates contractors and if you don’t offer the best rate you won’t win contractors. Interestingly enough, this is often the reason why recruiters offer Umbrella over PEO as a payroll solution. Umbrella gives contractors an artificially high rate, but when all the deductions are applied, it’s nowhere near. Recruiters often feel that you need this hook to reel contractors in. So what’s the truth?

What contractors really think

Money’s important, absolutely, but our research of over 600 contractors show it’s not the main reason that contractors move to, or stick with, a recruiter. Not even in the top three.

What influences your decision to work with a recruitment agency?

Getting the right opportunities is number one while the strength of the relationship follows close behind. After that it’s about having their best interests at heart and trust. ‘They always get me good rates’ is tenth. Tenth! And the preferred payroll solution of most recruiters, Umbrella, is the one that gives contractors an artificially inflated rate. But it’s ‘Fool’s Gold’, the higher rate disappears once taxes and Umbrella margins are applied. This could significantly damage trust.

When we asked contractors ‘What’s the one thing that recruiters could improve on?’ communication was the top answer across all categories. Keeping them informed, checking in on them and taking the time to learn about their aspirations, these are the things that’ll keep contractors. In our Leaders research, communicating with their teams to ensure business success was also important.

Following ‘Communications’ was ‘More Career Development’ opportunities and ‘A simpler Payroll Product’.

What, if anything, do you think agencies could do to improve after the COVID-19 crisis?

Thinking Differently:
‘Contractors choose recruiters who care’

Our research indicates that contractors choose recruiters who take care of them. In the current crisis, this is crucial. Keep building the relationship, even if there aren’t the right opportunities at the moment. Make sure you’re with a payroll provider that also takes care of them, because that reflects on you. Money will always be important. But the relationship is what keeps contractors coming back. And it’s one of those hidden efficiencies. If your contractors are happy and stick with your agency, you spend less time and money trying to attract them.


Myths can be dangerous, they lull us into a false sense of security that can come back to bite us. At People Group, we aren’t about selling, we’re about saving – proven efficiencies that speak for themselves.

To learn more about how People Group can help optimise your business.

Get in touch