During the pandemic many small and medium sized enterprises (SMEs) have necessarily paused, postponed or cancelled their plans for long-term logistics and supply chain development. With lean workforces stripped to the bone through furloughs and redundancies, the emphasis has been on survival in a constantly changing business environment.
But as the economy reopens, challenges old and new will have to be addressed. The move towards eCommerce, and the need to adapt to a post-Brexit environment, has demanded responses in both supply and fulfilment arrangements, and there are new tasks in converting ‘emergency’ improvisations into sustainable and profitable business models. Expansion out of a trade depression is often the riskiest time for smaller businesses, and much depends on achieving fast and effective change.
Even in the best of times, designing and implementing fundamental change initiatives within the supply chain, while maintaining or even ramping up ‘day to day’ activities, often requires a temporary strengthening of the technical, professional and managerial ranks, bringing in new skills and expertise. Larger corporations may have the necessary human resources elsewhere in the business, but smaller companies may need to look externally.
That appointment often takes the form of an ‘Interim’ – a professional with very specific skills and experience, working for a day rate as self-employed or as their own company. This is a proven way for SMEs to access the latest and most relevant knowledge, and of pushing through change while minimising disruption to normal business.
However, there is a widely held misconception that interim appointments are no longer appropriate, and that the ‘right’ way of meeting these short-term needs is through employment of staff on Fixed Term Contracts (FTC), rather than buying a service from an interim. Largely, this is due to the postponed but now imminent introduction by HM Revenue and Customs of the ‘IR35’ rules.
These aim, quite rightly, to combat ‘disguised employment’ whereby long term workers claim to be self-employed, thus reducing employer and employee National Insurance payments, and saving on sick pay, holiday pay and other benefits. But this has led many businesses to believe that trying to make the case for a ‘genuine’ interim appointment is just too difficult.
That is to confuse two different situations. Temporary cover, for example for maternity leave, or because someone has left unexpectedly and the firm wants to take its time in making a permanent appointment, is clearly employment and should be treated as such. But those aren’t the situations where a firm should be looking to an interim, and indeed are not the sort of assignments that many interims would be keen to take on.
The interim comes into his or her own where there are clearly defined objectives, results and timescales that require particular, sometimes unique, skills and knowledge. These will have a strategic focus around change management, crisis management, project delivery, and business transformation. Common themes include restructuring, digital transformation, and the realignment of the cost base to reflect changed business models. Examples in the logistics and supply chain field might include re-orienting supply chains to achieve increased resilience, reconfiguring warehouse and distribution operations around a new emphasis on eCommerce or, as has been suggested, setting up a European distribution operation to mitigate post-Brexit impediments to exports.
Even, or especially, in the sectors worst affected by COVID, short-term issues may be acute: how do firms in the aviation supply chain, for example, plan for a ramp-up that could go from near zero to full capacity literally overnight when travel restrictions are lifted? Or how do suppliers to the hospitality sector resume ‘normal business’ while still developing the alternative channels and markets that many of them have found? These all require particular sets of skills and experience that a business is unlikely to have, or indeed usually need, in house.
There are other advantages to taking the interim route. Although day-rates can look quite steep, they are less so when the full costs of employment (employer NI, holiday and sick pay, other employment benefits) of a FTC are taken into account. For this, the company is accessing very specific skills that may not be available in the ‘pool’ of candidates for a FTC post.
Moreover, an interim will ‘hit the ground running’ and see the project through, using experience that they know is relevant to the task – their reputation and livelihood depends on demonstrable success. An FTC candidate by contrast, however well qualified in managing supply chains, may have relatively little experience in creating or remodeling them, or in the company’s particular line of business. They may need a significant induction process before they can become fully effective. And they may not see the contract through – not because they are irresponsible but because, they are not ‘temporary’ by choice – they are looking for a permanent post and will, quite reasonably, take one if offered.
Both day-rate interims and FTC appointments can have their place in an SME’s recovery strategy, but the company needs to be clear about what it is trying to achieve.
Bis Henderson has extensive experience of both approaches and can help firms define their requirements and decide on their preferred strategy. We recognise that smaller companies have limited HR experience and resource and we can help with the selection process for both interims and FTCs.
In addition, we have alternative fee structures depending on the route the company wishes to follow. For interim talent, the client company contracts with us as the service provider, with specific conditions on resources, outputs, deliverables, timescales and so on. We in turn have different service contracts with the interim(s) who will be deployed. The client pays us against a single invoice for the delivered service. IR35 does not arise.
In the FTC case, we are offering to replace the usual upfront fee, by a monthly fee (for a minimum period). For SMEs in particular, that removes some of the risk around the appointee not seeing the contract through, and positively assists cash flow.
Our commitment is not to one model or another, but to finding the best solution for our clients. We are always happy to talk through the pros and cons of the different recruitment and appointment options – start by contacting us on 01604 876 345 or email [email protected]