Let us not go the same way as the Luddites, the interim consultancy market needs to transform itself, and quickly.
We are all doomed, don’t panic shriek those in the interim management recruitment agencies and hoards of interim manager types at recent announcements from the Department of Health and Treasury on limiting the pay rates that interims and agency workers can charge. This coming on top of a UK Autumn statement of changes to the way single employee/directors will be taxed and the limitation of taxation benefits from the payment of benefits.
If you listen to them anyone would think they are just about to become the “ Nokia” of the contract market assigned to oblivion with Betamax Videos and PS2’s.
Whilst I accept change is worrying to those consultants who retired with comfy pensions, it is actually refreshing as it will freshen up the market and leave the market leaner and more competitive than ever and hopefully driven by outcomes.
In essence the autumn statement was fairly light on those who work as contractors.
From Section 3.20: “As confirmed at Summer Budget 2015, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, such as an umbrella company or a personal service company. Following consultation, relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies.” Draft legislation will be published on 9th December 2015.
I have been running my consultancy company now for 18 years and seen the highs and lows of the business cycle, we have rode out tough times and swam with the tide when needed. The changes to way consultancy/interims work have been changing for the last 18 months when high profile cases of “off book” employees were exposed, quite rightly by a skeptical press packing baying for “noses in the trough” stories. This driving knee jerk reactions from both regulators and clients.
However like most government announcements an element of compromise is reached once the reality of policy decision from Central Government is socialized and people with a real grasp of business and the real World start to frame the final policy with pragmatism and an outbreak of common sense.
In May this year I detected George Osborne had proposed a number of changes to the way small consultancy companies could operate post April 2016 and I took the chance to check out the proposals with my rather Uber efficient MP. This led to a personal letter from the Treasury, which put my mind at rest about the future. However it would be naive to think the future of the consultancy/interim market will remain the same forever. Hence my clear belief that like all businesses you either innovate or fail. I want to be at least an Apple, the current perceptional leader in technology but I really want to be the “BubbleGum” (the fictional leader of technological design which has yes has yet be developed but mark my words will be the future) of the consultancy World.
Consultancies either react to change by changing your business model or you simply fail. You join the mill and pit owners, makers of Betamax VCRs and the retailers who failed to join the Internet generation.
I changed my business model realizing that the traditional model was dying, expecting to rely on the sole provision of service to a client through a traditional agency model on sustainable growth when that client is hamstrung with internal and in some cases external policies or procurement practices. Clients need innovation and added value, not trousering a day rate with no accountability on delivery but a clear outcome base where your delivery is linked to a work package deliverable.
So this Summer I started the process of employing my own project staff, my own project professionals and my own project trainees. The aim by April 2016 to be able to provide not just me but a range of business analysts, project and programme professionals to compliment me and add value to my clients work. It would totally bonkers of me to share the complete model with you, commercially confidential and all that stuff however it is one that offers more than a grizzly old interim, is output based and allows the clients to have control on their costs and manage the quality of their contract staff.
If you are to survive in the 21st century our industry has to change and innovate not become luddites as most or business is built around changing and transformation.
Nigel Gooding MCMI is managing partner at Fifth Consultancy and a leading business transformation professional who lists the National Rail Enquiry Service, the new MPs Expenses Scheme amongst his impressive CV.