Statement of Work as a competitive advantage in the war for talent
Exploring how Statement of Work and outcome-based delivery can provide organisations a competitive advantage in talent acquisition.
With Affi Khan, CEO, Cpl UK - Tech & Health
00:00:00 - The importance of talent & reflections on the challenges in the market
00:11:45 - Statement of Work as a competitive advantage
00:25:20 - The misunderstandings and misconceptions around Statement of Work
00:40:30 - Statement of Work model's impact on an organisation's culture
00:48:20 - SoW as part of strategic workforce planning
00:55:50 - Factors influencing talent shortages
Transcript
Jonny Dunning: 0:00 Okay. So we’re off. And a very warm welcome to Affi Khan. Thank you very much for joining me, Affi. How are you doing?
Affi Khan: 0:07 I’m good. Thanks. Thanks for having me, Johnny.
Jonny Dunning: 0:09 My pleasure. Excellent stuff. So we’re going to be discussing some topics around the title of statement of work as a competitive advantage in the war for talent. So there’s a really interesting and meaty topics we can get into around that. And before we do that, could you just give a little bit of background on what you do and kind of where you’ve kind of come from in your journey?
Affi Khan: 0:32 Okay. So, I’m Affi Khan. I’m the chief executive for CPL, UK on the technology and healthcare sectors. So I’ve been a recruiter all my life. I went [after the] school, straight into recruitment. I started to some jobs and go into recruitment very early age. And most of my career has been in the public sector recruitment market. Most recently, I had a business that I sold to CPL Resources, DLC in 2017. And that was a doctors and allied health recruitment business, which was called rig. That business has 1000 contractors going through the IR35 changes in the public sector. So it is sort of I’ve been through the war for the scars to show it, to prove it. And since then, we went on and built a technology recruited within the group as well, which is part of [Inaudible 0:01:33] too. And so I guess I’m a second time round, I’m going through these IR35 changes in the private sector, which have made me somewhat of a well-versed in the subject.
Jonny Dunning: 1:47 And in terms of this whole kind of talent and recruitment space, a lot of people kind of tend to sort of fall into rules, or is it the drew you to this area? And what is it? I know you’re really passionate about the talent space? What is it about those that so appealing to you?
Affi Khan: 2:01 Well, a lot of people say they fell into recruitment. I think, for me, I’m proud to be a recruiter, and I didn’t go to college. I don’t have a degree. So actually, I didn’t fall into recruitment. Recruitment was a privilege. I was selling mobile phones in the high street in retail. And so for me, becoming a recruiter was something to be really proud of. And almost 20 years later, I’m still proud to be a recruiter. So it wasn’t an accident for me. I love recruitment. I love making a difference to people’s lives. And I’m also really enthusiastic about the difference that good talent can make to a company. I think all of business really is a combination of people coming together who believe in a similar thing, who worked with a similar mission. So I think, talent is key. It is core to all innovation or achievement, good government, good society good companies. So for me, I love what I do.
Jonny Dunning: 3:09 Yeah. And I love your description of companies as matching people with purpose. That’s pretty much what you just described. But ultimately, that’s almost like... It’s like the ultimate leadership scenario, isn’t it? Everybody working towards a common objective. It’s well communicated. Everybody buys into it. That’s the ideal scenario. And obviously, for some companies and some people, it doesn’t always end up necessarily looking like that or they don’t think about it like that. But I think that’s the real aspirational way to look at it. I like that. Yeah, I kind of have a similar lens, [but] slightly different angle when I look at the world of work. So I’ve been involved in various different things in the workforce technology space, obviously now focusing on services, procurement, and statement of work as a vehicle for getting things done. And I think for me, in a similar kind of simplistic sort of way, it comes down to getting things done. And just get the job done, move forwards, be productive, make great things happen. But that relies on talent. It relies on skills. And there are different ways to get access to skills into talent. And that’s what I’m really passionate to talk about when it comes to looking at how companies do things and how companies structure things.
Affi Khan: 4:29 Absolutely!
Jonny Dunning: 4:30 And I think when you get something like IR35 that happens, it’s just such a big change, it’s just such a big obstacle that it forces companies to assess what they’re doing, whereas previously maybe they didn’t have to. But you’ve obviously seen this in the public sector. You’re now seeing it happen in the private sector, probably seeing some of the same mistakes. A lot else going on as well. [Inaudible 0:04:57] really in the last year.
Affi Khan: 4:57 Yeah. I think so. Something else, yeah, a pandemic, I think.
Jonny Dunning: 5:02 I think, it is pandemic. But you guys, your business has gone through some interesting changes as well, hasn’t it? In terms of...?
Affi Khan: 5:06 Yeah, it has indeed. I mean, the working from home experiment has been a key success for us. We’re pleased about that it enhanced our talent pool. It made it possible to align people who believe in what you believe in irrespective of whether based because we’ve gone into a hybrid working model, which means people from much further away that previously might not have been able to work with us and are working with us. And it feels a lot of challenges that this pandemic threw at us, but there’s also a lot of positive take from it, as long as we learn and move forward.
Jonny Dunning: 5:45 And you guys, are you now...? You’re also are part of the larger organization now as a group?
Affi Khan: 5:50 Oh, yes, yeah. So that changed too, which was a massive change. Again, it’s a testament to the quality of the group that throughout a pandemic, we were able to still sell the group to become part of a very large Japanese conglomerate called OSI Incorporated. So we’re now part of a group with 3.2 billion turnovers with over 80,000 employees, listed on Japanese Stock Exchange. And it’s made our UK footprint enormous. Our UK turnover is just over 300 million now. Just in the UK alone.
Jonny Dunning: 6:29 And so basically the part of the business where you’re CEO of that’s focused on tech and healthcare, isn’t it?
Affi Khan: 6:37 Correct.
Jonny Dunning: 6:37 So again, two extremely relevant areas, Tech has become more important than ever. Healthcare has gone through some massive changes. It became more important than ever. How’s the pandemic...? What has been the impact of the pandemic on the business? Obviously, apart from the remote working side of things, but in terms of business with your clients?
Affi Khan: 6:56 Oh, very interesting question, actually. Because whenever I talk to anybody about what I do, and I mentioned healthcare and technology, the natural assumption is because there was a pandemic healthcare would have been really, really busy. And actually, the healthcare staffing market went through an extremely challenging time. Because the hospitals understandably focused only on COVID related matters, or non-COVID related matters were put to the side and that is widely covered in the media that the waiting lists have increased a hundredfold. What that also meant was that all those healthcare professionals who weren’t dealing with COVID related matters were also put on the bench. So actually our healthcare business went through a very challenging period. But now it’s really really busy. But that’s a challenge in itself, because you have to go through artificial depression of the market, and then a very big explosion of demand. So you have to manage that. And then on the technology side, it was actually, again, a very rapidly busy period in some of the markets we’re in, for example, social media, where a number of our clients ramped up ridiculously fast. And of course, a busy market is good, but too busy means you just can’t keep up with a demand fast enough. And for us, we have a very core commitment to delivering for our clients. We don’t just want to have loads and loads of vacancies to feel good about ourselves. We also want to make sure that we’re delivering. So it’s been a roller coaster of a ride for different reasons. But an interesting one. And I’m grateful, I think, where the healthcare market and the technology market in the long term have very positive indicators for growth.
Jonny Dunning: 8:54 Yeah, so basically going through an acquisition, pandemic affecting the markets, all remote working, [and] all these different things, it must be quite nice now looking forward as things start to ramp up. And as those, obviously, we’re not out of the woods yet completely as far as the pandemic goes, but there’s a little bit more certainty in some areas. It must be quite nice to look forward. Obviously, IR35 has happened now, but that’s kind of still really right in the mix as far as clients are concerned, [Inaudible 0:09:23] say.
Affi Khan: 9:24 Yeah absolutely. It’s funny you say that. It’s like, I wonder the day I became CEO following the acquisition, and then a force for CPL, a security key tech in health and I faced a Brexit to IR35 and a global pandemic for good measure.
Jonny Dunning: 9:48 Well, that’s right man in the right place at the right time.
Affi Khan: 9:52 No. I don’t know. You know what [Inaudible 0:09:53] just said you know, that does not kill you, it makes you stronger. I hope that’s true.
Jonny Dunning: 9:59 I remember... Yeah, I think it must be. And you know if you can get through that, and you can still have a really positive outlook. And obviously, things are going great for you guys. And there’s lots of scope for expansion. And there’s lots of scope to solve problems that your clients having to deal with. So that’s great. But I remember early in my career, talking to my boss and saying, “You know, what it’s like to go through a recession.” We should know right before the kind of credit crisis. We should never have said that. I learn the hard way. But if you can make it through these things, and we have to make it through these things, then there’s a lot of learnings that can be taken from it. And also changes opportunity, isn’t it?
Affi Khan: 10:38 Correct.
Jonny Dunning: 10:38 Because where organizations are having to adapt. Because if you look at certain things, like take for example, services, procurement, statement of work, there was a massive problem that companies are trying that had already with services procurement, where it’s not measured effectively, they don’t really know what they’re getting for their money. There’s rogue spend and a tail spend. It was a kind of a bit of a wild west situation. But it wasn’t important enough for companies to put at the top of their priority list. Yeah, but you throw in a few things like a pandemic, with suddenly there’s a lot more remote outsource work delivery, outcome based work delivery becomes more relevant, because it doesn’t really matter when or where people are working. It’s about getting things done. IR35, which obviously changes the picture around just to kind of free for all in a contracting space, and you mentioned Brexit earlier as well, that puts a massive pressure on talent. Outsourcing, then becomes another avenue. So suddenly, you get these factors which create change, but it does create an opportunity. And obviously, we all the changes that you guys have had, it must have created massive opportunities, because it’s just hard to stay on top of it all.
Affi Khan: 11:44 It is. And you’re absolutely right, that the Statement of Work is definitely one of those products in the market that actually, I think, that there’s a lot of people who do it badly to sugarcoat it, or to try to disguise what they’re doing, which is just to try to find a way around IR35. And that gives it a bad name. And I think that if done properly, it’s a really strong competitive advantage. And more so now than ever before for three reasons. Number one is, of course, the elephant in the room is IR35 itself. Because a statement of work, there is a space for it. In the market, there are jobs that genuinely do fall into a bonafide Statement of Work milestones, delivery based, outcomes based solution. Number two, is Brexit in the UK. There has been a drop in sentiment, at least, if not for more technical loopholes to jump through in Europeans who want to come and work in the UK. And number three, is the pandemic. It has truly put the globe, the world, the war for talent into hyper drive. Because it’s truly going global. And you’ve been saying globalization for a long time, of course, yes, correct. But until we were able to really get comfortable with the experiment of everyone working from home, the true capacity of globalization really gets felt in the markets, because now as long as you’ve got the skill set, you could genuinely be anywhere. And that’s a plus and a minus. Some say, people voting for this working from home environment - and even after the pandemic - is like turkey is voting for Christmas. Because if you no longer add any value in your physical presence, could your job be done somewhere else much cheaper? So the globe, the war for talent has truly gone global. And for all those reasons, solutions that can help attract more talent are going to give any company competitive advantage. And I think statement of work done properly can definitely do that.
Jonny Dunning: 14:15 Yeah. And I guess it’s just a different way of accessing talent, isn’t it?
Affi Khan: 14:19 Yeah.
Jonny Dunning: 14:21 As I say, for me, it always comes back to how you’re gonna get the piece of work done. And I think when you take that approach, you have options. And it’s not a question of just saying, as a blanket. It’s always better to do it this way. It’s always better do it that way. If companies can take an intelligent look at what they’re doing, and the pandemic is forcing people to do, they can’t afford to waste money. They can’t afford to not know what value they’re getting for their spend. They can’t afford to not get things done on time for their customers. And they have to look at what it is they need to do and have options as to how they do it. Because it might be great to get everything done with your permanent workforce. But that’s going to be a massive cost on your bottom line. If you’re a PLC, you might not want to show the headcount. There’s all sorts of reasons why that might not be the perfect solution in every scenario. Likewise, with the contractor world, I feel like the contract world kind of just grew so big and messy, and IR35... If contracting had been done properly in the first place, it wouldn’t look like it does now. And there wouldn’t have to be such a massive change, where there’s gray areas and stuffs kind of spilling over into what’s considered to be disguised employment. And so there’s a major correction that’s going to take place now. But in the right scenarios, contracting temp workers is still absolutely the best way to get certain things done. And it’s an incredibly important resource capacity for an organization, but most organizations will do a lot of statement of work. But they won’t necessarily feel like an obvious part of their workforce mix. Because it will be associated with larger projects, maybe consulting professional services that sit within procurement. And whether they’ll be doing loads of stuff, like statement work anyway, because pretty much any service that’s procured will be procured under a statement of work, contract with deliverables, milestones, etc. And that mechanism, when you start breaking it down to a more micro level, the world is moving or is trended towards an increase in task or output based work delivery. And so yeah, you’re absolutely right. If companies don’t know how to use it effectively, or they can’t use it effectively, they basically haven’t got an option that they could have.
Affi Khan: 16:38 Yeah, absolutely. And you know what, I think that I’m hoping, anyway, I’m a bit of an optimist. I’m hoping that over time, people will fathom on to this fact and Statement of Work will prevail on a much wider scale. The challenge, I think, we’re facing at the moment Johnny, you might agree with me is that IR35 changes came in as usual, even though they were delayed by a year because of the pandemic, no one was really prepared. So everybody is now focusing on securing the existing base of workers, protecting themselves from risk, and thinking less about “Is this solution fit for acquiring future talent?” What I mean specifically, is a large number of our blue chip customers and customers across the board, and I totally get why they’re doing it, and we’re helping them by simply just transferring that temps onto a payroll services agreements, managed service payroll, so effectively, to cut the risk of working through umbrella companies altogether. Because [Inaudible 0:17:49] should you be, should you not be, who’s auditing you. who’s checking your pay slip, is it the right place, it is the wrong place, there is so much unknown there. There is such bad practice out there that a lot of big customers that we are seeing have simply gone... We’re just not going to even engage on that front. We’re just going to go POI payroll through a managed service. And we’re going to do that. And that makes sense. It does make sense for your existing workforce who may be loyal to you, who are comfortable in their job, who like where they are, and they’re going to continue doing what they’re doing. Right, great. But how do you acquire talent going forwards? How do you get the best contractors in the market who genuinely could work in a statement of work environment, who now get told no, I don’t care. You have to be on POI payroll? Well, many will say no.
Jonny Dunning: 18:50 Yeah, I mean, does this echo some of the things you saw in the public sector previously?
Affi Khan: 18:56 100% exactly the same thing. It was known as insourcing. So you had agencies who could not meet demand because the IR35 rates were no longer attractive, yet, through the back door, they had largely fairly unregulated startups, who would simply put those same [Inaudible 0:19:21] in and call the insourcing, because Statement of Work services won’t have rolled out through bonafide providers like yourself, who do things properly. You have an online portal. We’re proud to be working with you, which gives us deliverable milestones, outcomes. It goes out in an auction to a number of contractor communities of people are bidding for work just like mybuilder.com. It’s a proper Statement of Work service, which gives everybody peace of mind. And when the market doesn’t do it, people start to find workarounds, and generally those workarounds are not really well thought through. They’re sort of [Inaudible 0:20:07]. This will just hold together, just to make things work.
Jonny Dunning: 20:11 Yeah. And I think, these sort of short term solutions typically will store up problems for the future. And in the public sector, certainly, there was pushed certain things into bad practice, but also it created resource capacity gaps for later. And I can see the same thing happening in the private sector. We’re in the short term, as you say rightly, clients need to solve the burning problem right now; put that fire out. But if they’re thinking about it strategically, they need to have a bit more of an open mind. It’s like when some of the big banks and some of the big pharma companies have basically said, “No PSCS”. For example, they’re just taking that kind of just a line in the sand approach. But there are going to be issues at some point down the line, where projects that are urgently needed for their clients, for their products are not going to get done. They’re going to be behind. It’s all very well, yeah, what the sweat off, we’ve solved that problem, we’ve got away with that risk, we haven’t got to worry about that. But business productivity is going to suffer. And I guess that’s kind of the message that people like yourself, and certainly we’re trying to put out to help educate the market, because it’s a question of understanding, all available resource channels, making sure that they are optimized to use all available resource channels at the appropriate point in a compliant manner, efficiently. And if companies can do that, then that opens up so many opportunities.
Affi Khan: 21:38 Yeah. Well, the thing is that you have to start with a question. I think, if you spoke to boards of these very large companies, the answer would be a unanimous, yes. But whether that message is at the moment, because we’re recovering the pandemic, and because we’re having to react to comply with IR35 in many cases, I find that’s cascaded down to the operational level just yet. But if you were to say to, let’s say, IBM or Dell or the like, “Can your entire workforce be permanent?” They would go, “No, of course not.” It’s not possible. Organizations have a certain scale need a certain amount of flexible contingent workers to go through seasonal demands, peaks and troughs to be able to cut through tough quarters to be able to meet project deadlines, to be able to do a specific demand less situation, which requires a niche in one country, but none of my own is somewhere else. Also sometimes be able to break your own rules a little bit. Like pay scales. Sometimes some large organization have very thorough roadmaps for careers and pay scales and bandings, like the [Inaudible 0:22:55]. And sometimes demand just doesn’t allow you to be able to meet that. But if you go and solve this problem permanently, you’ve got a problem on your hands. Because then you got the rest of your workforce saying, “Hey, what’s going on? or how’s that guy paid more? They aren’t same banding as me.” Whereas if you bring somebody in on a genuine short term period, on a genuine statement of work, outcomes driven, milestone driven solution, then the reason you can justify that person having an increased income is because they’ve got increased risk.
Jonny Dunning: 23:28 Exactly. And they’re ultimately being paid to deliver something. And I think it’s a very pragmatic way to work. And I think the pandemic has forced pragmatism back into a lot of companies where maybe they were a little bit too comfortable. And I’m not saying that’s a great thing. It’s obviously terrible, the way that companies have had to go through this, and the way it’s affected the whole world, but it strips away any luxury of letting stuff go. As I say, in the right scenario, contractors are the best solution to get work done as [Inaudible 0:24:02] as our [Inaudible 0:24:03] in the right scenario for [Inaudible 0:24:05]. But I think, with the way that the contractor market, it kind of got very big and messy, for business managers, stakeholders, operational people within organizations, right up to the C suite, it’s quite easy to be kind of trucking along with a load of people doing stuff on a time materials basis. And kind of everyone seems to be working hard. And we’re doing well. Yeah, we seem to be doing well. If you actually have to really strip that back to kind of what we said before about everyone working together towards an objective, what’s the key objective of the organization? How does that translate down to operational objectives? So someone within a department knows what they’re expected to do as part of the overall objective, if you actually can then package up the work to what was actually needs to be delivered, what’s the output, what’s the outcome, and put a price against that and get a supplier who takes on the risk of delivering that, that’s incredibly pragmatic. You know, some organizations might say, “Well, I think that’s going to be more expensive.” But is it? Because if you just got a load of people working away on the never never, then how do you know what’s being done, how do you know how much it’s costing and all that sort of thing. So it does require a bit of a cultural shift. Is that something...? I think within procurement... Procurement people understand statement of work. And a lot of business stakeholders will be engaging suppliers under a statement of work. Where do you think there’s maybe less of an understanding and acceptance of that model? Do you think it sits within the kind of talent in HR type space?
Affi Khan: 25:32 Personally, I think it’s just new. In some terms, people are stuck in their old ways as habits. I think is no more difficult than signing off a timesheet. But it’s habitual. I don’t see why I agree milestones and outcomes based on actual deliverables that have a cost associated against it is any harder than signing off a weekly timesheet. Because that’s also complex. You did you work authorization, pay and bill, [and] everything else. It’s just because people are used to it that there’s a misconception that that’s easier. This is harder. That’s number one, I think personally. Secondly, I think there are some bad practice in people dressing up [Inaudible 0:26:25]. And you’d basically take a standard contract that you would have had for a contractor before IR35. And you change a few terms along with a call a statement of work at the top, and you change the word of this to associate and that to substitution, and you put this in there and bang, you got statement of work, which you haven’t. I think that’s scaring people off because people were bad practice. So I think the key thing is... The main reason why IR35 a really was keen to join them This podcast was to create awareness; I think that’s one of the main things you’ve got to do is create awareness. Because I think once good practice, right, the sort of platform that you deliver, starts to become a bit more present, I think the benefits of a proper Statement of Work agreement are self-evident.
Jonny Dunning: 27:20 Yeah. And that’s why it’s great for us to be able to work with people like yourselves in the sense that, we’re just the technology that provides a structure, you’re providing a service around it. And so that’s something that your clients can take advantage of, and can make sure that they’re doing it in the right way. Because you do need structure. And you also need to make sure that the work is delivered in a manner that’s consistent with the way that it’s contracted. As you said, you can’t just have a time materials contractor, try and change them to some sort of quasi Statement of Work Contract, and then have them carry on doing it in the same way managing people just working, working exactly as they were. And I think that’s where, with a bit of education and a bit of support, and the structure that can be provided by for example, the service that you guys provide using technologies such as that, that we provide, that provides a safety net for an organization to be able to do it properly. Audit trial, clear visibility, clear governance, standardized working practices and workflows, etc. And then it becomes something that’s really, really feasible. But you’re right about people being kind of stuck in ingrained habits. I think that’s going to take a while to change. One of the other things that I think is also something’s to be considered, which is, again, it’s a bit of a change. But it’s a valuable change and a valuable learning is, in my experience, so previously, I worked in the kind of Job Board World for a good few years. And one of the things that, you know, as soon as you get involved in the Job Board World, you understand that companies are not very good at writing jobs descriptions, from the recruiting world, you know ...
Affi Khan: 28:59 Yes, I am aware of that.
Jonny Dunning: 29:00 ... is a constant source of pain. And so, there are simple elements to how you could create a good job description. And some companies, stakeholders, hiring managers still just can’t do it, they haven’t got time, they can’t be bothered, they don’t know what to write, or the company is always trying to update their library of standard job descriptions, etc. With a statement of work and there’s the complexity of looking at it and saying, well, it’s not just a Java developer, actually, I need to get a piece of work done. And there’s an art and there’s a science to that. But again, it fits into a clear structure. And it just means that stakeholders are having to ask themselves, what actually is it I need to get done? But I think that’s such a great question for organizations to have going on within their businesses, because it’s really driving towards, am I doing something useful? Are we getting the work done? What’s the objective and how do I work towards it? But I do think, in the same way as when you had like the mass adoption of job boards, lots of recruitment companies and lots of job board companies are trying to educate hiring managers onto how to write a job spec, how to appeal to a candidate, how to describe the role and competencies and benefits and all that sort of thing. My personal view is the same thing needs to happen with regards to work.
Affi Khan: 30:16 Yeah, you’re absolutely right. I think that’s what it is. Again, it’s habit, it’s head of engineering department is used to going through to the recruitment HR manager to give them a whole detail of what they need from the skills of an employee, they’re going to hire, the HR manager, or the HR team will then write up job descriptions, all the employment and perks and everything else that goes to the talent team and talent team, then try to create attractive snazzy job adverts or LinkedIn themes or whatever else off the back of it. That’s an onerous process in itself, and often ineffective in especially in areas of the market where talent shortage exists, right? It’s the same if you just go backwards. And if you had more decision makers, like the head of engineering, who’s prepared to engage with a statement of work supplier and give them full visibility, on outcomes and deliverables and say, “Okay, so tell me, take me through your project phase. Take me through exactly what deliverable you want on this stage and this stage and this stage and this stage, what are the milestones here? Who are the key stakeholders?” And if you’re able to get them engaged to give you those information, because you can’t create a statement of work platform properly without the engagement of the end user. But the point that I think you’re trying to make and correct me if I’m wrong, is it takes just as much effort to do that, than to go through the writing of job descriptions, job adverts, and everything else. Am I right?
Jonny Dunning: 31:42 Exactly. I mean, it should tie into a business stakeholders’ fundamental business planning career, because it should tie in to what their objectives are and what they need to get done. That head of engineering is going to know what projects they’re working on, how that needs breaking down and pass something up.
Affi Khan: 31:57 And if I just add in there, I think that’s where I keep, I keep beating this drum about recruiters being able to move up the value chain. In an ideal world, I’d be sitting as an advisor to that board and just saying, “We need to ramp up our customer service team. And I’ll be able to map their talent to be able to say, Well, this is the pool exists for you. And is it best to do that this way or is it best to do it this way. Let’s do that way. Or you need a team of Cuban 80s technology developers.” Okay, well, that’s a skill shortage you’re going to have struggle with, I think you need to work out a Statement of Work Project, depending on what sort of project we need to be delivering against a good talent advisor could give you a solution fits.
Jonny Dunning: 32:44 Yeah, absolutely. I mean, that’s true Workforce Solutions, isn’t it? It’s actually helping that company ask the answer the fundamental question, which is, what is the most effective use of my resources?
Affi Khan: 32:56 Yeah, yeah. But nine out of 10 workforce solution companies who call themselves workforce solution companies, they’re really just manage service providers.
Jonny Dunning: 33:04 Yeah, and I guess, you know, that’s partly that the market is still slightly mature in that area. But it’s also a question of whether the companies are letting people in and buying into that, but it’s kind of both sides need to be right. But yeah, I mean, just going back to what you’re saying about the writing statements of work and packaging up work in that way, suppliers can help. We see it all the time, where, you know, a business, it might be something super technical, where even the engineering manager doesn’t understand or a technology manager doesn’t understand the details of the cybersecurity project that needs to be carried out, for example, the suppliers do. But if you’re going through a competitive bidding process with multiple suppliers, and you’ve got an overall requirement, they can help you shape the final specification. And if you’ve got, you know, several suppliers working through a competitive process, then you should be able to come out of it with something that the client and supplier have agreed on, which is a feasible structure and something that’s actually going to get done. And it’s actually priced correctly. If the sometimes there were changes along the way, but you know, you can’t make these things perfect. But I think that collaboration between supplier and business stakeholder is also crucial. Because people might think they’ve got to solve every single nuance of it within their overall description, but actually, our requirements probably going to change by the time you get supplier input anyway. So, I think that adds in this whole new world of collaboration, where, again, it’s people working and businesses working together to solve problems.
Affi Khan: 34:36 It’s a value add for term partners, to be able to offer that service. And there’s a time saving exercise folks and clients who’ve got a business to run. Yes, you could articulate the ins and outs of every scope and every step and every deliverable every milestone of the project need delivered. But is that your value adds or would you Not rather have an expert who has done this 11 times before, for very similar companies to yours, then come in as an advisory basis. Do the scoping for you. Yeah, so you don’t and you’re taking time away from growing your business, especially if you’re a rapidly growing FinTech, you’re about to either pre IPO, you’re about, you just have a Series B, and you’ve got that funding to make your product better, increase your customer base, or hire more salespeople sell more of your product, whatever you’re doing, surely, that’s what you want to do more of, and bring experts in, who can go right, you know what I’ve done this 11 times before, I’ll help manage your crisis management solution. I’ll help detail the statement of work behind your data major migration project, and get them to come in that for me, I think if done properly, that could be an additional selling position for a good term partner. So you actually sell advisory services to build Statement of Work offerings, and then deliver Statement of Work offerings, and actually increased value for the customer too, because this saves them time. And it allows for them to ensure that the person who designed this statement of work has done it 11 times before, 10 times before. So it’s going to be right.
Jonny Dunning: 36:16 Yeah and ultimately, what they care about most is getting the piece of work done, not falling behind their deadlines, the stakeholder being satisfied, their client being satisfied their product going to market on time. So, yeah, I totally agree. I think there’s massive value there.
Affi Khan: 36:32 And you know what it’s the same reason why, very same reason why I work with you, instead of trying to design my own portfolio. It’s not that we can’t, you know, the size of our group. But for me, personally, I know what I’m good at. I just rather do more of that.
Jonny Dunning: 36:54 It’s exactly what you know, we always say, sticking to your knitting, you know, as a tech provider, people are always saying to us, does your system also do this, do this, does this system also do that? No. And we don’t intend to do any of those other things, because we just focused on the end to end lifecycle of anything delivered under a statement of work. But the only way to be really, really good at doing that is just doing that exactly, as you’re saying. So we don’t provide all the kind of advisory services around our platform, because ultimately, partners like yourselves, that’s what you guys do. And that’s where your expertise lies. And I’ve seen recruitment and Workforce Services Organizations evolve massively over the years, like I say, I got my original background is in the Job Board Sector. I remember back in the day, job boards, were really just first starting to get some traction. And everyone was kind of saying all the recruitment agencies, it’s the end for recruitment. It literally couldn’t have been further from the truth, you know, a high percentage of job board revenue to this day will still be recruitment agency revenue, by far the bulk of their revenue, there are far the bulk of the vacancies, because recruitment organizations are very adaptable, they’re good at solving problems, and they adapt to technology generally faster than the end clients can possibly even think about it. But also, they’re just good at solving problems. And if you take the problems associated with managing a contingent workforce program, transitioning, you know, workers in an IR 35 payroll situation, dealing with, you know, issues of trying to keep your permanent headcount where you want it to be, upskilling talent programs, a lot of the same principles apply, particularly to a contingent workforce solution to what’s required in a statement of work based solution, where you need to have the right suppliers, they need to be compliant. The work needs to be done in the right way, selection needs to happen properly. Business stakeholders be it needs to be assisted in the buying process, everything needs reporting on, everything needs, refining, savings needs to be made. And for organizations, of course, they could do that themselves. They could adopt technology and do that themselves. But if they come to somebody like yourselves, as you say, if you’ve done this multiple times before, and you have a solution that’s ready to go, that reduces the headache for them. So, I think that is a massive opportunity.
Affi Khan: 39:08 Exactly, exactly. And there’s a cultural challenge there as well. Because if those companies who choose not to do this, and they know that they need somebody for a short period of time for a deliverable project, and they hire those people permanently, knowing they’re going to make them redundant after it’s done, actually, that’s really bad for your culture. And secondly, if you then bring them all in on fixed term contract as effectively permanent employees and they’re really high skilled individuals that are hard to find, then you’re going to have a massive, massive challenge in attracting the talent in the first place. There are rock stars out there who work independently, who are very, very good at something that is inch wide mile deep. They understand inside out they don’t know anything else. They’re probably good at nothing else, apart from that one thing and that nasty expertise they’ve created. And when you’ve got a specific niche, outcome based project you need delivering, and you need someone to just come in work independently and do that statement of work is the best way to do it.
Jonny Dunning: 40:16 Yeah, and it’s interesting what you said about the impact on culture, with all of these kind of potential scenarios, but I think, if you have different work streams, where, you know, some stuff is it makes most sense for your permanent employees to do that some stuff, it makes most sense for you contingent workforce to do that, and other stuff, you’re just going to get delivered on an outcome basis under a statement of work. I think I personally would put forward the argument that, that has more of a positive impact on your culture in the sense that if you do it other ways you mix things up, I think that can have a real negative impact, where if people know where they stand, you know, ultimately, the people that an organization deals with within a supplier course they should still treat them well, there’s still people this is still have a good relationship with them. And, and they need those suppliers, especially where their niche suppliers, in the same way that they need to give the contingent workers a good experience, because if that’s the culture of their company, they need to present that to them. And likewise with how they manage their opponent employees, but, but they aren’t different scenarios. And I think if people, if it’s clearly different than it’s working on different bases, then there’s room for that culture to exist within the permanent team and within the company as a whole and to spill over into the other engagement models. Because everyone’s really clear on where they sit, what liability they’re taken on what benefits they get from the way they’re working.
Affi Khan: 41:33 Yeah, and they become very different. One of the things I deal with regularly and not just in my career, but in my personal life as well. I have loads and loads of friends who work in tech companies or banks and things like that. And some are contractors and, and some are perms. And the you know, the premise generally would say our contract is amazing. Oh, they don’t invest in the company, or they just say to earn their hourly rate. And the contract would say, all the perms that the *pan* people just get jealous of us, they’re just jealous because they’re earning as much money as we are. And you get all these, there’s a little bit of an animosity situation where you get a perm person who’s got the same job title, and a contract person with the same job title. And then, you know, people find out that that that contractors a lot more money. And then you get things like, sometimes you might get stories of a contractor who’s intentionally prolonging the contract. Because they’ve intentionally left some broken code, or something wrong in the project, because they know now that they’re going to want to prolong it. Because, unintentionally, of course, from behavioral economics versus there’s a cobra effect, where there’s an incentive for the contractor to not finish the job quickly. Because the longer it goes on, the more they get paid, because the contract goes on. So, Statement of Work fixes that because you’re only getting paid on the milestone deliverable. So, if you haven’t delivered it, you’re not getting paid. You haven’t met your requirements. So, first of all, you’ve overcome that potential, unintentional incentive to want to prolong your contract for no reason. And also, you’ve made that function different enough from a permanent employee, for the permanent employee not to feel like they’re being hard done by because you’re saying, “Well, no, I don’t talk hourly rates with me.” I came in to deliver the data migration. You were going to pay me X amount for this migration. I’ve done the migration. And here’s how much you owe me. You don’t start comparing how much your salary is compared to the Tyler who comes in tiling to you.
Jonny Dunning: 43:52 Yeah, exactly. I think there’s a few things that have happened that have really accelerated this understanding of outcome based work delivery. I always describe it as it’s a statement of work as a contract that says, “I will pay you X to deliver Y”, simple as that. But obviously, there’s a lot of complexity within the depth and breadth of it, because it could be really massive projects, or it could be really small projects. But I think the gig economy has helped drive awareness of this. And it’s pushed that trend towards outcomes. You know, some gig platforms, or some gig work is still hourly. But actually, a lot of it is just fixed price. And I’ll pay you X to build, write, create a logo or whatever it might be seen at that very, very micro level, people have subtly been getting more used to just the idea that they’ll agree to a price. And the person that delivering the piece of work has to take on the risk that they’ve quoted the right part price, they’re going to be able to do it. They’re going to get it done to the satisfaction and they’re going to make the margin that they need to make, so that’s how. But also I think remote working during the pandemic has thrown open some interesting conversations about this because for some organizations I mean, I know that some really large organizations have had the difficult struggles of everybody suddenly working from home. Are they working? I can’t see them. You know, they’re not in the office. They’re on Teams. Are they watching Netflix? So, you hear these stories of people kind of throwing around the ideas of should we have, you know, monitoring software, on people’s computers at home. So we can see when they’re working and when they’re not working. But then you look at that and go, surely you’re better off just saying, this is what I need you to do. It doesn’t matter when you need to do it, you might need to be teaching your kids or looking after a relative or doing whatever walking the dog. As long as you get this done, then that’s fine. You can do it when you need to do it during this really difficult time. It’s forced that. And I think that’s a very healthy way to be able to look at it because everybody’s circumstances are different. And it to a certain extent it enables diversity, because it allows people to work in all sorts of different situations and different locations, etc.
Affi Khan: 46:01 I think it’s the most meritocratic.
Jonny Dunning: 46:07 Yeah.
Affi Khan: 46:09 You know I was really never a big fan of presentism. And just, just because, you know, I said, if I can do something in three hours that someone else takes 12 hours doing, where’s my upside. Where’s my upside, because the guy who sits in the office till 9pm, at night, doing the job they should have done by 5 p.m. is considered having a strong work ethic. Well, if you study and develop and work hard and be able to work something and get it done by 4 p.m., what does that mean? Does that mean you have a strong work ethic? Yeah. So, I think it’s also very meritocratic.
Jonny Dunning: 46:55 Yeah. And the pandemic has kind of put so much pressure on companies, that the stuff like that, to a certain extent, has had to go out the window. And it’s good, because it’s about productivity. When it’s like, if you look at the supply chain issues during the pandemic, where it’s been a question of, we need X amount of PPE, just sort out, you know, companies and procurement departments had to go into like emergency mode. Yeah. And it just cuts through any rubbish. And its pure pragmatism. And I think there’s definitely a kind of a flow on effect from that. But it’s just in the cost pressures, you know, companies are looking at everything now and saying, we need to save money, what are we doing? How are we getting this done, and yet, they’re under pressure to supply chains, there’s massive demand for delivery of goods and materials, that that aren’t available. So there’s a big pressure throughout the kind of manufacturing distribution, retail supply chain, and then that has a knock on effect in all areas. So no companies can afford to be complacent with it now. But if you if you look at how, so the ultimate scenario is, a company has a super flexible resource capability. They’ve got different channels of how they get things done, and they can access them all efficiently. And they know when they need to use the different ones. And how do you think companies can work towards that? And what are you seeing in the market, in terms of people thinking about that we’re trying to do?
Affi Khan: 48:23 I think in the moment; the market is still just recovering. And I think we’ll have to work a bear with that for a while we continue our good work, creating awareness, keep fighting the good fight as such. But there’s a long way before people fully recover and really start thinking about growth in a really structured, pragmatic and logical way. At the moment, people just ..., this it is just a mad rush to the door, you know, it’s just, I’ll pay you 10 grands a year more, I’ll pay you 20 grands a year more, I’ll give you this, and I’ll give you this and we’re just a war for talent, people just throwing money at it, throwing money at anything really solve the problem. That’s one thing. The second thing, the solution, as would you refer to, as the first part of the question, is just my opinion. But I think that companies should really go back to what are they best at. And their permanent workforce, as much as possible, should be focused on doing what they’re best at. And outsourcing everything else, within reason. So instead of trying to do everything yourself and try to be loads of different people, try to work through projects, to deliver things that not your best competency and have a permanent workforce that does, so you stay focused, otherwise very easy to create siloes and have all these different functions in your business. But actually don’t add to your ultimate USP. But now you’ve got them their permanent employees, now they’ve got a voice, now they’ve got a committee, now they’ve got meetings, and they start to have an impact on which direction your company goes. Whereas if your core employees are only fully focused on your key deliverable, the one thing that makes you world class, and then the everything else is done through third party experts who deliver things through a project, it’s a higher chance of use remaining focused on what you’re best at.
Jonny Dunning: 50:39 Yeah, I’ve totally agree. And I think, would you agree that there’s an argument to say that that can have massive positive benefits on the overall culture of the organization, and also the kind of purpose or value proposition that company has in the sense that, you know, some organizations can look at it and go, if we outsource more, we’re diluting our culture, we’re diluting our value. But I would argue that if you’re focused on doing the things that make you world class, as a whole, all of your permanent team are absolutely fully aligned on that, then surely, that’s just going to solidify and strengthen your culture and your value proposition. The other stuff is things you need to get done, bring in expertise to get it done.
Affi Khan: 51:25 Exactly, exactly. My mentor told me that he was years and years ahead of his time. And to this day, I’m just trying to still try to make that vision a reality he was. He told me recruitment business should be recruiters and customers. And everything else within a recruitment business within reason that can be our source should be outsourced. So your business is focused on nothing, but serving the customer. And we’re still not there yet. But I think the more businesses that focus on that you just be, the better you’ll be because you never forget your values. Never forget what makes you valuable in the world, this is pivotal.
Jonny Dunning: 52:10 Yeah. And if you look at specialism in the sense of service providers that very much matches up with specialisms in, you know, the way that people use technology, people don’t always try and find one thing to do everything, in their personal life, and in their work life, they’ll have specific applications that all kind of sit alongside each other or just deal with their specific thing, because you’re never going to get that level of quality if you’re trying to do everything.
Affi Khan: 52:32 Yeah.
Jonny Dunning: 52:34 So in terms of the risks for organizations, obviously, we discussed around IR 35. You know, firstly, companies need to make sure they’re compliant. Yeah, absolutely. They should have done that already. Like you say, a lot of people kind of left it late, understandably, that the pandemic, you know, that we had an election, we had a situation where it’s kind of like, is it going to happen, is it not going to happen even right up to the end, some people were still wondering whether because of COVID, it wasn’t going to happen or not. So people need to get their ducks in a row, and that sort of make sure that their contracted populations are compliant. They also need to I mean, the umbrella side of things, I think, there’s some kind of quite concerning things that you hear in the market around that side of it and I’m not sure how many companies are really aware of the risks around that. Have you come across that at all much?
Affi Khan: 53:26 Oh, loads loads, but I mean, the government could stop it tomorrow, but they chose not to. So what can you do is the is the most unregulated, the wild wild west of our sectors, I don’t know any sector that is as badly governed as the umbrella company sectors. They just I mean, thing is you get to you get to make money now and pass the risk on to somebody else.
Jonny Dunning: 53:55 Sounds great.
Affi Khan: 53:56 Yeah, yeah, exactly. Wow. Okay, so I can just, I can just make money through commissions right now, Wolf of Wall Street Style, and then pack up my offshore limited company and run away to the sunset and leave the end client or the contractor with the debt obligation. Wow. Okay. Why is no one stop this? I mean, this is something I get quite passionate about. It’s ridiculous. It takes one change legislation, just put a stop to it, it cannot happen anymore. You’re either a fully bond bonafide contractor or you’re not. That’s it!
Jonny Dunning: 54:30 But I mean, I don’t know the specifics of it. But I know there was talk of a government review into it, but I think that was like, I’ve no expectations, whether it might be next year or something like that, that people start looking at it.
Affi Khan: 54:42 Oh, well, if it happens, it happens next year, the private sector is going to have even more chaos. Because when the public sector there were still governing bodies who saw large chunks of their spend. So the NHS could come in and try to regulate something or governments were trying to come in regulate something local authorities to try to mandate. There’s some degree of control at least in the public sector, if you know what I mean. But in the private sector, I mean, this could run away with it. This could absolutely run away with it, loan charges, dividends, offshoring the whole lot. I mean, it just, it’s going to be messy.
Jonny Dunning: 55:25 Yeah, and organizations are going to need to take the right advice, and then they’re going to need to take the right strategic advice. And I think we’re seeing a lot more organizations working with a Strategic Workforce Solutions Partner, rather than just lots of, lots of different providers, that kind of move to a partner type model. And so obviously, there’s the risks around doing that. All right, and making sure they’re compliant. Obviously, there are more talent shortages, anyway, the type of talent that’s in demand has probably been changed drastically, in some ways by the pandemic. And talent shortages are much worse in some areas. And there’s new areas of demand that are really difficult. But how much, so if you look at the factors that could limit a company over the next five years, where companies are really trying to grow, and hopefully the economy pushes itself forward in a really positive way? What do you think will be the major limiting factors for companies, when they’re faced with these skills, shortages?
Affi Khan: 56:23 Flexibility! Simple. I just had an article recently, on Times National on diversity inclusion, there was the same answer. You can’t have inclusivity without flexibility. And you can’t win the talent, you can’t win the war for talent, without inclusivity. So, if you can’t be flexible, you will lose the war for talent will not work. People are conscious of how flexible you are in business. And people are conscious of how inclusive you are as a business. And so to make blanket statements, that fly in the face of that is ridiculous. It’s absolutely ridiculous. Like, every single one of our workers are going to be permanent. Well, not every single person is a contractor, is a tax dodger. Right? Some people are amazingly talented people, but their lifestyles, the parental reasoning, whatever, for bonafide, perfectly bonafide reason require them to work in a different way to a permanent employee does not make them a bad person. If you as an organization cannot adapt the way you work with people. And be as flexible as you possibly can be, you will lose the war for talent.
Jonny Dunning: 57:54 Yeah, I totally agree. And it kind of comes back to what we’re saying right at the beginning, where your view on talent and recruitment and resourcing and what our company is, is it’s a combination of people with a purpose.
Affi Khan: 58:10 Yeah, correct.
Jonny Dunning: 58:11 And as I said, I feel like it aligns very well, with my view on just, you know, it’s all about getting things done. Because, when it comes to getting things done, there should be no bias or prejudice because you’re looking to get something done. And when you have a clear purpose, then everyone involved in that purpose is brought into that purpose, their voices are important and it’s useful. Because if the strategy of an organization is clearly communicated, they can anyone, and if they’re from different backgrounds and have a different point of view, then that’s going to add to the value of that organization. And this is where for me the true beauty and value of diversity comes in, because it’s about that, it’s about as you say, it’s just people and purpose trying to achieve an objective. And if everyone has the same ideas, you know, you might as well just have one person to a certain extent.
Affi Khan: 59:04 Yeah, it’s just not going to work. It’s not going to work, you know it’s not going to work, I know it’s not going to work. Let’s just hope that it changes public opinion. And after the pandemic, we don’t just go back to five days in the office, everyone has to work through a [inaudible 59:21] payroll. And that’s it. like it never happened. I think this pandemic has been a very painful experience for the whole planet. A lot of people have lost loved ones, a lot of people have lost their jobs, or people have faced massive austerity. Let’s take some positive out of it. And let’s bring that flexibility that we’ve had to go through to the pandemic. Let’s bring it to the real world and let’s make it scalable by working through reliable, efficient solutions, like yourselves.
Jonny Dunning: 59:55 Yeah, I agree. And you know what the group of people within this pandemic, obviously, it’s been terrible for older people, it’s been terrible for people with existing health conditions and all that sort of thing. And it’s been a massive strain on everybody being stuck at home. But I particularly, I feel that the kind of young people, university age, just looking to get into the workforce, everyone’s been affected. But personally, I look at those people, I just think that must be really, really tough. Maybe, just maybe there’s a silver lining on it, in the sense that if this new kind of approach to flexibility can actually transition through after the pandemic, which I believe it will, there may be that’s going to suit these youngsters, much more so than trying to fit them in to an old mentality. Because if you look back 60 years, it was a job for life, now is it you work for one company and you got a, you know, a gold watch at the end of it, whatever it might be? Yeah, then we saw that kind of changing the growth of the contingent workforce, you’ve seen the gig economy kind of spiking through, and then COVID comes along and changes everything. But, for a lot of young people that were coming into the market, they’re passionate about organizations with purpose, they want to align their views on the environment, sustainability, general ethical approach with the companies, they want to work for one of the most important factors. But also they want to do what they’re good at, which kind of aligns with what you were talking about, on a company level. And I think individuals as well. So that is helped by the ability to do project based work, and is helped by the ability to work, you know, people can work around their life a bit more, rather than having a work life balance effectively just kind of make everything fit how they want to do things. Yeah, actually, in some ways, again, I take an optimistic viewpoint, I hope that the pandemic will lead some positive changes for people like that and for everybody where flexibility is required. But I think if companies, you know, some companies may come down heavily and ghost all back to normal, it’s all back to how it was, surely, they’re just going to be at a disadvantage.
Affi Khan: 1:02:02 They will be, they will be, but they’ll, you know, the expression fighting to the bitter end has an interesting story behind it. And I think it, it refers to the end of a noose. You know, so, I think some people will fight to the bitter end until they no longer exist. I mean, I’ve already seen so many of my competitors forced their staff back into the office five days a week, because in my opinion, they weren’t able to efficiently figure out ways on how to manage people remotely. So unfortunately, it will exist until it doesn’t. The best way to prove something works is actually to prove it works. And I think that’s why people like you, and I just need to keep going out there and delivering the solutions. And the more case studies we have on the efficacy of it, the more traction, the more like a snowball effect, the more popular they become.
Jonny Dunning: 1:03:06 Yeah, absolutely. You can’t argue with results. And we’re seeing certainly organizations are much more open to try new things and reorganizing themselves. And, you know, I just think, yeah, that the factors that are driving things at the moment can be harnessed for a positive outcome. But anyway, listen, thank you so much Affi. That was a really, really interesting conversation. I really enjoyed that. I think, you know, there’s so many other areas we could cover as well. But that’s some real core kind of topic areas that I know you feel strongly about. I certainly feel very strongly about. And, yeah, it’s really great to be able to chat through that with you.
Affi Khan: 1:03:41 And yeah, that didn’t feel like work.
Jonny Dunning: 1:03:48 Excellent stuff. Well, listen, thank you so much. And, you know, I hope you enjoy the rest of your day. I’ve got some real positive vibes out that conversation. And I look forward to hopefully catching up with you again soon.
Affi Khan: 1:03:58 Yeah, hopefully in person soon.
Jonny Dunning: 1:04:00 Yeah, look forward to that. Great.
Affi Khan: 1:04:02 Cheers Jonny.
Jonny Dunning: 1:04:02 Cheers Affi. Take care.