IR35 is not the problem – it has just exposed the problem

You will have probably noticed from my previous posts that I am not a fan of IR35 (but as I previously stated, as an individual who has a childish concept of fairness, I believe individuals and companies should contribute fair levels of tax). It is the way IR35 is implemented and administered and the huge areas of ambiguity as well as the Dickensian way the revenue ‘go after’ small businesses that I have a big problem with.

Putting the implementation of IR35 (due April 2020) to one side and focussing on the way we attract Talent to our organisations; then I believe IR35 is not the real problem… we are! Here is why:

Hiring individual or project teams of contractors absolutely has its place. It can be very relevant. I have certainly witnessed large Technology Transformation and Business Change Programmes that would have been dead on their feet if it had not been for talented individual company contractors who have the knowledge, experience and determination to drive through to successful conclusion.

Taking on Contractors for the wrong reasons

However, I have also seen a lot of BAU contract hiring for the following reasons: (with varying degrees of lunacy!)

It has exposed “accounting-driven” lunacy. Situations where because there is an OPEX headcount freeze contractors are hired under CAPEX Professional Services budgets

It has exposed “fear-driven” lunacy. The project, system, initiative or change is a poisoned challis. No career minded permanent member of staff is fighting to take it on. A professional contractor is hired (and we have our scapegoat should the assignment fail).

It has exposed “more is better” lunacy. We’re behind schedule, the product is not going to be ready to deadline. ‘Hire more people!’ At least I am doing something; 20 developers must be able to move faster than 15 (not always my experience). This is a classic case of gathering more resources rather than solving problems.

It has exposed “hiring strategy-driven” lunacy. The real rub is that permanent roles are often just not attractive enough propositions for a lot of talented individuals. Hiring a contractor because you cannot hire a permanent member of staff is ‘plastering over the cracks’. Why can’t we hire that person:

• We don’t have a strong enough employee brand or we are not considered an employer of choice
• Roles are poorly delineated and salary banded (for example we can’t hire a Project Manager for a Cloud Project, because this falls under IT PM – 59,000 – 74,000. This is a niche requirement in a high demand market. We need to be realistic, but we’re willing to spend money on a contractor so we are not seen to break the salary bandings?)
• We are not able to offer the levels of autonomy, flexible working and headspace for innovation
• Our talented people get wrapped in line management, time-consuming appraisal systems and badly run meetings. Our permanent roles are boring!
• We do not reward risk-taking and innovation

The changes to the way IR35 is implemented has exposed some of these problems. So what do we do about it?

All of the above represent an out of date construct. Start addressing 21^st Century problems with 21^st Century Solutions.

21st Century Solutions

1. Construct a Future State Talent Operating Model. Marshall Wolfe are increasingly engaged to help organisations with their Talent Operating Model – what does my future state workforce look like. Not just in terms of talent, skills and experience, but also in terms of happiness, well-being, flexible working etc. as well as how the talent is engaged (perm, contract, expert-network, project, outsource etc.). Personally, I have a real passion for how to build and manage high performing teams, including their organisational construct, their culture and their need for diversity.
2. Pay close scrutiny to your existing permanent hiring model. Have a practical plan to become an ‘employer of choice’. Audit the full candidate journey. Recognise the steps throughout the organisation that need to be taken to become a really attractive proposition and make sure this is truly reflected in a compelling Digital Message.
3. Ensure you have the processes and mechanisms in place to hire the best contractor talent by offering robust Statement of Work assignments. It is not difficult to offer assignments that fall way outside of IR35, but it requires a little thought and some effort. A lot of large organizations are making lazy and foolish ‘blanket’ IR35 decisions. This is a great time and candidate market to get this right.
4. Go to the experts for project-based solutions. Please tell me we have moved on from ‘you don’t get the sack for engaging (insert the name of Big 4, Big5 or Big 6 Accounting House, Consultancy, Technology Integrator etc)’. I hate the term boutique, but you know what I mean. There are a plethora of great SME delivery partners in the UK market. Within the Rokker Network alone we have an awesome Business Design Team www.rokker.co.uk focussing on Concept Validation, go-to-market and growth optimisation; a ‘Digital Product Management’ Business. www.skull-mountain.com – an impressive track record of launching and re-invigorating Digital Products. Utterly focussed on growing customer numbers and revenue; and, a ‘thinking first’ Brand and Marketing Agency – www.randomcolouranimal.com . All of these businesses, like Marshall Wolfe, place personal responsibility on customer delight and delivering services to accelerate the growth and success of your business*.

*Obviously great partners are not limited to The Rokker Network – a shout to some great potential partners who are friends of Marshall Wolfe:

Inawisdom – A market leading specialist in Artificial Intelligence and Machine Learning as well as a AWS Machine Learning Competency partner.

EW Group – Diversity and Inclusion Consultancy

Rainbird – Intelligent Decision Automation

Konvergent – Expert Architecture Services

Maisha+Co – Creative Collaboration and Business Consulting 

SynergyMode – Flexible Expert Board Advisors

Do not be afraid to ask for a recommendation. We’d far rather see you working with a great company than take a 1990’s decision to go with a big player because the alternative is perceived as too risky. I, like many others, believe the large Management Consulting market is broken, but more on that another day! The required speed to market for our products and services is ever decreasing, look for Agile and Innovative partners who can help you flex and even pivot with maximum effect.