At a time when the staffing industry is focused on driving value and defending margins, compliance is often seen as an unavoidable burden that consumes expensive admin resource and introduces inertia into the sales process. It doesn't have to be that way! In this short presentation, Ben Stoneham from NowWeComply.com show how advances in process automation technology can not only remove the admin overhead and cut risk from the business, but done right can be a source of competitive strength, accelerating the sales process to increase both short term earnings and the all-important long term value.
3. My goal today
Compliance is here to stay
Focus on outcomes to drive growth
Smart tech can transform
4. Structure
I’ll be quick!
5 minutes on each key message
Q&A at the end
5. About me
• One of the founders of
NowWeComply
• 10 years in recruitment tech.
• Background in supply chain and
Business Strategy.
• Worked with lots of recruitment
businesses over the last 10 years
from small to large.
• I’m all about cloud
• & I’m a libertarian at heart!
www.linkedin.com/in/benstoneham
E: ben@nowwecomply.com
6. About NowWeComply
“Smart Compliance software in the Cloud”
Cut Risk, Cut Admin.. Job Done.
‘We’re all about action’ – NowWeComply
doesn’t just prompt.. It does.
Come see us at Stand 94
7.
8. Part 1 – Comply Damn-it!
“ It’s important to realize that whenever you give
power to politicians or bureaucrats, it will be used
for what they want, not for what you want.
Harry Browne (US Conservative Libertarian) 1933-2006 ”
9. The Recruitment Industry Suffers
X Business and Social Regulation
X Unintended consequences
X Lack of clarity and delay
10. Doubly Damned!
Compliance isn’t just regulatory
Client ‘Compliance’ can be even more onerous
No need to legislate to change your terms!
‘Soft Compliance’
11. Life’s unfair, it sucks.
De-regulate? … Don’t bet on it.
Everyone has an agenda (and lawyers get rich)
Clients will look to suppliers to offset and indemnify
12. So what do we do?
Work arounds and Opt-Outs?
How about more resource?
.. Or shall we just wing-it?
13. Wing-it? maybe not so good…
You’ll probably get caught out.
You will still damage your business.
Lots of things you are PERSONALLY liable for.
14. Still.. The other options…
(More cost + more complexity + more risk)
= Lower profitability and growth
?
15. Part 2 – Compliance for fun and Profit!
“ It's all very well to run around saying regulation is bad,
get the government off our backs. Of course our lives are
regulated. When you come to a stop sign, you stop; if
you want to go fishing, you get a license; if you want to
shoot ducks, you can shoot only three ducks. The
alternative is dead bodies at the intersection, no fish,
and no ducks. OK?
Milly Ivins (US Left- Libertarian) 1944-2007
”
16. We like some processes, right?
The ‘Sales’ process we like (outcomes for us)
De-risking (for sales!)
“Process” establishes value creation engine
17. So why is Compliance any different?
Outcomes for your Clients and Candidate matter!
Compliance is ‘just’ process
Process is good for you!
20. .. To accelerate growth!
Drive Processes to Improve Outcomes
Analyze and Measure
New opportunities (International)
21. & Building Value
(Better outcomes : More competitive)
+
(Efficiency and scalability : More profitable)
= Faster Growth
+
(Evidence : Limited Risk)
£ Increased Value
22. Part 3 – Get Smart!
“ The effort of using machines to mimic the human
mind has always struck me as rather silly. I would
rather use them to mimic something better.
Edsger W. Dijkstra
(Pioneering AI researcher;
”
winner of the Turing award in 1972) 1930 - 2002
23. A lot has changed, though…
We’ve moved online
‘Self-service’ is the norm
..but ‘Admin’ still manual
£600 per Candidate PA !
24. We could get MUCH smarter
Use ‘The process’
Re-assign ‘the manual 80%’
Stay Flexible
Process Automation means Action, not words!
25. Which means..
Much less admin resource required
Risk is Managed (and always evidenced!)
Cost is contained
26. So..
It’s a fact of life
Compliance is here to stay Client ‘Soft Compliance’ too
We need some regulation
Process is Good
Compliance is ‘just process’
Focus on Outcomes supports growth Outcomes to drive growth
Cut Risk
Smart tech can transform Cut Admin (growth!) .. Job Done
27. Jerry’s Final thought
“ Simple, clear purpose and principles give rise to
complex, intelligent behaviour.
Complex rules and regulations give rise to simple,
stupid behaviour..
”
Dee Hock, Founder and CEO Emeritus of Visa Corp
31. Logically..
Contention: Compliance is bad for growth
• Process is good for business (increase efficiency, scale and opportunity).
• Compliance is process
• Compliance supports outcomes (as part of the commercial process)
• Good outcomes are good for profitability
• Compliance limits risk
• Limited risk is good for value
• Compliance can be good for growth and value creation.
• Technology can drive process to increase efficiency, scale and opportunity while
limiting cost and risk.
Editor's Notes
SLOW & SMILE!Thanks for having me here today.Nav Mann and the team at Bluewater for having the confidence to put on a show on this scale - something the industry really needed and we’re really pleased to see it so well attended.So we are going to talk about compliance. Just looking through the seminar list it struck me just how many people here are talking on a subject that either directly or indirectly involves compliance – maybe 30-40% of all the seminars.James OsbourneInnery - service excellence Paul Chamberlin - protecting your IpAdrian marlow from ARC 'Setting the Legislative tone for Recruitment 'Peter Stoll - The impact of non-standard contractsSamantha Hurley - UK Recruitment Practice Post AWRPeter Stoll - AWR and the impact on insuranceGeorge Anastasi - AWR, IR35, and the state of the marketJason Cropper - The Bribery Act 2010 - six months on…Robert Drake - Safe Computing 'Pre-employment compliance surgery and how to address the issues'Compliance is obviously high on the agenda.I’m going to talk broadly about.About growing recruitment businessesAbout the way that compliance related issues often seem to be a source of pain/ a bottleneck to growthAbout the way in which I’ve seen some very successful businesses overcome this problem by doing 2 things – reframing compliance (they way they approach it) and using technology smartly to reduce the cost and risk.NEXT SLIDE
Not going a show-and-tell about my own company (NowWeComply) – although as you would expect the technology piece is what we doAlso not going to talk about specific legislation or solutions to it – again not because we wouldn’t be pleased to do so, but because I want to focus on the core message around the way you approach compliance.Take you on a journey to show how moving from ‘Compliance’ as cost centre to comliance as part of delivering growth with smart technology can help you to build a better (bigger, more valuable) recruitment business.
5 minutes on each of the messagesQ&A at the end – happy to answer any questions, share experiencesNEXT SLIDE
Started out with evolve, successful front office provider with around 200 customers here and in the UKGeeky kid – program in a couple of languages Enthusiastic about business, growth and strategies to drive itEspecially keen on network technologies – cloud, outsourcing and everything like that.I’m a libertarian! I don’t like regulation, especially government and so putting that all together I’m especially keen on solutions that overcome the burden of regulation (which we can use effectively while we work on getting the regulations changed!)NEXT SLIDE
Quick bit about NowWeComply“Smart Compliance software in the Cloud”Value proposition: Automate your processes to cut risk, cut admin and grow your business.Built over the last 18 months, officially public from January but has been in Private beta since mid way through 2010NEXT SLIDE (Sequencer)Delighted with the reception – pleased to be able to announce several new clients over the course of the coming week (including Medicare First)Please drop by the stand – pickup a flower for valentine’s day and have a cup of coffee.NEXT SLIDE – Part 1 Quote
Regulation, Regulation, Regulation - Another quote: If you have ten thousand regulations, you destroy all respect for the law. – Winston Churchill3506 laws introduced in the UK in 2010 - up 41% on the previous year (Sweet and Maxwell) - significant number before May 6th!This included some major pieces of legislation including the Equality and Diversity Act, the Bribery Act 2010 and since then of course many more, including AWR which Samantha Hurley APSCO talking about tomorrow.…and something for us all to look forward to later this year with the Pensions reform legislation.The trouble is that..NEXT SLIDE
Since so many laws are geared around regulation of business and social benefit, its logical that much of the legislation is likely to affects staffing – often in ways that we not intended by the original draft.For example – AWR designed originally with the rights of exploited contract cleaners in Southern Italy has had a disproportionate effect on the contract recruitment market in the UK.Worse still, the nature of our legal system means that often the full ramifications of the legislation take time to play out, leaving employers and recruiters in a difficult position. Example: AWR and uncertainty over Limited Company contractors, article 3rd Feb Recruiter. Conference 50:50 split 100 or so representatives.NEXT SLIDE – DOUBLY DAMNED
Recruiters can find themselves doubly damned though as tendency towards client’s terms looking to assign liability (rather than accepting terms offered by the staffing agency) is also much more common. Not Just contract recruiters here either.Clients may overlay their own ‘compliance’ requirements – enforced by means of SLA and audit, which often aren’t actually regulatory requirements in the strict sense of the word from a recruiter’s perspective.This ‘soft compliance’ is often much more burdensome that the regulatory variety – ask anyone who has been involved in Health care under PASA/ Buying Solutions framework (or whatever this week’s new title is) or Social Services, or banking. Whereas governments move a a glacial pace, Client drive requirements can change overnight – and often do.Still.. What are you to do? NEXT SLIDE – WHAT TO DO?
OK, so Compliance is here to stay. Tough, life’s unfair, get over it.Sure the government talks about de-regulation and ‘Cutting red tape’ – Red tape Challenge http://www.redtapechallenge.cabinetoffice.gov.uk/home/index/And in fact we might yet this year see some reform to the EAA - Adrian Marlow ARC @ 14:15 Theater 2Too many people with too many agendas – political, financial, social.The simple truth though is that the world we live in is likely to get more regulated not less and as ‘oursource’ providers – recruitment businesses are likely to find themselves increasingly burdened with both direct regulatory obligations and – perhaps of more concern indirect or ‘soft’ compliance requirements directed by their clients.
We know Overload and Uncertainty makes life difficult.We know that the evolving business models we see increasingly (flat fee, managed vendor, client assignment of liability) all puts additional pressure.Its is all just too much?So what do do we do?Throw more resource at it?Change sectors and clients to maximise growth and profit?Some will pretend its not there and hope it goes away?NEXT SLIDE – WING IT ?Or just that old favorite .. ‘Just Wing it’ ?
“We’ll wing it’ isn’t a strategy (thought for many businesses it has been).Its not a good idea because sooner or later you’ll get caught out and it could cost you your business or liberty.If for no other reason then the fact is that Governments are broke and You have already started to see teeth being bared: – Changes to DP enforcement: how many people here have a proactive DP policy? - April 6th 2010, fines of up to 500K became law - A4e Recruitment were fined £60,000 in November 2010 - Throughout 2011 ICO escalated its use of DP audits – Advisory Visits introduced - January 2012 – new guidance issued around circumstances that would incur fines. - Right to Work – 19 Million in fines handed out in 2011. £53M since 2008 when new system was introduced, that’s 10K per employee. Shocked at how few agencies really check ID properly.“The position you’ll be in” – Personally liable for many things now – Bribery Act (up-to 10 years), Health and Safety (Corporate Manslaughter) and discrimination all can be hugely expensive to defend and have big consequences for you reputation and prospects (and liberty) if you get them wrong.Again, much of this applies to perm recruiters just as much as it does contract.For many (and increasingly) it’s the commercial incentive to get it right that is equally compelling though (soft compliance).NEXT SLIDE – OTHER OPTIONSBut what about the other options ?
Well pretend it will go away isn’t a strategy (though we’ve see a lot of that with AWR. Changing sectors is a possibility.. But that’s kind of like starting again for many people.Which leaves the final strategy that most opt for -down simply to ‘throwing more people at it’.Understandable – Sales focused organisations, managers focusing on sales process outcomes, it not until someone doesn’t get paidMuch easier to see it in terms of more effort (resource) required than changes to how we do it.More people = more cost, more complexity, and more mistakes. What’s more it doesn’t scale well because of the non linear overhead of hiring people to manage the people.And as more people get involved in the process the rate at which things can ‘get through’ the process, limited as much by the inertia of efficiently communication between so many people with all the delays and choke points that that sort of thing entails.The result you can hope for (at best) is an admin function that costs a lot and gets most of it right, most of the time. But as we have seen, getting something wrong can be vey costly.All of which impacts the bottom line, all of which limits growth.NEXT SLIDE – PART 2 QUOTE
So we saw in the last section that compliance is here to stay.We looked at he way it impacts on the recruitment industry especiallyAnd we concluded that none of the traditional approaches to solving the problem are very attractive.NEXT SLIDE – WE LIKE PROCESS..But then again if regulation and compliance are so bad, how come some people seem to still be so successful?
So from this perspective, compliance process is a pain. We know its there.. We have to do it, but would rather we didn’t.but then again we don’t see all process as bad do we?As recruiters there are lots of processes that we are actually pretty good at – The sales process being foremost.Client + requirement + candidate + negotiation = profit.Most of the time, they are also pretty good at the things that lend support to that – getting client terms signed is one that most agencies do most of the time (though again I’d say it was pretty inefficient and I wonder how many people here could say it happened absolutely 100% of the time).Still, contracts get done because the support the sales process – actually they de-risk it. They are you guarantee that you will get paid! We accept then that this “process’ is good for our business because it the thing that helps us to deliver our strategy; to measure and increase the efficiency with which we execute it and to limit the risk that something will go wrong.And.. If we are in the business with an eye to selling it at some point – it’s partly the ability of the systems we create to codify the value creation process (and demonstrate that it has future viability and no historic risk) that gets us the multiple. Its no coincidence that the businesses I have seen that have achieved the highest multiples have always been the businesses that have a top-down commitment to process.NEXT SLIDE – SO WHY IS COMPLIANCE DIFFERENT?
So why do get so uptight about ‘Compliance’ as process?Every time we go into an office we see ‘Sales process diagrams’ – very rarely though ‘admin process’ mapped out and analysed.‘Compliance’ is seen as a barrier, something that gets in the way that ‘not my problem’, ‘get around or mitigate’But When you start to think about it, it shares many of the same attributes of the sales processBut in this case, its designed to lend support to that same sales outcome but with a focus on satisfying the needs of the client (and candidate).NEXT SLIDE – COMPLIANCE SUPPORTS OUTCOMES
And that should matter. It should matter just as much as the fee you bill matters, because ultimately it is only by meeting the needs of those 2 parties that you create value and get to charge your fee.In fact, outcomes are the only reason to have any process – too often we talk about ‘following process’ with the emphasis on the ‘what’ when really we should be looking at what the process is designed to deliver.So compliance then IS part of the commercial process, and when you start to think about it in those terms, you start to think about the way in which the same kinds of tools and techniques you apply to the Sales process to improve performance and limit risk could also be applied to the Compliance part of the commercial process as a whole.NEXT SLIDE – LIMITING RISK AND RESONABLE STEPSBut compliance as a process has additional benefit to you too.
So one of the things that comes up a lot in legislation is the concept of “Reasonable Steps”This idea that if you can show you’ve done things the right way, then almost irrespective of the actual outcome, you are afforded protectionAWRICOHealth and SafetyThe list goes on (and on..)Governments like it because it doesn’t mean they have to define, it puts the onus on you.Its one of the reasons why clients like to assign liability or apply ‘Soft compliance’ as part of their contract terms – it means they can tick the box for a ‘reasonable steps defence’But it works in your favor too because for many of these things as long as you can evidence your approach and policy, that’s enough.Example: AWR – defense provided for clients not providing comparable pay and conditions. Process compliance (note the switch around of the words) limits liability by allowing you to evidence ‘reasonable steps’NEXT SLIDE – TO ACCELERATE GROWTH
So as soon as we start to think about compliance as part of the commercial process i.e. we reframe it in our minds in terms of driving better outcomes, we can see that all of the techniques we use to improve the other processes in our business – like the sales process, are just as applicable.We can set expectations an measure performanceWe can use it to drive efficiencyWe can then look to incentivize the people who are responsible for the processWe can identify the bottlenecks and points of pain.We can build on what we have to quickly respond to new markets and opportunities – Great point was made to me recently which is that the UK is pretty lightly regulated for example, thinking about Internationalization?Most important though, better outcomes for Clients and Candidates means you are more competitive.And your ability to service their needs more efficiently is a competitive differentiation.NEXT SLIDE – AND BUILDING VALUE
So how does this build value ?Obvious: Better outcomes make you more competitiveObvious: More efficient commercial process means you can scale, adapt to new opportunities and earn more which go together to Generate faster growth.Obvious: Which with the benefit of risk limitation – policy and evidence add up to increased value.The process of DD - Transparent and codified processes can be understood better – the things that underpin growth are obvious and can be valuedAuditability in the business means people can see what they are buying more easily (seminars on exit - How many businesses get into trouble in the DD stage)Reputation and Goodwill counts for a lot in the final multiple.NEXT SLIDE – QUOTE ‘GET SMART’
‘EsraDextra’So process is good.And compliance can be reframed so that we understand the contribution it makes to the commercial process – of which the Sales process is a part that we value (for ourselves) already.And by focusing on the outcomes for the other parties, we can see that part of the route to a successful growth strategy comes in part from applying these same principles to this process (seeing it as part of the same commercial process continuum) as we do to sales.Of course that still leaves the problem of how.. Since the thing got us into the negative ‘compliance is a burden’ frame of mind in the first place was the corner we found ourselves in where compliance seemed to need ever more resource throwing at it.The good news is that in the same way we’ve changed the frame of reference for thinking about process, we can do something similar about how we think about (and actually do) run the processes.
So, a lot has changed in the last few yearsRecruitment has moved onlineMore open systems – especially government (though not far enough)Attitudes to what is expected has changed – people more used to the idea of completing things and being asked to ‘do the work’‘Sell side’ technology has become key – front Office, Job Boards, Broadbean tying it all together.Focus on the sales process has encouraged us to invest in these technologies because we can measure their impact on the business.Still, quite a lot hasn’tAdmin still manualOften, what systems there are have been ‘patched’ together – Excel, Outlook and a lot of running aroundExample spreadsheet in healthcare – 60 columns, team of 11 looking after 600 candidates - £350K, around £600 per candidate per year!The way most vendors have responded has been more of the same ‘ Glorified excel’NEXT SLIDE – GET MUCH SMARTERPoint about process – we know when who and how
The point about process is that it implicitly means we know what we need, what we have to do and when by who in advance.So why are we using human beings to keep track of this manually?All the stuff that all to often is recorded in those big spreadsheets, or noted as ‘reminders’ or prompts, still expects a human being to do the running around – just crazy!Worse still, in most cases, the people doing the running around (on your payroll) aren’t even the people who ultimately are able to fulfill the compliance steps – if you need a opt-in letter signed from a candidate then it’s the candidate that needs to do the work, so why are you doing the chasing?Using ‘smarter technology’Process automation tools don’t just provide tickboxes, storage and prompts but can actually action the processes for youWhich means because then know the who what and when, they can re-distribute the work to the people who are best placed to actually do it – candidates, clients, employees whomever : 80%If they are flexible enough – they should be able to cope with any process – generating documents through to getting signatures to collecting evidence that a candidate has the insurance, qualifications or skills that they claim, or making sure every employee has seen and signed you employment terms documentNEXT SLIDE – WHICH MEANS
You can re-deploy your resource to do the things that *really* need a human being - Qualitative judgments - ‘In person activities’ e.g. Identity checking - Spending more ‘personal contact’ timeBut there are several other advantages too:By using process automation, you can be sure of that ‘reasonable steps defence’’What’s more you can people to account – “ Your are on your own” is a powerful persuaderWhile at the same time, they provide a span-of-control with transparency – you always know what is needed when, what the latest is and who has got it.Which means you can also benchmark and quantitatively measure and incentivise performance of the team (whether that’s dedicated admin or consultants) as it’s all part of the ‘Commercial process’NEXT SLIDE – So..
Compliance is a fact of life – it has a bad rep because its seen as an impediment to the sales process.We can’t hide from it – nor should we try to.. Risk is serious and even if you don't ‘get caught’ the damage to the future value of your company is there.We also recognize that some regulation is good. More importantly though if you start to think about compliance in terms of process you quickly come to the realization that it plays an important part in contributing to the value that the other 2 parties in the sales process derive – their outcomes.Compliance (and admin more generally) is therefore a key part of the commercial process and it takes on a new dimension when you think of it like this.By treating it as a process in this way, we can use the same approaches and tools we use for managing the sales process to look at driving efficiency and value.This means we can then look to differentiate ourselves along the dimension of service quality and outcomes (which is what your client is buying).And the good news is that the burden of compliance effort can be substantially lifted with the the smart use of technology.Move to redistribute work to the people who are best placed to do itAutomation of the 80% of stuff that we know implicitly because its ‘part of the process’, doing more with lessThese tools also afford us protection – ‘reasonable steps’They allow us to benchmark and evidence the quality of what we do to our clients, which provides competitive advantageAnd codify processes to increase ultimate value in the business.NEXT SLIDE – FINAL THOUGHTAll of which contributes to our ability to grow successfully no matter what the regulatory regime throws at us.
Whatever we do though – process (and maybe regulation too!) needs to be considered in terms of outcomes it supports, needs to use technology wisely and should never be engineered for its own sake.PAUSE NEXT SLIDE