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The opportunity of IR35 for organisations and start-ups

The recent announcement from HMRC that IR35 and Off-Payroll Tax would come into effect on the 6th of April 2020 as a means to combat ‘disguised employment’ presents a significant threat to companies and organisations that are dependent on a contingent workforce.

It does, however, also offer opportunities for companies who have recognised the need for building internal Agile capability and cultivating high-performing, Agile organisations that unleash people’s creativity and passion.

Businesses thrive on deeply embedded knowledge and expertise, cohesion and continuity, and a culture of continuous improvement. When the DNA of that organisation organically produces passionate, creative high-performance teams that embody what it means to be Agile.

Autonomously, collaboratively, and interdependently.

Brexit, IR35, and enormous disruption in local and global markets are the perfect ingredients for transformation and reinvention. We believe that now is the best time to actively use the disruptive forces around us to grow and nurture internal Agile capabilities.

The obstacle becomes the way.

The risk of dependency on a contingent workforce.

A recent survey of almost 1,500 self-employed contractors by inniAccounts found that 53% intend to abandon their clients ahead of April 2020. 85% of whom have cash reserves to fund time away from contracting and are happy to do so for numerous reasons, including grave mistrust of HMRC.

We’ve worked with contractors on Agile Transformations. We’ve been independent contractors ourselves. We’re good friends with people who are contractors.

Many are good people that we respect a great deal and so we appreciate that this legislation represents a tempestuous time for them and their clients.

The keywords in the survey results above, however, are ‘abandon their clients’.

Those words hit home as I read them because it reminded me of the interdependent nature of both personal and professional relationships.

I felt for the people who had invested such a great deal of time, effort and money in contractors and who had become dependent on their knowledge, expertise and skills. A significant investment in external capability that very often doesn’t translate into growing internal capabilities.

What happens now? Who do they turn to? How do they keep their momentum flowing on the projects, products and service initiatives that are so critical to their business?

12 months ago, given the convenience and perceived necessity of a flexible workforce, it was unimaginable that such legislation would come into play and yet, as of today, we’re less than a month away from that being a reality.

A tinderbox of complexity astride a significantly greater tinderbox of complexity, uncertainty, volatility and ambiguity.

Why is Developing Internal Agile Capability Important?

As companies investigate and adopt ‘Agile’ as a business imperative, developing Agile capability is often an afterthought. It’s something people believe will happen organically through the process.

Companies may think of Agile as something along the lines of, “This is how we’ve always worked. Today, we’ll do an Agile Transformation and tomorrow that’s how we’ll work. Done.”

High-5s and fist pumps all round.

The reality, however, is that we’re in an environment where we’re not only thinking about how we’re going to work today, we’re thinking about how that will evolve through tomorrow and the day after that.

Business Agility is not a method of working, it’s a culture of continuous improvement and evolution.

Agile coaches, s and Agile leaders are a vital element of that evolution. They’re the ones who shine a light on the vision and lead the way for others to follow. The pathfinders. Way makers.

The purpose of Agile is to do the most valuable work, in the right way, and continuously grow the learning, skill set, and capabilities of the organisation through a culture of continuous improvement and empirical knowledge.

How does a contingent workforce support that internal Agile capability?

The truth is, it doesn’t.

It often becomes life support for a failing Agile transformation and builds dependency on presence rather than impact. On checking boxes in a ‘to-do list’ rather than having a measurable, specific impact on performance.

We often see contractors and consultants who have been in a client environment for years. People who punch the time clock day in and day out, and somehow, never leave.

Hotel California for consultants and contractors.

It gets me thinking about the difference between working as an independent contractor – which I have done in the past – and being a business owner that is accountable, responsible, and an integrated partner in developing internal Agile capability in our client’s organisation.

We aren’t paid for the amount of time we invest in their business.

We’re paid for having an impact on their organisation, for helping them solve difficult problems, and to deliver the results which are critical to the progression and success of the organisation as a whole.

In Agile jargon, we’re not a local optimisation. We’re an optimisation that’s designed to move the needle on the success of the whole, dynamic eco-system.

To build, nurture and grow internal Agile capability. To cultivate high-performing, Agile teams that enable and empower true Business Agility throughout the entire organisation.

When we do this right, leaving the organisation is the fulfilment of that obligation and opportunity. If we’re there for years, it means we’re doing it wrong. It means we’re failing.

IR35 may well be a blessing in disguise for many organisations.

Yes, it’s hard. Yes, it’s potentially painful. And yes, it’s potentially come at the worst imaginable time for you. But it’s highlighted a dysfunctional dependency on external consultants that had become the norm for many companies.

Tightening our belts. Sharpening the saw. And looking toward a far more competitive Europe than the one we’ve lived through over the past few decades requires us to work with purpose and precision.

It requires us, as individuals and organisations, to develop capabilities that grow and sustain competitive advantage.

To produce products and services that truly delight customers, frequently and continuously. To welcome and embrace disruption as opportunities for growth and learning. To value customers over contract negotiations. To value people and interactions above processes and tools.

It requires collaboration, creativity, and courage.

The principles upon which Agile are founded.

How do you capitalise on IR35 and grow internal Agile capabilities?

When faced with a myriad of options and complexity, a map is always a great place to start. Whilst the map isn’t the territory, it’s always a great guide to the territory and allows you to visualise the terrain effectively.

A Value Stream Mapping workshop is a great way to get a feel for the territory and visualise the gaps between how you believe things work and how they actually work.

Mapping out the end to end processes throughout the Value Stream and developing an understanding of how, when, who, what and why impacts the Value Stream allows you to make decisions that have an impact.

At Agile Centre, we gather the team who actually do the work on the coal face as well as the leadership that supports the Value Stream. It facilitates open discussion around the impediments to progress and enables leaders to understand why things happen and work the way they do.

It’s a great way to develop a deep understanding of the environment, understand impediments, and create solutions that have an impact in a very short space of time. It also allows you to see the skills gaps that need to be filled, and develop a strong game plan to grow your skills and capabilities portfolio.

An Agile Capability Assessment is another good way to gain a rock-solid understanding of where you currently are versus where you want or need to be.

From a contractor’s perspective, there may be a period where a protest of sorts creates a vacuum of talent and skills in the market but ultimately, there is going to be a period where those contractors are going to either (a) collaborate to form companies that serve their previous clients or (b) actively seek employment opportunities.

A Value Stream Map and Agile Capability Assessment enable you to plan for employment requirements versus the areas that would be better served by a company that actively solves a problem which is finite and measurable.

Some companies have as many as 50% to 60% of their highly skilled workforce in the form of independent contractors. Much of this is a result of ad-hoc decisions rather than strategic planning, and as such, offers cost-saving benefits as well as effectiveness and efficiency gains when aligned with strategic and operational requirements.

Leadership training in the form of Certified Agile Leadership and Workshops are a good way to realign thinking around Business Agility, organisational design and a culture that embraces the Agile mindset and thinking.

A lot of thought leadership in this space points to the importance of leadership supporting ‘Agile’, however, we believe that leaders need to actively drive and champion Business Agility in order for an Agile adoption to be successful.

And finally, coaching.

Consulting is the art of knowing the answer and telling someone else what that answer is. Simple, straightforward, and effective when all the variables are known.

Coaching is the art of discovering answers, developing solutions, and activating high-performance teams through collaboration, coaching frameworks and techniques. It aims to cultivate and embed a mindset of high-performance and creativity, supported by tools, that actively empower rather than simply inform.

It can be easy to feel that you’ve got to have the best ‘Agile’ people, with the most experience and deepest skill set, to effectively transform as an organisation but it isn’t the case.

‘Start where you are. Use what you have. Do what you can’ – Arthur Ashe

Developing Agile Capability is a process of meeting you where you are and optimising what you have with the intention of continuous, incremental improvements that lead you to the highest value contributions you’re capable of.

Start there. Trust the process. Trust your people.

Scrum doesn’t solve problems. It highlights problems that need solving. As you move through each sprint, each evolution, and each review your company learns. The people in your organisation grow through the challenges that they go through.

Coaching combined with the right support, workshops, skills development programs and initiatives can achieve a great deal more than you imagine possible, in significantly less time than you thought.

Scrum, after all, is built on the value proposition of ‘the art of doing twice the work in half the time’.

Give me a call or send me a mail if you’d like to chat about the challenges IR35 presents you with and the potential opportunities that are available to you.

author avatar
John McFadyen Managing Partner
John McFadyen is an Executive and Enterprise Agile Coach with proven experience working on some of the UK and Europe’s largest, most complex Agile Transformations. As a Certified Scrum Trainer, John brings a wealth of experience as an Agile coach, Agile practitioner and software developer into each of the four core courses he provides. The war stories, the insights into successful Agile transformations and everything he has learned from coaching high-performance Agile teams combine to provide course delegates with a unique, compelling training experience that transforms as much as it empowers.

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