Covid-19 and IR35… What next for Transformation?

The landscape

Norman Broadbent’s Change & Transformation practice are starting to hear increasingly positive market noise regarding implementation of post Covid-19 initiatives with a growing number of companies, now looking to overcome transformation challenges brought on by the pandemic. However, just as people start to make their way out of the woods, other challenges arise: IR35, Covid’s legacy, and the impact of a more isolated Britain now begin to emerge. There is no denying that transformation in a post-Covid era will look different. Face-to-face meetings and business travel will decrease as digitisation and flexibility increase. The landscape is looking clearer but is also irreversibly altered from the past and agility will be the order of the day.

What’s next in a new ‘post Covid’ era?

Just as companies adapted to working from home, initiated change remotely, and overcame employee challenges in 2020, the landscape in 2021 and beyond will be around confirming those changes, as companies focus on enabling performance by optimising strategy in the face of a new ‘flexible’ era.

During the pandemic, organisations have demonstrated considerable resilience and agility, now, as we emerge from the Covid-19 centric world, digital transformation will become a huge area of development, alongside changes in Target Operating Models and company structures. Demonstrated by the likes of Microsoft, Spotify and Facebook, a drive to ‘work anywhere’ is a continuing theme. Workplace & operational digitisation will be important strategic aims, ensuring companies stay relevant and entice the right talent. As a counterpart to this, we are also seeing a significant drive in developing the customer journey across a number of different sectors, with businesses transforming to build a customer centric strategy and enhance customer experience. The combination of these two goals together will require organisations to maintain a dispersed workforce but also require a unified approach to deliver cultural change at the same time.

Market feedback would indicate that an increase in pace for transformation from Q2 of 2021 is likely. Companies will move back to the ‘traditional’ agile methodology with a surge in face-to-face interaction helping bridge gaps and increase collaboration. However, as we know, enabling increased pace will not be just a case of turning up to the office.

How will IR35 affect things?

As April 6th approaches, IR35 is proving a hot topic of conversation as organisations seek to ready themselves for the change in legislation.

Now that the client is responsible for IR35 status determination, we may experience placements taking longer to convert due to increased ‘red tape’. Clear communication and understanding between the Interim, client and consultancy will become even more vital. If this is not achieved, we can expect delays to transformation programmes and knock-on effects financially for all parties.

Inevitably like the public sector in 2017, the private sector may experience an exodus of Interims from companies, creating in the short term, a shortage of skilled and necessary resource due to either an internal IR35 assessment or a ‘blanket approach’. (HMRC have stated they will take a dim view on companies who adopt this stance).

The certain outcome is that transformations will be delayed and become increasingly complex both financially and operationally as talent resource becomes more difficult to entice and working arrangements evolve due to the changes.

What does all this mean for how companies drive Change?

Now more than ever, a holistic view is paramount. Companies will need to be adaptive and agile from the start of programmes in 2021, ensuring that change targets can flex as external challenges rise and fall. Interim talent will continue to play a part; however, the terms of engagement associated my lead to increased fixed term contracts and more permanent in house ‘change teams’.

The need for transformation will be more important than ever as the legacy of Covid-19 takes shape. However, the way transformation programmes are delivered, and the optimal form of engagement will be a short-term ‘work in progress’ with further ‘teething issues’ and challenges on the horizon. The way to overcome this will be a collegiate and unified approach utilising new and different resource products to deliver significant value and simplicity in managing transformation.

If you would like to discuss this article in more detail, learn more about the Norman Broadbent Group, or perhaps discuss your people or organisational challenges, please do not hesitate to contact Fraser Hunt via fraser.hunt@normanbroadbent.com