15 December 2015
As the year end approaches, there is often a spike in requests for interim company secretarial support
In the lead up to the year end, a number of pressures bear down on the secretariat. This is nothing new, as the requirement to balance workload with resources during the year is a constant challenge. Yet this pressure becomes particularly acute during the precious few days before the Christmas break.
In addition to the secretariat’s day-to-day workload, group reorganisations often pile on pressure as they typically need to be completed before year end. Although these projects are not initiated by the secretariat, they require dedicated expertise from the team to create the supporting documentation, provide information and to advise on the reorganisation of the group subsidiaries. It is also common for an in-house company secretarial team to be a person ‘down’ during the festive period, which reduces the number of hands available. More importantly, this means that key corporate memory relating to the group is absent. There is also the usual requirement for the corporate records and the compliance of subsidiaries within a group to be up to date by 31 December – often driven by audit requirements or general housekeeping.
Alongside this, at this time of the year, individuals are usually examining their personal scorecards and are pressed to close personal objectives for the year.
With all of this corporate activity, it is no wonder that professional services companies experience a large spike in requests for secondments at this time of year. Most companies struggle to employ additional people – especially in the secretariat – instead seeking external help to support them during this busy period.
In the last few years, there has been underinvestment in in-house company secretarial teams. As secretariats look to improve efficiency and reduce costs, there is pressure not to replace people following natural attrition, or at least not recruit a replacement at the same level. Although, again, this is nothing new, it is particularly acute now as there is very little ‘slack’ left within the secretariat to be able to absorb spikes in business activity.
In conjunction with a shortage of skills in the marketplace, for candidates it is very much a sellers’ market as there are few company secretaries able and looking to fill short-term assignments. The logic for many is ‘why would I want a short-term assignment when there are a number of very good companies out there looking for my skills on a permanent basis?’ This means high calibre company secretaries that would fill short-term assignments and year-end workload spikes are scarce.
As is broadly acknowledged, company secretarial expertise is niche. Companies may turn to law firms, which often provide secondees – although they are usually lawyers as opposed to company secretaries. Although being capable individuals, lawyers are perhaps not geared to what the secretariat might need. They may not be familiar with the procedures, or have the historical experience and knowledge of processes to resolve issues on a daily basis. On the plus side, law firms sometimes provide these secondees without charge in support of their overall relationship – although this is now less prevalent.
The other option is to look to the interim company secretarial market, to people looking to fill temporary roles either on a part-time or temporary (six or nine months) basis. As mentioned, it is hard to find the right person, with the right skillset and available at the right time.
The third option is to look to the professional services firms. This is admittedly a more expensive option as professional firms must make their own margin and do not in general have people sitting around waiting for secondments opportunities. Professional firms would need to have someone available at the right time for the right amount of time, with the right skillset and be a good personality fit for a company. However, professional firms have flexibility both in terms of their teams – with anywhere between 10 and 30 members of staff on their payroll – and the ability to offer staff at short notice. Professional firms are also not subject to the same pressure that may be experienced at this time of year by the in-house secretariat.
There are some basic truths about secondments that are worth reiterating. Normally, the secondee is going to be under the care and supervision of the secretariat once they are placed – so there needs to be a clear vision from the secretariat from the outset as to the activities and assistance required. For example: if they need someone able to operate with a high degree of autonomy and able to complete a ring-fenced piece of work; whether it is a junior or senior position requiring gravitas; and if it is governance or annual compliance-type activities. Even in a dedicated professional services firm, all members of the team are not necessarily regularly exposed to the same, broad range of activities undertaken in-house.
Often a ring-fenced project is the best assignment for a secondee and company, as it normally involves a repeatable process that would not necessarily rely on having an in-depth understanding of how an organisation operates. Once the process is understood, the secondee can be largely autonomous and only raise questions in relation to exceptions. Typical difficulties encountered with a secondment occur when the activities are bespoke and require a degree of judgement. This may present a horrible situation where you wonder if you should have completed the work yourself.
The repeatable task removes the temptation of the secondee to exercise their judgement and so largely avoids situations where political nuances and the history of the secretariat may come into play. This statement does not take anything away from the professional firm secondee and their ability to exercise judgement but it highlights that secondees may inadvertently undertake activities and provide advice that does not perfectly resonate with the company.
With the burden of repeatable-type work removed from the in-house secretariat, focus may be directed to higher value, bespoke activities – including group reorganisations that are prevalent as the year draws to a close. The in-house team can also turn their attention to specific assignments that require the sole experience of the in-house team.
Much of the above may sound obvious, but in the flurry of activity at the end of the year, it is valuable to take a moment and step back and ask ‘are we tackling the important activities effectively?’
End-of-year pressure may, in some instances, exist for the in-house team all year round in the form of repeatable compliance work that can be ring fenced. There is a strong case for partnering with a professional services provider to relieve pressure on a more regular basis. Professional firms are recognising this, and are looking at how they can best adapt to the needs and schedule of the secretariat to relieve unmanageable workloads.
If this statement resonates, it is likely that you would also agree that now is not the right time to initiate substantive changes to the secretariat. However, if positive steps are not taken to address efficiency in the New Year, it is likely that little will change and the same end-of-year spike in activity will come around all too soon.