Examination of Witnesses (Questions 82
- 99)
WEDNESDAY 14 JUNE 2000
MR CHRIS
HUMPHRIES CBE, MS
RACHEL SPENCE
AND MR
PAUL BIRT
Chairman
82. Lady and gentlemen, you are very welcome.
Thank you very much indeed for coming to see us this afternoon
and for the submissions which you have made already. As you know
we have embarked upon this study of recruiting unemployed people
because the Government claim that we have about a million vacancies
and the more of those vacancies that we can actually convert into
jobs the better, the better for unemployed people, the better
for the economy as a whole and the better for business too. Thank
you for coming along. I do not know whether you, Chris, want to
make a preliminary statement or whether you can do so in trying
to answer the first question that I will put to you. The question
which I have in mind is do you think we know enough about employers'
recruitment practices? A supplementary, to give you more thinking
time, we have been told that surveys that will provide useful
information on this subject are extensive. Would employers' organisations
be prepared to sponsor this type of survey work presuming you
think it is necessary, of course?
(Mr Humphries) Thank you, Chairman. I
do not think any of us feel the need for a significant preliminary
statement, we are happy to launch straight in. Let me partly answer
that and give some input to that first question with my other
hat on, if I may, as Chairman of the Skills Task Force. We will
be publishing in two weeks' time the final report and a major
evidence report which will include the results of a telephone
survey on all aspects of recruitment, training and skills of 23,000
businesses and a personal face to face survey of 4,000 businesses
to enrich that, to actually try and bottom out some of the issues
about recruitment practices. We said in our first report as a
Task Force that poor employer recruitment practices are often
a key part of the reason why we receive reported skill shortages,
which are very often not, in fact, true shortages of skills in
the labour market but in fact simply evidence of poor recruitment
practice, of not recruiting widely enough and perhaps using 1970s
and 1980s recruitment practices rather than 21st century recruitment
practices. One of the things we did very early on in the life
of the Skills Task Force was to actually publish a guide to small
firms on how to use much more effective and modern recruitment
practices, published both as a book and as a CD rom and available
and accessible through the Internet, to help businesses try and
address the fact that recruitment practices can be important.
The result of the survey we will be producing and the evidence
report we will produce as the Skills Task Force will have quite
a lot of evidence on this and you are absolutely right, it was
extremely expensive to conduct that survey. It is not something
I suspect DfEE would want to do too regularly. It was part of
a £1.75 million research programme on skills which was designed
to try and tackle the fact that most surveys were poor. In terms
of the employer surveys, actually I would criticise my own organisation
and the CBI's survey in terms of the analysis they make on skills
for actually asking questions that are not nearly deep or sophisticated
enough. We tend to ask broad questions like "Are you experiencing
any recruitment difficulties" which hides a multitude of
sins which can be concealing true skill shortages, it can be concealing
geographical imbalances, an over supply in one part of the country
and an under supply in another. It can be even concealing simply
the fact that the industry has a poor image, poor pay, poor terms
and conditions and there may be lots of skilled people out there
who simply do not want to work in the industry. So you are right
to say that our skills data is poor, what we hope we have left
behind in the Skills Task Force is not just a record in terms
of this latest survey but a new methodology. What we have produced,
we think, is a new methodology for surveying skills and recruitment
issues which we believe that the Department for Education and
Employment and Learning and Skills Council can actually utilise
on an on-going basis to provide us with better information than
we currently have. Would the business organisations be willing
to improve the quality of the questioning we at least make? I
think we have to. The CBI certainly recognise it, certainly we
recognise it. The difficulty with changing long term surveys is
that you essentially create discontinuity in your data and you
lose all comparability with earlier work. So there is naturally
a resistance to not change questions too often because essentially
you lose the time series. Both of us are looking at that in that
context. Paul, who is in the business, can actually give you some
insight from the practical front line on that better than my general
comments.
83. Do you want to add anything at this stage,
Paul?
(Mr Birt) Just to reinforce the fact. On your question
about does Government know enough about recruitment practices
with employers, a survey done not too long ago, 1997, highlighted
that of the practices that were there at the time there were some
17 different techniques that employers were using as part of their
recruitment processes. Now, of course, approaching the Employment
Service and Job Centres is one of those so the question is does
Government know what the other 16 are?
84. Yes. The question that was intriguing me
as Chris spoke was we get all kinds of complaints from business
and from employers about the quality of the labour force and skills
that they need are just not available in their particular location.
Now, are you really saying fairly loud and clear that some of
that is due to poor recruitment practice?
(Mr Humphries) Certainly that was the clear evidence
that we found in the Task Force but we found a bigger problem,
that we were actually asking the wrong questions in the first
place. The questions were being asked in a very general form and
then they were being interpreted as having either a very specific
or a different meaning. So questions about recruiting procedures
would actually be reported in the media as skill shortage.
85. Yes.
(Mr Humphries) So there was a huge problem about the
quality of the questioning and the extent to which the questions
were actually getting to the real issue or really painting a false
picture. More than simply recruitment difficulties being a problem
was the fact that our whole survey practice was poor, we were
not actually getting to the questions we really intended to ask.
Part of what we are trying to do with this new survey is to redefine
the questions that should be asked in the future.
86. Okay.
(Mr Humphries) We think actually genuinely it is a
step forward. We have been able to answers questions in this new
research report which have never been able to be answered before.
Mr Pearson
87. I am sure that will be very useful. Firstly,
my apologies as well, I will have to leave early to go to a meeting
on Rover. What I wanted to do was to probe your views on maybe
what the survey has been telling you on effectiveness of the Employment
Service. As you are aware, the Employment Service has instituted
a number of initiatives recently aimed at improving its services
to employers. Are you seeing any evidence that this service itself
has improved? Are employers more likely to use the Employment
Service? What are your views? Does the survey probe any of those
issues?
(Mr Humphries) Let me start and then let me very strongly
turn to Rachel and Paul who have been doing very specific work
in the North East getting at some of the details of this. Overall,
in talking to employers in Chambers nationally, I think the first
thing we would say is that the employers' view is that the Employment
Service has definitely got better in the last three years. It
has been noticeably better in the ways in which it is seeking
to do its job. Having said that, if there is an area of concern,
it is the extent to which there is still not a real recognition
of the employer as one of the customers. Let me exemplify what
I meant by that. If one is to do the best job for an individual
in terms of job matching then it really is important to understand
deeply the employer's demands so that you can do the best matching
of an individual and their skills with an employer and the job.
The better the Employment Service fills the employers' need the
greater the likelihood the job will be sustainable and the greater
the matching and indeed the preparation of the candidate for the
job, the greater likelihood that the fit will work and the employer
will keep that person on for a long period or perhaps permanently.
There is a broad feeling coming back from certainly our discussions
with Chambers that, although that has improved, it is still a
significant weakness. You see that in terms of the Employment
Service's ability to fill different types of jobs. Again in the
employers' survey we have done—Paul can tell you about another
one—there is quite a strong Employment Service capacity
and awareness of job vacancies at the low skilled level and intermediate
level, craft skills. At the management level, professional level
and associate professional level their understanding of and the
vacancies they have are very poor and something of the order of
7:1 or 8:1, so 85 per cent or so of those jobs are not placed
through the Employment Service when the Employment Service might
pick up 70 per cent of jobs in the low skills area. Because it
cannot provide a whole service employers tend not to be putting
jobs in front of the Employment Service for many of the, particularly
older, management white collar workers and therefore there is
an issue about the completeness of the service. Rachel and Paul
have been doing some work on this.
(Mr Birt) I suppose I would like to fire a question
back of yourselves and question what remit does the government
place upon the Employment Service and what are the government's
aspirations for it because, to support Chris in what he said,
there is strong evidence to suggest that for anything above junior
management positions the Employment Service is not even considered
and I think just once again to reinforce the point that Chris
made, that spells considerable problems for the over-45 manager
who is made redundant and who feels that the only route back into
employment is through the Employment Service because it has been
proven in a number of surveys that employers looking to appoint
at that level use employment agencies, use local press advertising,
use national advertising. The information and statistics show
that job centre Employment Service support, albeit it could add
value and indeed is one of the most cost effective ways of recruiting,
would not be considered for someone of that ilk, and so therefore
it means that unwittingly the Employment Service is letting down
a particular cohort of unemployed adults.
88. I will come back on a couple of things.
Firstly, I think the aims and objectives of the Employment Service
are clearly and publicly stated. The issue is whether they are
correct and that is maybe one of the things you have views on
and we can probe on. Also it has always been the case that the
high level professional jobs have tended to be recruited through
private recruitment agencies?
(Mr Birt) And that is fine but is that the aspiration
of the Employment Service?
89. I think you rightly put your finger on an
issue about the overall objectives and I think that is something
that needs to be tackled, but whether you should actually try
and make sure that all those professional jobs are advertising
through the Employment Service as solution, I have some doubts.
I was particularly interested in some of the figures you gave
which showed that overall one in three vacancies are notified
to the Employment Service. Have you any evidence to suggest that
figure is no longer reliable and should be changed?
(Mr Humphries) Not at the level I was speaking of.
It is the issues about the level and type of job. Overall we probed
that question through the big employers' survey we have just completed
as well and 2.5-2.7:1 would be the ratio, the Employment Service
is getting just over a third of the jobs. The issue is the extent
of coverage at different occupational and skill levels. I think
one of the points that Paul was trying to emphasise as well is
very often the extent to which the Employment Service sees the
business as a customer is driven by the nature of the targets
they have and where those targets are primarily focused on reducing
the numbers on the register and less on the level of retention
and the extent of retention of the individual in the job to which
they are placed, then the less the likelihood that the Employment
Service will be definitely or directly meeting employers' needs.
The good employers and the vast majority of employers when they
are recruiting from the unemployed are seeking to put in place
a long-term employee. Where they are doing that they are therefore
looking for a high-quality match between the skills of the individual
and the job. They fully accept that there will not be a perfect
match and there is a need to up-skill and all of that, but the
greater the emphasis of the Employment Service in getting people
into long-term sustainable employment, the greater the likelihood
they will meet the employers' needs as well. There can be a tension
between the rapidity and volume of people taken off the register
and the target aimed at producing sustainable employment which
has a benefit for the individual but which may not be as compatible
to speed of removal from the register. When Paul was talking about
the question of what the targets are, that is the sort of question
we wrestled with in talking to the Employment Service, to what
extent do you have perhaps incompatible objectives in trying to
align both those things or to what extent does one of those outweigh
the others?
90. In response to setting a sustainable performance
target, if you are going to monitor people in jobs after six months
that is going involve a substantial cost and that is obviously
a point to take on board. Can I come back to you as well on your
point about the Employment Service being more focused on the needs
of employers. You feel they have still got quite a long way to
go. What changes do you think we should be recommending to the
Employment Service if they are going to get to the state you want
them to be in and presumably more like private sector recruitment?
(Mr Humphries) There has been a discussion at the
level of Chambers and the business community about this for some
years. There is an absolute recognition that the Employment Service
has a very important role to play in the service of the individual
customer. That is to whom they owe their responsibility and loyalty.
Our concern is that if the employer went slightly higher up their
priority list in terms of also being seen as a customer they could
make a difference to the sustainability of employment and the
extent to which individuals are retained in the jobs they get.
The sorts of things that would imply would, I believe, be putting
in place more of an account management relationship between nominated
individuals in the local job centre and groups of employers, perhaps
setting up sector advisory groups that could put people in touch,
putting in place more structures to enable the Employment Service
to maintain stronger ongoing links with employers and ensure that
more of the staff in the Employment Service have an understanding
of different aspects of the local labour market and the key employers
within that. It is just about creating a greater understanding
and awareness of the local employment priorities and needs at
the same time as those Employment Service officals are talking
to the potential employees of those organisations in the future.
So it is not about changing the balance, it is not about creating
an imbalance towards the employer against the individual but actually
a belief that there could be some designated and identified resource
inside each Job Centre that has the responsibility to liaise more
closely with employers, perhaps even in primary priority sector
groups, then it would increase the internal Employment Service
knowledge and understanding and help the process of job matching.
Mr Nicholls
91. Far be it from me to defend the Government
but I was struck when Mr Birt was making his remarks a few moments
ago that, as I recall it, the Employment Service did once have
the professional executive recruitment which it sold off. I assume
it sold it off because it did not quite see this fitting in with
the overall service it was providing. I do not want to misunderstand
you. Were you saying that you felt the Employment Service should
be extending its boundary so it should be actively kitting itself
up, tuning itself up almost to be able to offer a service at that
level, or were you noting that they did not do it but conceding
what I would accept to be the case that it is really middle management
and below it should be concentrating its resource on?
(Mr Birt) Yes. I take your point and I think we are
in agreement. The point I think I was trying to allude to was
because there is obviously a point at which employers see the
Employment Service as having an effective role, there is a boundary
and that boundary is likely to be a grey boundary.
92. Right.
(Mr Birt) It is unclear. I have my suspicions that
that causes confusion both with employers and the Employment Service
representatives as to how supportive they may or may not be at
particular levels. I think the point I was trying to come to was
that it needs to be clear within a certain segment of the unemployed
job market who is helping who back into employment. The over 45
year olds, of which a number are being referred to the Employment
Service for support back into the employment market, are perhaps
not being supported by the very nature of the fact that the Employment
Service is not geared up to look after that group of people.
(Mr Humphries) Chairman, can I offer an observation
on that? One of the things which occurs to me here from being
on the sharp end of dealing with the white collar, 45 plus unemployed
in Hertfordshire for many years is the fact that there are many
ways in which that third age white collar unemployed individual
is a phenomenon particularly of the 1990s. It became much more
prevalent in the 1990s than it was before hand. I think it will
be a sustained problem in the future. Now I would accept that
it is unrealistic to expect the Employment Service to be all things
to all people or to reduce the quality of its service to one group
by trying to extend it to another. It does seem to me that there
is an enormous opportunity here for some very 21st Century practice
in the Employment Service by looking to establish service level
agreements with private sector agencies for these particular harder
to place clients or client groups where they have less expertise
because those client groups are still their clients. They still
have a reasonable expectation of looking for the same quality
of service as a less skilled individual. You know from the statistics
that the huge proportion of males particularly over 45 now who
are permanently economically inactive is a huge economic problem
for us.
93. Yes.
(Mr Humphries) Many of them reach that status after
two years or more on the register. Now I think if we could find
ways of encouraging the Employment Service to establish relationships
with other agencies who perhaps are private sector but who have
greater confidence and coverage in those areas there may be an
interesting way for the Employment Service to fulfil a bigger
remit without actually diverting the attention away from the less
skilled and thus potentially more needy.
Judy Mallaber
94. Can I follow that up by looking at the private
sector agencies. If, say, you are in a position where an employer
has two people referred to them, one from the Employment Service
and one from a private agency, is there any evidence that they
are more likely to recruit—we are talking about unemployed
people—the unemployed person from the private agency? Is
there a cash element involved?
(Mr Birt) I cannot say that I have any evidence to
show one way or the other. I suppose clearly there could be an
argument that says that the person being referred from the Employment
Service would be a cheaper option because the agency would be
charging the recruitment fee. There could always be an argument
which says that from an employer's perspective the cheaper option
or the most cost effective option, all things being equal, would
be to take someone through the Employment Service route. I have
not got any evidence to suggest it is one way or another. I would
like to think that an organisation in a recruitment situation
would be looking for the best person, the person that they matched
to the vacancy as opposed to where they came from.
95. Chris suggested that you could have an arrangement
between the Employment Service and a private sector agency where
they might have more expertise to place that unemployed person
but when the Select Committee last year visited Australia, and
they are looking at the whole way in which they are changing their
market labour forces, they are offering very substantial financial
incentives to private sector agencies to take on the harder to
place long term unemployed person. Can you give us any thoughts
on whether that is an option rather than extending the range of
skills met within the Employment Service to carry that out?
(Mr Humphries) One can speculate. I am not sure. If
you do not feel you have the knowledge then I think all we can
do is speculate on that. I understand the tensions that the Australians
discovered with this system because at the end of the day the
private agencies are in this business for the profit. They are
needing to pay their own staff and there can be a greater degree
of preparation done for candidates in private sector recruitment
agencies before they reach the potential employer.
96. Why?
(Mr Humphries) Fundamentally because of the financial
incentive of placing your candidate. If I am recruited to do the
recruitment for profit then I am going to get the best person
for the job. If I am in competition, if I am one of three agencies
feeding candidates in for a particular employer then actually
the extent to which I have adequately prepared and chosen and
supported the best candidate will be reflected in whether my candidate
gets placed and signs the contract. There is an incentive for
private agencies to put additional preparation into helping individuals
to re-prepare their CVs, in retraining them in presentation skills,
in addressing particular issues if that results in them getting
a placement and a contract. Given that the fees associated with
successful middle management placements can be significant, it
is worth the effort.
97. Is there any necessary reason as to whether
the Employment Service or a private sector agency would be better
at preparing the long term unemployed or is it just a question
of financial incentives? Following on from that, do you think
that the Government should be using private agencies more to reduce
unemployment?
(Mr Birt) I think it could be one strand to the strategy.
I do not think it is obvious but there is not one solution to
this. I think using private sector recruitment organisations would
be an opportunity to fill a gap, if you like, in the unemployment
opportunities of a certain sector of the unemployed. I am not
suggesting that all recruitment agencies would be better positioned
to prepare the long term unemployed but certainly there is a role
to play for those that I have mentioned and that is an increasing
number, middle managers who are, for whatever reason, out of work
for a lengthy period of time and who are perhaps not being served,
through no fault of their own I have to say. I think that the
Employment Service is doing an admirable job but I suspect there
is a group of people who are not being served by them simply because
Employment Service expertise lies elsewhere. They are however
being directed to the Employment Service as a first port of call.
(Mr Humphries) There is a dimension around this as
well which I think leads me to suggest this has to be a mixed
economy, whatever happens. I am sure there are areas in which
the capacity and breadth of the Employment Service could be widened.
As someone who has experienced and was supported by the professional
executive recruitment (PER) part of the Employment Service some
years ago, they helped me enormously and I suspect there were
many who found themselves in the situation I was in later who
regretted that function not being there. Having said that, there
are always going to be areas of work where specialisms are relevant.
Not only do private recruitment agencies operate in a general
market but many of them are technically and sectorally specialist
and in those cases they will also know their sector better than
a general private sector agency as well as the Employment Service,
Again, there could be a case for saying in certain areas we will
broaden the capacity of the Employment Service and in others we
will explicitly not because it is too narrow or specialist. The
one group I would agree with Paul on is the growing problem that
needs solving is the 45-plus individual, male and female and not
only management, who are increasingly finding it difficult.
(Mr Birt) If I could pick Chris up on that point.
I focused on that age group but there are probably other areas
where the expertise and relationships that employment agencies
have with the businesses in their areas could also be tapped into
by an Employment Service that was able to have some form of service
level agreement with professional agencies and Chris has touched
upon the specialist areas, information technology, finance. There
are many sectors where specialist agencies could take advantage
of some of the new technologies that are available that make selecting
and searching for people extremely efficient and provide an extremely
efficient service to the employment services without going into
any detail probably on a much more cost effective basis than perhaps
government and the Employment Service may believe.
98. We might want to come back to that. Can
I take you back now to the opposite extreme in terms of recruitment
practice. I think Paul, you said, there were 17 different techniques.
Can you start by saying something about word of mouth, how prevalent
that is. Do informal methods of recruitment work? Having done
recruitment and having tried to stop myself just doing word of
mouth, can you tell us something about how prevalent it is and
is it bad or good?
(Mr Birt) It is extremely prevalent again at the higher
end of the job market. There are many organisations who take word
of mouth as networking. The official employment or recruitment
term for it would be "networking" and that is considered
to be—
99. You are talking about networking at the
professional end. If you are recruiting a journalist for a national
newspaper it is "networking", if it is at a lower level
it is "word of mouth". It is the words that are used.
(Mr Birt) There is little evidence to suggest that
word of mouth recruitment at the lower levels is high. The evidence
suggests that it is not as high at the lower levels and in fact
Employment Service involvement and local advertisements are far
more prevalent than word of mouth.
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