Examination of Witnesses (Questions 100
- 119)
WEDNESDAY 14 JUNE 2000
MR CHRIS
HUMPHRIES CBE, MS
RACHEL SPENCE
AND MR
PAUL BIRT
100. Why do employers use word of mouth? Do
they think it works?
(Mr Birt) It is the first part of the process. At
the end of the day an opportunity is filled hopefully by the best
person for the job no matter where that employer sources that
individual. If word of mouth can put sufficiently high-calibre
people in front of an employer, then why should he not choose
against his selection criteria from that group of people? I would
be very surprised if many employers used word of mouth as a sole
basis for recruitment.
101. Does your survey tell us anything about
that?
(Mr Humphries) Certainly the survey that we have done
does not show massive word of mouth as a recruitment practice.
It tends to be prevalent among the smaller companies and particularly
tends to be amongst the five minus companies and we did not survey
those, but the other thing that we did find in the earlier stages
of the task force work was that one of the key reasons for lower
skilled jobs using word of mouth in the local neighbourhood is
because of an almost complete lack of understanding of how to
recruit professionally. The statistic that shocked me when I discovered
it a little while ago, but it exemplifies and identifies the problem,
is that only one in five businesses have any form of internal
personnel or training support. How do the other eight out of ten,
four out of five actually do it when the manager has no understanding
of how to do it? They need training support on this.
102. Is there a role for the Chambers? You said
you put out a guide particularly for small companies. Is there
a role there for Chambers to do that kind of training in terms
of recruitment practices? If so, what is it, how can it help specifically
in terms of our inquiry in terms of recruiting the unemployed?
(Mr Humphries) There is certainly some job to be done
around up-skilling or skilling managers of small firms in recruitment
and employment methodology. If you do not have any form of personnel
or training capacity in-house then you probably have no idea what
the appropriate way to do things is, yet you are almost certainly
nervous about asking anyone else. In dealing with small firms
in this way, you need to be out there—Rachel is nodding
profoundly—doing it on the ground, you need to be working
out there with them and going out to them and that is quite difficult
for Chambers to do who only have their own members' funds to use
for those sorts of things. Some Chambers do do it. Personnel recruitment
practices is not an uncommon training offering from Chambers but
I think there is a bigger job to do which is persuading them in
the first place that they have a problem.
103. Can I ask Rachel how have you managed to
persuade them they do have a problem?
(Ms Spence) At this stage we have not, it is not something
we have concentrated on in the past, but I think the case that
I am thinking of is very much you can take a horse to water. Very
often in small companies they do not have a lot of time, they
do not have a lot of expertise, they are too busy running their
business and if they are recruiting by word of mouth and they
are recruiting people who can adequately do the job they require
they will be quite happy with that. They are really not interested
at that level in finding somebody who might be better for the
job if they can get somebody to do it adequately and if they can
do that by the cheapest and quickest possible means available
they will because they have got other things to do. I think there
would have to be some persuasion of companies, particularly in
the five minus companies and maybe the ten minus companies, that
they really need this service and really need expertise in recruitment
processes. If they are recruiting higher up the ladder they are
more likely to use a recruitment agency again because it is the
quick and easy option. It might not be the cheaper option but
it is the quick and easy option. It is only when they get a reasonable
workforce when they can take some time away from the coal face
that they will then think about it. In the group of companies
that perhaps need the help most it will be very difficult to get
them to engage in this, and that is the experience on the ground
from working in the North East.
Chairman
104. Can I turn to a particular problem that
we have in the North East. You have referred to the over-45s but
I think you were mostly referring to middle management. You know
that we have a large number of over-50s, over-55s who were made
redundant in mines, ship building, iron, steel, railway engineering,
all of that, who have been long-term unemployed. Have you got
any comments to say how well they are served by the Employment
Service—not just in the North East but we have got people
here from the North East who might be able to tell us.
(Mr Birt) I think that it does take me back again,
I do not want to labour on the point but I think it is horses
for courses. I think the Employment Service do a tremendous job.
I was involved in the exercise to close the Siemens Micro Electronics
plant in North Tyneside. I was responsible for supporting the
redeployment of 1,200 people. As part of that exercise we involved
the Employment Service on-site. We set up a resourcing centre
and brought the Employment Services in. Certainly I would not
be a critic of the service that they provided us. But to give
you an example of the limitations that were apparent as a result
of that, in the first week of establishing that centre on-site,
the Employment Service posted 70 or 80 job vacancies that they
had on their books which were relevant to that group of people
and in the same week we received at least 500 unsolicited faxed
job opportunities which came direct from employers to Siemens.
Now, you can judge that yourself but that tells me—and they
were different jobs—there were 500 vacancies in the region
which employers saw fit to send directly to Siemens but they were
not putting through the Job Centres or Employment Service.
105. The same kind of experience I think would
have come out of the Fujitsu experience too in Newton Aycliffe.
(Mr Birt) Absolutely.
106. Where very many of these personnel were
really quite sought after.
(Mr Birt) Yes.
107. They had been highly trained. They were
high quality people. They were capable of keeping a job at a certain
level. So it is not surprising that you had that kind of influence.
(Mr Birt) They were sought after.
108. They were very much sought after.
(Mr Birt) Yes.
109. The people I really had more in mind were
those who were less sought after, who had been made redundant
and had been long term unemployed for, what, two or three years.
Have you got any experience of trying to place those people or
the service which the Employment Service gives in trying to place
those people?
(Mr Birt) As part of the opening of that particular
plant we had a desire, a strategic objective, to look to the community
for our workforce. One of the key groups that we were looking
to recruit was the medium to long term unemployed. We initiated
a very successful project with the Employment Service to recruit
ten long term unemployed adults on to that programme. It was very
successful. The results of that showed that co-operation between
employers and the Employment Service definitely were able to offer
an alternative route into an organisation that may not have considered
these people otherwise. It was very successful. Of the 14 people
who started nine were still employed with us when we closed.
Chairman: Excellent. That relates to some of
the evidence that we took last week and I think Patrick will be
coming on to that in a moment but Graham wants to come in first.
Mr Brady
110. I just want to pick up on this point about
the 500 vacancies which were presented to Siemens.
(Mr Birt) Yes.
111. Was there any evidence of a corresponding
reduction in the number of agencies which were put out into the
Employment Service or in the local press or would it seem that
these were job opportunities which employers were simply not trying
to fill because they did not think there were people with those
skills and qualifications available?
(Mr Birt) As far as the evidence is concerned, I do
not have any clear evidence to show one way or the other. The
vacancies which were presented to Siemens were different from
the ones which were available through the Employment Service.
I suppose we made an assumption or an interpretation that these
were opportunities which employers felt would not be filled through
the normal ES channels but I can only say that was an assumption
that we made.
Mr Nicholls
112. Leading on from that really, the Government
is supporting development of intermediaries that use demand led
strategies to get unemployed people back into work. We were wondering
whether you see that as a sort of successful way of linking the
problems of skills gaps on the one hand with the unemployed people
on the other? Indeed, perhaps following on from that, whether
there is a role for Chambers of Commerce developing a role as
demand led intermediaries? It is that sort of subject area that
we are interested in.
(Mr Humphries) If I can kick off. Some of the Chambers
are actually already doing that. Many of the Chambers—a
substantial number of the Chambers—became directly involved
with the New Deals.
113. TECs?
(Mr Humphries) Yes, many of them were also TECs as
well but actually many of them, both the merged Chamber/TECs and
Chambers directly, got heavily involved in the New Deal working
directly with the Employment Service and other employers to actually
try to play a sort of role that somehow provided—this is
before the recent discussions on "intermediaries" started
to become obvious—a friendly interface between employers
who were feeling confused and uncertain and did not know quite
what it meant and, especially at the beginning of the New Deal
the Employment Service who did not actually, in many cases, know
how to communicate with employers very well. They often communicated
like that, even though their intentions were very good. Chambers
often found themselves sitting there as key members of local advisory
panels or working closely with the Employment Service almost as
translators, interpreters of demand in both directions. In terms
of trying to help the Employment Service which was grappling with
building new forms of relationship with employers to understand
the needs and concerns of individual businesses and to translate
for those individual businesses what it was that the Employment
Service was seeking to communicate. I think that was quite a helpful
process because it is not surprising that organisations with very
different cultures and backgrounds need that sort of thing.
114. Yes.
(Mr Humphries) Now you are going beyond that. The
concept of intermediaries which is being developed is going beyond
that, building on some of the models of good practice in the US.
Undoubtedly—and I think it would be helpful if Rachel picked
up on this in a moment—what we found was that many of the
ideas for mentoring and supporting, essentially acting not just
as intermediaries at the level of the organisation but intermediaries
at the level of the individual who was being considered for this
place and incorporating mentoring plus other dimensions of it,
actually have proved very powerful but not in our broad experience
necessarily in relation to the New Deal so much as with other
programmes. Can I ask Rachel to say something on this?
(Ms Spence) Yes. Certainly with the heavy involvement
that Chambers have with TECs, a lot of them have training companies,
and also speaking for the North East we have nine training centres
dotted around the North East, and we train over 1,000 trainees
a year. I think really acting as an intermediary, yes, we do in
that quite often employers where they trust a third party, if
you like, they come to us to get rid of the confusion. Quite often,
to be honest, we are confused, so what hope is there for employers?
I hope that is not reported. We do have a very, very strong role
to play as an intermediary but there is only so far we can go
in that. We can play it from a policy point of view but if we
were to get into that much deeper then I think, speaking from
a very mercenary point of view, it would have to be worth Chambers
while to do it. There is only so much advice we can give on a
superficial level. We can signpost, yes, of course we can, and
we do. I think one example that springs to mind here is the Job
Clubs. Chambers took on some of those, they were contracted by
the Employment Service to some of the Chambers and at the end
of the day Chambers did not really get enough out of it to bring
employers to the individuals as an intermediary for it to be worth
their while. Some of the Job Clubs lost their way a little bit.
I think there would have to be a very strong commitment to the
programme and even from a financial point of view it would have
to be worth their while.
(Mr Birt) Can I just pick you up on the demand led
strategies. I think there is a danger, I suppose, in linking that
back to the skills gap, there is a danger that the pace of technology
means that any demand led activity is always going to lag. We
do not really need to go into the pace of technology but clearly
it is becoming more and more difficult to firefight for educational
establishments right down to, if you like, at the grass roots
end, actually plug these gaps on an on-going basis. So I suspect
that the very real difficulty in trying to create strategies that
are based on demand at a particular time is simply the pace. Today's
demand is tomorrow's old hat. There are a number of particular
topics within the new technology sector where two years ago the
demand for particular experts in, for example, SAP, which is a
software application, went through the roof and today you find
that 300 or 400 consultants are sitting on the bench. So no amount
of demand-led strategy in advance of that was going to in active
terms take that into account, so it is very difficult.
Chairman
115. I think, if I may say so, the government
is using this concept in quite a special sense and really along
the lines that you would welcome in that they are advocating that
an intermediate agency should really get much closer to the employer
and have a much closer understanding of the real needs of the
job which the employer has on offer. When that is known then the
intermediary is in a far stronger position to individually design
education and training and work experience programmes which bring
the client far closer to being job-ready. Is that the kind of
programme that you feel that you could support and would the Chambers
be able to make any contribution toward that?
(Mr Humphries) That is why I started talking particularly
about this initial role we were playing as translators but Rachel's
point is a very valid one. The answer is yes to your question
"could Chambers play a role here" but the point Rachel
was making was not a mercenary one. Chambers' resource is the
resource they give it. We are not for profit organisations, we
have no dividend payments—sadly—to be able to take
home. At the end of the day the only resources we have are our
members', and therefore there is only so far we can go before
members say we have got to find another income source. Chambers
can do that. They were doing it on a smaller scale than is now
envisaged and they set up as that friendly interpreter and friendly
face to overcome the communications gap. The idea that is now
being addressed, which is to play a much more active role in needs
assessment and matching and then the design of the preparatory
programme in order to present the well prepared and best equipped
candidate, in fact matches many of the things we have been saying
through the whole of this session. Preparing an individual properly
to meet those employers' needs will ensure longer term employment
for the individual and a greater sustained workforce for the employer.
So yes, there is an enormous amount of sense in this but it needs
to be properly resourced because there is only so far we can do
it to the point where simply the resources run out. I think in
social cost terms it is actually very good value for money in
a well-designed way but at the same time it is something that
needs adequate resourcing because it needs to put more than simply
the translation into place. It needs to lead to individually designed
preparatory programmes and, indeed, I think some preparatory work
for the employer in skilling up key managers in the business to
know how to deal with and work with an individual with a history
of unemployment so that you do not create either an unreasonable
management demand on the company or resistance among other employees
that this individual is somehow getting special treatment. Undoubtedly,
that can be made to work, particularly I would have thought for
the less skilled or longer-term unemployed or those where the
employers' view is that this individual has the greatest gap to
be closed.
116. A picture is beginning to emerge that where
there is a commercial term then the private sector quite understandably
moves into any kind of niche market and particularly on middle
management and senior management the private sector is dealing
with that pretty adequately, or one would expect them to do so.
The evidence that we received last week was of an intermediary
in the United States, as you referred to, which was actually dealing
with the most disadvantaged clients and still had a very remarkable
placement rate from the point of view of getting people into jobs,
getting people into jobs with good salaries and then keeping them
in that kind of job.
(Mr Humphries) Absolutely.
117. Which really is a major objective with
all career development or job development programmes, I would
think. Clearly, if the government were to invite you to take part
in that, I am not suggesting that they will, but if there was
scope for that, then it would have to be on a funded basis because
this organisation got 90 per cent of its funds from the public
service although it operated on a very cost-effective basis. Is
that the kind of thing that the Chambers would feel tempted to
enter into?
(Mr Humphries) I think it is something that many Chambers
have been doing for quite a long time. In fact, the number of
Chambers that have been doing that has reduced, sadly, in recent
years with the confusion over the funding regimes, rather than
increased but we are in a position where at least 25 of them are
still active in that sort of role and, from the point of view
of government, private sector organisation which are not for profit
actually offer a very comfortable and happy intermediary doing
what needs doing in terms of best value for money but with a respect
for and relationship with its business community which will deliver
that dimension which is essential. I do not know if Rachel wants
to say something?
(Ms Spence) I would agree with that completely. I
do not think I can add anything of value to that.
118. Thank you. A slightly different question
before I bring in other of my colleagues here. Do you think there
is anything that can be done more than we are doing now to encourage
employers to publicise vacancies more widely, in particular notifying
them to job centres? Would you particularly welcome the Employment
Service having a wider share of available vacancies? Is that a
desirable objective? If it was, what can we do about it?
(Mr Humphries) I think the answer has got to be yes.
At the end of the day from a business's point of view if what
they suddenly find access to is a broader recruitment base, a
broader range of candidates, then it is going to be difficult
to say no. I do genuinely believe, and certainly we found from
the Skills Task Force point of view when we published that IPD
produced guide, that the number of employers and the number of
IPD advisers who found employers saying, "I did not know"
that was terrifyingly large, particularly amongst those 50 minus
companies with no internal support. So two things happen—Rachel
is absolutely right on the first one—if I can fill a job
tomorrow because I need it tomorrow because they went off and
left me last week without warning, and someone is good enough,
then the potential longer-term cost of getting not the best person
for the job is overwhelmed by the immediacy of solving tomorrow's
problem, and that will always be a fact. If I need three machine
processors to meet the order for Nissan next week and I have got
two and either I get my third tomorrow by word of mouth or I wait
three weeks, there is no question that that is going to be the
way I go because at the end of the day the whole of the workforce's
jobs are depending on that next order. Nothing will overcome that
but if it, firstly, can be shown that it can be made easy for
businesses to do this, secondly, it would be very easy for them
to register a job, and, thirdly, it would be very easy for them
to manage the process of candidate sifting, then yes. Two problems,
though, have arisen from the New Deal in relation to employers.
Again, I will look to Rachel if I may to spell some of this out.
Employers' satisfaction with recruits forwarded from the New Deal
has been mixed. In some cases there has been a question of under-preparation
or simply individuals who were not right for the job. In other
words, a feeling amongst employers of "We have wasted our
time seeing those three candidates because they were nowhere near
appropriate." In other words, there was a tendency to feed
people in for the sake of the interview and indeed to give the
candidate interview experience which is not an unreasonable objective
but it meant employers seeing people who were not suitable and
they felt it was a waste. The second thing was that the quality
of the individual support and mentoring that came in through New
Deal programmes has not been up to the standard that employers
expect, and Rachel you have been dealing with that first hand.
(Ms Spence) I think certainly to deal with the mentoring
first, what we have found is that employers are far more attracted
to programmes such as Training for Work and Youth Training because
of the mentoring and the third party support that is there. What
we have found is that the category of candidates that we are dealing
with here, ie the lower end of the job market, quite often are
no good at dealing with employers. They see it very much as a
"them and us" type of situation. It is very much like
being sat here actually.
119. Right. Sorry about that.
(Ms Spence) They find it difficult to communicate
with their bosses, their potential employers. If there is a mentor,
a third party in place that can ease that process that is very
good. I will give you a small example. We had an employer who
took someone on under New Deal. Three weeks into the programme
the guy did not turn up for work, they did not know where he was.
The employer was tempted to think "Where is this guy? Obviously
no good", out the door. The way he joined this through the
Employment Service he did get in touch with the person on New
Deal. It turned out his Giro had not turned up so he did not have
the bus fare to get to work. Now, as it was the Employment Service
took care of that but it was the intermediary relationship between
the employee and the employer that solved the problem and gave
the employee a second chance. It was easy for them to communicate.
I think in something like Training for Work where people are mentored
all the way through and there is very regular contact with the
training companies, it very much shows that the employers are
a lot happier and the employees are a lot happier. New Deal, there
is some sort of mentoring but you are only seen really a couple
of times during the six months' placement.
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