Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses(Questions 1260-1279)

THURSDAY 13 FEBRUARY 2003

MR HAMISH DAVIDSON AND MS ALISON CAWLEY

  1260. I am afraid I am innocent about all this—I have never been headhunted but I am open to offers!
  (Ms Cawley) Can I take your number, Chairman?

  1261. Probably several of us here would like to go onto your books! I do not really know what goes on. Why does the public sector have to do this? Why can it not have its own recruitment agency that goes off and does the kind of thing you do?
  (Mr Davidson) It did have at one time Recruitment Assessment Services, which was sold some time back. The public sector does, indeed, do much of its own recruitment from time to time but there is a perceived advantage occasionally in using external third parties such as ourselves, either to handle the process where it is felt that the resources to handle a particular public appointment do not exist in a particular organisation, or where it is felt it would be useful to get some external independent perspective to help manage the process and bring some fresh views to the needs of the job or, indeed, where it is perceived that a third party may be helpful in terms of acting as an intermediary in attracting candidates even to the extent of going off and headhunting candidates or encouraging particular candidates to apply in connection with a profile we have been given by the client, and it may be sometimes to identify categories of candidates that typically otherwise may not have applied for the job. Also we will get used in situations where the reputation of an organisation is relatively poor and there may be a view that it is going to be difficult to fill a particular job, or we may get used where an organisation has attempted to recruit already and failed, so there is a sense of need to put out some extra effort, or we may get used where it is felt that it would be very useful to have some independent assessment of candidates very specifically, so there is a whole string of reasons.

  1262. But unless I am not following you there is no reason why this should be done necessarily by the private sector? If you were running United Kingdom Recruitment which is a branch of government you would be doing the same job, would you not, in the same way presumably?
  (Mr Davidson) There is a possibility. That offer has not been made to date but I will consider it if it comes. There is an issue here about any organisation doing its own recruitment, and some candidates will, of course, become somewhat nervous about how confidential that information is going to be. If, for example, any one department began to do all its own recruitment, even for the most senior positions, you would have some of the candidates at senior levels who might not be comfortable for it to be known that they might be up for a move, particularly in parts of the public sector or in parts of the private sector. Individuals get anxious about issues of confidentiality.

  1263. And you are the market leader, are you, in public sector high level recruitment?
  (Mr Davidson) We would be perceived as being the market leader, yes.

  1264. "Perceived as", or are?
  (Mr Davidson) I believe we are, but that shifts and changes according to the extent to which one is used. One is only as good as the most recent reputation and whether one has ended up with placements in jobs, but yes we would generally be regarded as the market leader.

  1265. And it is a lucrative business?
  (Mr Davidson) Public sector recruitment tends to be less lucrative, as it happens, than in the private sector where generally the remuneration for candidates is higher. The fees to consultancies in those situations would be higher. Typically in the public sector remuneration levels are less, so if our fee is based on a percentage of the remuneration then proportionately it is less, but also a lot of the time the public sector chooses to buy its suppliers based on a fixed fee, whereas private sector will tend to buy on a percentage of ultimate remuneration. Clearly chairmen of companies and chief executive of companies are on multi million packages, and if you are doing private sector recruitment it can be lucrative. It is far less so in public sector.

  1266. It is like an estate agent. The bigger the price you sell the house for, the more money you get?
  (Mr Davidson) That analogy has been used before!

  1267. I have read that you get a quarter of the annual salary, but this is not true of the public sector?
  (Mr Davidson) As I said to you, it depends on the particular client. On occasions it will be a percentage, perhaps a quarter of a salary; in other cases the fees which are negotiated in advance may well be based on a percentage. For example, the Cabinet Office orchestrated a series of framework agreements to cover senior civil service appointments recently, and there are now twelve firms on that framework agreement. Part of the reason for doing that framework agreement was to encourage more competition in that particular market and also to ensure that there were some set minimum standards that each of those companies were offering in terms of doing the work, and also to ensure that the Cabinet Office was happy about the level of fees that would be charged. The system now is that any department can utilise any of the organisations who have been approved in that framework agreement. There are twelve and they are free to go elsewhere, in which case they must go to tender on those appointments.

  1268. I notice on the back page of The Times appointments today that it is entirely you. There are four big appointments, all yours, and someone has kindly worked out for me that this page alone would make you, on a 25 per cent basis, about £164,000?
  (Mr Davidson) In terms of—?

  1269. If we took 25 per cent of salary. That is not bad, is it?
  (Mr Davidson) I think it is a competitive rate in terms of what anyone else might be offering. As it happens, we would not be considered to be the most expensive of those organisations that operate in the public sector—but still, yes.

  1270. Could I just ask you this: we are primarily interested clearly not in your main business but in quango appointments when we talk about the public appointment system as it has been talked about here, and I want to get a sense of the extent to which you are involved in those kind of appointments, non executive appointments, to public bodies. Do you work with the Public Appointments Unit inside government? Where do you fit into that whole bag of tricks?
  (Ms Cawley) We do work with the Public Appointments Unit in that clearly they hold the register which has been much discussed in your proceedings over the last year or so, and has been described as a dinosaur—in my opinion rightly. We work more closely with the Office of the Commissioner of Public Appointments, Dame Rennie Fritchie and her staff. Clearly any public appointment which we handle is governed by her Code, and we have found it extremely useful to be able to touch base with Dame Rennie and her staff if issues come up that we would welcome clarification or guidance on, or at times where there are issues which she needs to make clear would not be acceptable—issues arising not from our side but perhaps from the department involved. In terms of the proportion of our business, the bulk of our business is executive appointments. Capita RAS handle quite a large amount of, if I can say, lower level public appointments, particularly in the lower tier as defined by Dame Rennie. We handle a smaller number of the higher level appointments so, as mentioned before already, the chair of the Audit Commission is one we have recently done, chair of the Housing Association is just starting, and the chair of the Commission for Racial Equality is another recent one.

  1271. That is fascinating but, just before we lose your remarks there, tell us in a nutshell why you think the Public Appointments Unit is a dinosaur?
  (Ms Cawley) The Register rather than the Unit is a dinosaur because government departments do not use it. They know it is there: it is not very easy to use it in any kind of interrogative way, so you cannot say, "I need somebody with this range of competencies so I will search that database to find it"—you would have to plough your way through the thousands and thousands of names there. My own name is on there because I registered some years ago before I moved into this line of work, and I received a few information packs which were of very tangential interest, and nothing else. Departments do not quite know what to do with it. If the investment were there to turn it into an interrogable database that would be hugely helpful and then it might be used, but at the moment it is not of any practical use.

  1272. That is interesting. In your relations with Dame Rennie I understood you to say, correct me if I am wrong, that sometimes departments were wanting to do things that did not necessarily stack up in terms of how it should be done. Is that what you were saying? That you needed to check it out with the Commissioner?
  (Ms Cawley) That is right; there is guidance and sometimes the guidance needs to be interpreted. Sometimes, because departments have not gone through the process before or because the civil servants are not HR professionals, as the Civil Service tends to be people who pass through to other jobs, if it was their first time and they are not clear of the procedures, so either they or we on their behalf check that out with Dame Rennie's unit.

  1273. What kind of naughty things are they not to do?
  (Ms Cawley) I think "naughty" is your word rather than mine, but clarification on the role of ministers in the process can be one area, particularly because the role of ministers is very different in executive and non-executive appointments, so if the same member of staff in a department is dealing with a public appointment and has previously dealt with an appointment to the Civil Service staff, different rules apply, and they can get twitchy thinking that the minister wants to be involved, but it is proper that the minister wants to be involved in the public appointment within the designated parameters.

  1274. You mentioned that you were involved in the appointment of these various jobs, including the recently appointed chair of the Commission for Racial Equality. The reason I pick that up is because I saw in the Daily Mail when this was appointed the headline: "Tony crony in top race job". Now, you are the person to tell us that it is not like that.
  (Ms Cawley) Absolutely. Hamish can talk about this in detail because he handled it but in that particular example the rigour of the process was the protection for both ministers and for the department that no appointment was made, or could have been made, on the basis of cronyism.
  (Mr Davidson) I was involved in the agreement of both the ad and the specifications for the post, taking the briefings, placing the ad and then with colleagues in terms of handling the response to that advertisement, and also in terms of approaching potential candidates we thought might be appropriate, suitable, and maybe even interested. We sifted that response: we made recommendations for a long list of candidates to be interviewed: and we interviewed something of the order of 14 or 15 candidates for that post, that long list having been agreed by the client. The interviewing process was with myself and a technical assessor, someone we brought in who had specific knowledge of race issues altogether, and we did the interviews together and those interviews lasted anything up to two hours each. From that we prepared detailed two-page reports scored against the appointment criteria, and again made recommendations on those candidates to go forward to the Appointments Panel, explained those recommendations and those candidates at that point, six I believe, were taken forward and were interviewed by the Appointments Panel. At that point we also asked candidates to undertake an in-tray exercise that we had written specifically for that post to mimic the kind of issues that would likely occur in post. Clearly one of the issues about a chair post versus a chief executive is that, if it is a non executive chair, you do not want a chair who thinks they are going to run the organisation as an executive, and that is a typical common problem. All candidates, whilst undertaking this exercise, were fed into the process. The Appointments Panel then interviewed the six candidates.

  1275. Do you stop at the door of the Appointments Panel?
  (Mr Davidson) We advise the Appointments Panel and the process then varies. If you asked me what our preference would be and what we think would be best practice, we think it is better practice if we have the ability to attend all the following meetings as observers—that is, the appointments panel process. That gives us the opportunity to answer any questions that the panel may have about changes in the performance of candidates—why they appear to be this yet the report said that—and also to be in a position to give feedback directly to candidates afterwards. It is fair to say that this practice is not that common for public appointments, nor in civil service appointments, whereas if you looked elsewhere in the public sector, particularly at local government appointments, if consultants were being used you would see the process right the way through to the end. There is no extra cost to this at all: it is part of the package, if you like. There are some advantages and, indeed, when Alison Cawley did the chair of the Audit Commission the particular external assessor was comfortable that that happened.

  1276. Do you know how the Appointments Panel for this particular job we are talking about was constructed?
  (Mr Davidson) There were members of the Home Office, also the head of the Race Equality Unit, plus some other independent individuals that had been agreed at the outset.

  1277. Agreed with whom? Are you involved at all in the identification and selection of the independent members?
  (Mr Davidson) No, not usually.

  1278. Who does that?
  (Mr Davidson) That would be the client themselves in conjunction with Dame Rennie.

  1279. Always in conjunction with Dame Rennie?
  (Ms Cawley) Certainly with her office in terms of which independent assessors might be available.


 
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