Select Committee on Public Administration Minutes of Evidence


Examination of Witnesses(Questions 1320-1339)

THURSDAY 13 FEBRUARY 2003

MR HAMISH DAVIDSON AND MS ALISON CAWLEY

  1320. Is there a case for having a more systematic approach to remuneration?
  (Mr Davidson) There may be but I suspect whatever more systematic case was put forward—and guidelines would be useful—whatever systematic case was made, I am sure instantly one would find individual reasons why in this organisation it is not going to work or this organisation is finding great trouble finding anybody so therefore it has got to break the differentials.
  (Ms Cawley) I think there is a case for a more consistent approach across Whitehall departments in the same way there is an approach for senior executive posts, that go to the Cabinet Office if there is a case to pay more than what is seen as the going rate for a job. At the moment departments seem pretty much to work out their own rules about how they are going to reward public appointments. There are big variations between quangos in the different departments and a degree of consistency and evaluation—how does this job compare to that job and perhaps a ring master in the Cabinet Office in the same way—would be helpful. We do have situations where people say, "Hang on, if this post pays that why does this one you want me to apply for only pay this?"

  Chairman: That is very, very useful. That is what I was trying to get at.

Mr Liddell-Grainger

  1321. I am interested about your relationship with Capita. You are part of Capita and Capita appoints an enormous amount of people. How do you keep the Chinese walls intact?
  (Mr Davidson) Much the same way we did as when we were part of PricewaterhouseCoopers.

  1322. That was different, was it not. PricewaterhouseCoopers people were not running very large councils. Capita has a direct contract to run councils.
  (Mr Davidson) These days PricewaterhouseCoopers is involved in running large parts of councils.

  1323. It was not then.
  (Mr Davidson) About the time we left it was. It is the same technique of being absolutely confidential and not discussing the work we do. We operate using different systems, different databases and nobody else has access to those, and not going and discussing the work we are doing. It is nothing to do with anyone else there.

  1324. You mentioned that another part of Capita also does appointments to non-government organisations —
  (Ms Cawley) Capita RAS.

  1325. But you must have to supply information or is it nothing at all?
  (Mr Davidson) Capita RAS operates independently.

  1326. It is a subsidiary company of Capita, is it?
  (Ms Cawley) Capita RAS was the former recruitment and assessment services part of the Civil Service which was privatised to Capita some 12 years ago.

  1327. When you are doing your year end accounts up to the main board, you have obviously got to become part of the treasury operation passing it to up so Capita can do its accounts. Do you not feel there could potentially be a big opportunity for a clash along the line? You are dealing with an enormous amount of people who you are trying to find positions for. We have seen it in the City, we have seen it in all walks of life, including government, where there could be. Have you ever had a problem with this? Have you ever been accused of being incestuous?
  (Mr Davidson) The answer candidly is no it is not a problem, it is not expressed as a problem. Of course, you could say if it was ever perceived as a problem we would not know about it because we would not see the accounts anyway. That would be the case. There are other kinds of conflict of interest that occur. For example, you may be running a particular organisation, that is fine, so then you may apply for a job, and at the same time we are also doing some recruitment for you, so I know you in different capacities. How do we deal with that conflict? We deal with that conflict by treating relationships absolutely straight down the line all the time. If we did not manage to do that successfully I do not think we would have much of a business nowadays.

  1328. Do you have any retainer fees from the government at all, from any department?
  (Mr Davidson) No.

  1329. It is all negotiated on an individual basis.
  (Ms Cawley) With some departments we have historically had framework agreements where we have agreed a certain price for them, but they are not exclusive agreements and there is no retainer involved.

  1330. Would that be on executive appointments so they would say we are going to need six members of an NHS trust and you would say we will do a job lot on six, is that what you are saying?
  (Ms Cawley) It is more on the basis of department X will have a core contract agreed with us and perhaps two other recruitment consultants, so we have a better chance of getting that work because there are only three people on the approved list, so we offer a discounted rate.

  1331. Okay, how many people do you employ?
  (Mr Davidson) 100 people in total.

  1332. You have got offices in Wales, Scotland and Northern Ireland?
  (Mr Davidson) Veredus has 100 people in total. The Capita RAS combined operation is somewhat larger than that. We have a variety of offices around the country.

  1333. In Scotland and Wales and Northern Ireland?
  (Mr Davidson) Yes.

  1334. They all tend to deal with Scottish appointments, Welsh appointments? Obviously this crosses borders but if there is a requirement for Welsh-speaking candidates you are more likely to get them in Wales?
  (Mr Davidson) They more typically will use local recruiters.

  1335. Will they? They will go to a specific headhunter, say, based in Cardiff?
  (Mr Davidson) There is an increasing tendency to use local firms.
  (Ms Cawley) We do have a Welsh-speaking colleague in the team.

  1336. I just used that as an example. I am sure if you went to Cornwall you would have the same problem. Were you involved, this is more for personal information, were you involved in the selection of the head of the English Tourist Board recently?
  (Ms Cawley) No.

  Mr Liddell-Grainger: That is all I wanted to know.

  Chairman: We try to settle scores here as well as conduct the inquiry!

  Kevin Brennan: Apologies for missing the beginning, I hope I do not repeat any questions. What objective evidence is there that organisations which use headhunters get better top people than organisations that do not?

  Chairman: Perhaps give us the compressed version of the longer answer.

  Kevin Brennan: Did you already ask that?

Chairman

  1337. No, but I know it will be a big answer.
  (Ms Cawley) I will give a very quick part of the answer, it could be the amount of repeat business we get. People do not have to use us; they believe there is an objective benefit to them in using us.

Kevin Brennan

  1338. That is not objective evidence, that is their subjective assessment of the fact that they need to use you. What I am asking is is there any objective research which shows the organisations which use you do better because you find top people for them?
  (Ms Cawley) I can quote one piece of research-based evidence. The study carried out by the Bristol Business School into the role of women in local government included quantitative and qualitative research. One of the really interesting findings is both male and female respondents who were chief executives in local government felt that women had a better chance of being appointed to chief executive jobs if recruitment consultants were involved. So there is a sense you are adding value and producing perhaps a better decision and a more diverse and therefore better workforce.

  1339. Right, but is there any evidence anywhere that you have seen that shows that organisations that use people like you to get their top people come top of the league tables for performance or improvement? We are looking at that as well. In these objective assessments they do better because you have added that value?
  (Mr Davidson) I am not aware of any objective studies into public sector appointments of that nature.


 
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