Economic conditions are driving businesses to tighten their belts, and every wave of new employment legislation comes at a significant cost. So how does the food service industry ensure its contracts remain profitable while doing everything by the book? Caterer, in association with Blue Arrow Catering and Blend Recruitment, invited key figures to the St James's hotel in London to discuss the issues. Janie Stamford reports.
Mark Lewis, editor, Caterer and Hotelkeeper
How has business fared through the recession?
Melanie Hayes, resourcing manager, OCS OCS has been through a period of restructuring, which saw the separate strands of the business merged under a business and industry heading. We've placed people into different roles, which has made it easier to recruit and saved us around £100,000 on recruitment spend. As a result, there has been a new preferred suppliers list across the business.
Sue Parfett, managing partner, Brookwood Partnership
The independent education catering market remains quite buoyant. With 72% of independent schools self-operated there's huge growth potential. From an HR perspective, we've seen work increase and staff turnover reduced. We've benefited from people in the commercial contract catering sector taking a wider view on where to work in hospitality. People from hotels are moving into our industry and bringing their skills with them.
Antony Kirby, HR business partner, Compass Group There's always been a need for us to become more efficient, and the challenges in the economy have compounded that. In some parts of the business, such as finance and IT, we've seen the talent pool grow, but in a true catering environment I think it's got smaller. As a result, our labour turnover has reduced by 11-12%, and where our agency spend three years ago was about 5% of our total labour bill, we've now got that down to 2%.
We employ about 65,000 people in the UK, of which 36,000 are casual and temporary workers. Within that, our agency usage was about 30%, but this year we've got it down to 4-5% in the major event market because it has grown.
Nick Gourley, managing director, Blue Arrow We've found that the recruitment market has become an easy one to enter, but many that have aren't making a penny of profit. However, despite Compass's agency spend being reduced, it is still our biggest client, and Blue Arrow grew with Compass by double digits last year.
From an HR point of view, I don't think senior managements have any idea how much services should cost to ensure continued improvements to profit and share price with all the legislation that's facing us, such as Vetting and Barring Scheme (VBS), the Fairness at Work Act and the Agency Workers Directive (AWD). Every organisation needs to be mindful that everything will need to be done by the book, and with that comes a cost implication, whether you use an agency or you manage it internally.
ML How do you get to grips with all the legislative distractions?
SP By informing management of requirements. This will be tricky, because agency workers are often appointed by local management. There's no central record of who is where and what they're doing. In a large multi-site business, agency workers are easily lost. The right systems are needed, but it comes at a cost. The AWD came from European legislation, and the UK Government had very little choice in the matter. It was a case of making the law as workable as possible.
AK We have an employee relations team in Compass that tries to translate all the legalese into plain English and put it into easy-to-use fact sheets. We can't allow our 5,500 unit managers to recruit individually. It all goes through our Compass Direct team, which manages all staffing, either from the internal database or through an agency. That allows us to flag up if an agency worker works more than four consecutive weeks and gives us the option to recruit them, albeit maybe on a zero-hours permanent contract.
NG Without our business standards manager, whose job it is to know about all legislation that impacts on the business, we'd be up the Swanee. The Government needs to communicate it more effectively to the industry. I read an interesting comment by a hotel HR director who said she wasn't worried about the AWD because she was going to have her own bank of temps. At the moment the directive only applies to agency workers, but I think this will change next time round. Why would a waiter want to work at a flat hourly rate on a hotel's books when legislation has been brought in to ensure they get the same terms as the permanent waiters?
ML Is the legislation kind to business?
SP Can it ever be kind? Hygiene, VBS, school meals: it all merges and has a major impact on whether the business is running positively. It seems like an unending wave of legislation. Just as you get over one, there's another piece to tackle. We're a medium-sized business, but for small operations it must be a nightmare.
AK The right-to-work legislation has a huge impact on an organisation like Compass, because we physically cannot check everybody's right to work in the centre. We had to devolve that responsibility to the unit managers, but they aren't immigration experts. We've employed immigration compliance officers at a huge cost that we're not able to pass on to a client, but the risks associated with not having an immigration compliance officer far outweigh the cost. We could end up with a team that simply exists to make sure we're compliant with the all the legislation coming either from the EU or the UK Government. Unit managers are passionate about catering, not abut complying with employment legislation.
ML How do you deal with the cost implication that accompanies legislation?
NG The reality is that the cost of people on a contract determines its profitability. People are the biggest cost in any organisation, and therefore HR needs to play a more active role in helping shape strategy, as it is often the area where cost duplications occur. There needs to be more consideration over which services provided internally are core to the culture of the business and which ones could be outsourced.
As an employer competing for new business we need to be transparent with costs. But I know who I am going to be up against, and I know I'm going to be more expensive, because the cheapest option is cutting corners. The Gangmaster Licensing Authority has produced a paper that says if your agency is charging you less than £7.28 an hour, it is either not making any profit or it's not paying holiday pay or the minimum wage. The chances are it is the employer who will be liable rather than the agency.
MH At OCS, HR and purchasing used to run separately, but in the last 12 months they've started to align, in some ways as a result of the change in the dynamics of the whole business. Historically, we've not been able to manage a preferred suppliers list (PSL), but we moved on to SAP software and that has enabled us to do so.
AK We used to be supplied by about 350 agencies, but now on our PSL we have about 25 that cover the whole of the UK. However, while spend has reduced significantly, we've been able to build up relationships with strategic partners such as Blue Arrow, where spend has inevitably increased. We're only prepared to go with suppliers that match our principles and we're only able to do that with other big organisations. This has caused issues with some of our local relationships in the past, and we've needed to convince our unit managers that using more strategic partners benefits them as well as the client.
ML What's the secret to a harmonious relationship between operator and supplier?
SP Trust. You will build a relationship with far fewer people, because you have to trust them. As an employer it's impossible to check every agency, so you have to trust that the checks that should be done on your behalf are carried out.
NG A lot of work in the hospitality industry is done in the healthcare sector, where it's more cost-effective to use an agency rather than pay overtime for weekend work. But there's a risk that the agency is not compliant with the likes of CRB and VBS checks. It comes down to working out the actual cost of using or not using an agency. We've got the resources to offer clients, and because we've got fixed overheads we can do more.
ML What sort of changes do you foresee in your resourcing strategy in the coming years?
SP There will much more focus on staff retention, because of the front-ended costs of employment.
MH We will be looking to highlight talent that already exists in the business, rather than looking externally, and driving that in-house potential.
AK Our strategy for certain roles is to recruit for the next job up, not the one we're appointing. We also want to become more strategically aligned with a number of small national suppliers that share our vision and values.
ML Given all the challenges, what advice would you offer your peers?
AK Stay ahead of the game and be clear what legislation is coming. The HR function in a lot of organisations is shrinking, so discuss the idea of collaboration with your peers. If it takes the top five organisations four months to get the CRB checks turned around, let's collaboratively go to the CRB with a united hospitality voice.
NG Examine alternative ways to make your resourcing department more financially viable. Put your expertise into the right focus areas, rather than try to get your HR department to be a jack of all trades. HR roles are bigger and now externally facing as well as internally.
SP Take a complex system and try and make it simple without forgetting the core of the business. It's not as easy as it sounds.
SPONSOR'S MESSAGE - BLUE ARROW CATERING
Blue Arrow Catering is the UK's leading provider of recruitment solutions to the catering, hospitality and support services industry. Over 7,500 temporary staff are supplied each week; from chefs providing a day or a week's cover to 500 front-of-house staff for a major event. Most of the industry's major employers, irrespective of sector, choose Blue Arrow Catering as their preferred supplier of contingent labour.
Our network of 58 branches and 170 hospitality recruitment specialists provides a unique proposition within the marketplace. Our clients and workers all benefit from a local, personalised service on a truly national scale.
Blend Recruitment specialises in the provision of permanent staffing solutions across the country. Blend operates from within Blue Arrow Catering's branch network and finds new permanent jobs for more than 150 people each month. It supports local and national companies with their ad hoc and strategic resourcing challenges.
GOVERNMENT WISH LIST
Antony Kirby I'd like to see more inclusion of the business community. There's not enough consultation from the Government and there's very little discourse with the industry. Policy is often conceived by those too far removed from the situation.
Sue Parfett More understanding of the catering business. They wrote legislation for businesses where it doesn't matter when the work is done. We have deadlines like no industry. We cannot deliver lunch at 3pm. The big issues need to be addressed.
Melanie Hayes Better representation for the hospitality industry. Who represents our sector? Who is there from our industry to fight our corner?