Rob Lanham, senior consultant at recruitment company Harvey Nash, answers TM’s questions on the Hiscox report on how the British economy fares compared to its European counterparts.
TM: What was your initial reaction to the report?
Rob Lanham: Their definition of an SME is accurate but different to how I would define an SME. The Harvey Nash/CBI economic report defined SMEs as smaller than £50m turnover and 200 people, rather than less than £1m turnover and less than 50 people.
TM: How does the Hiscox study into SMEs compare to the major report published by yourselves and CBI?
RL: Broadly speaking, the comments are the same. It’s similar to our report in terms of the optimism being at a fairly high level.
TM: The mood has changed in the months since data for the Hiscox and Harvey Nash reports were collected, what do you make of the current state of the economy?
RL: If we did it now we would probably get a different outcome – the general feeling would be less positive. When we did ours in May-June that was off the back of a pretty strong first quarter.
Harvey Nash was doing a lot of placement roles during the recession where the chief executive had been doubled up as a divisional managing director, dual roles. There was recognition that it was never the right moment to say, “There is cash on the balance sheet, let’s go out and recruit these people”.
We have found over the last 6-10 weeks that businesses are thinking about waiting until the Q1 next year. The attitude is, “We’ve had this person in post or doing without them for 6 months, what difference is another 3 months going to do?”
Private equity (PE) backed businesses have a critical role. We recently had a case where a PE backed business with £15m turnover had offered a candidate the job but the funding was held up. Funding was held up from the PE house, the role is still live but they are waiting until the year ends.
TM: Employers in the Hiscox report put the UK behind Spain, Germany, France and the US for both reading and writing, and arithmetic. How do you think the UK fares compared to our counterparts?
RL: The role of the media is crucial, it often scaremongers for the sake of selling stories. In regards to the quality of our education system, there are a few elements that cause concern:
- Is it the teachers? I think there is something in that.
- Is it the engagement of the students? I think there is something in that.
TM: Do you think that the vocational route is the way to go?
RL: Some employers now prefer to take on someone with three years work experience rather than a degree. The motivation for people going to university is questionable. The determination of the previous government to up the number of university qualified people has had a detrimental effect on the value of university qualifications.
There are still very valuable degrees out there, such as law, medicine and engineering. These degrees give you skills even outside of the specific sectors they are designed for. To secure these degrees you have to be a bright and articulate individual.
TM: Was there anything you disagreed with?
RL: The Hiscox report put the UK working week at under 40 hours whereas our report put the working week at 60. Our report showed results above the EU Working Directive.
TM: What do you make of the difficulties the Hiscox report highlighted regarding SMEs obtaining finance?
RL: The lack of available credit is a problem. At one end you have the Prime Minister, David Cameron, yelling from the rooftops about SMEs, but when you get down to the factory floors it’s a different story.
There is a lack of understanding by SMEs about where to go to get funding. If SMEs are knocked back once, they need to persevere. There is an expectation that finance should be more readily available when the effort hasn’t gone into finding it.
TM: Finally, is there anything the UK can learn from the countries faring better than us in the Hiscox study?
RL: The government should make it easier for companies to do business and deal with legislation. There is more positive sentiment with how other countries are organised.
There is conflict between driving up the numbers of apprentices and the removal of the compulsory retirement age.