This week’s letters

Offshoring is necessary evil

I read the editorial comment with interest (‘Press the panic button on
offshoring UK jobs’, 10 February). The Government recognises the need to know
more about offshoring and its impact. That is why, as you highlight, we have
launched a debate, which includes:

– A major consultation exercise with industry, unions and academics

– A call centre study which is due to report at the end of March and will
give us an up-to-date picture of what is actually happening in the industry

– A round-table seminar with business leaders, unions and academics (held
early February), with follow-up meetings planned.

Our view remains that call centres in the UK are still very much a success
story, with the sector – the largest in Europe – continuing to grow. It
currently boasts 400,000 jobs and 5,500 call centres. The 50,000 figure [of
jobs outsourced to India in the past two years, estimated by unions] is never substantiated.
And it fails to take into account that employment in the sector has risen in
the past two years.

The UK is also the second largest global recipient of foreign direct
investment after the US, and the second largest exporter of services. We rely
on open export markets for our own services, and need to ensure the UK
continues to encourage businesses to invest and prosper. Many union members’
jobs rely on this investment. In 2002, 34,000 new jobs were created by this
investment alone.

We do share the concerns of those immediately affected by plans to offshore
services work, and we also want to keep as many jobs in the UK as we can. There
have been recent announcements by Royal Bank of Scotland, Alliance &
Leicester and Nationwide, which have decided against offshoring jobs.

It is a mixed picture. But ultimately, the Government accepts that some
companies want to offshore activity for commercial reasons.

Tino Hernandez
Press secretary to Mike O’Brien MP Minister for trade, investment and foreign
affairs, Department for Trade and Industry

People are not assets to be bought and sold

A quick word on the accounting treatment of ‘human capital’ from an
accountant at the sharp end – that is, working in industry for an SME (small to
medium enterprise).

My views, I believe, are the only practical way to approach the accounting
treatment of HR. With the possible exception of footballers, people are not
assets which may be owned, bought and sold.

While it is possible to calculate the liability of ongoing future costs of
employment in an accurate way (by adding together the potential cost of
redundancy, notice due and holidays accrued at any time), it is impossible to
give the ‘people asset’ a balance-sheet value in any meaningful, accounting

Staff have rights and obligations, and it’s the obligations that represent
value. They are obliged to work and give notice if they wish to leave.

The highest value that can be justifiably placed on employees is the cost of
replacing them should they leave. If a worker decides to leave, perhaps even
without working their notice, then they are immediately a liability, not an
asset. If they stay, then the value of the work they do in the next week, month
or year is a future value that will be represented by a future cost.

There will undoubtedly be those who wish to value human capital as they wish
to value brands, to boost the balance sheet of a company lacking in tangible
assets, but for most, it is not a sensible proposal.

Do not distract accountants from their task of recording and reporting the
profitability and financial strength or otherwise of the organisation. It is a
big enough task when workers’ jobs may depend on it.

Mike Barker
Finance director, A small/medium enterprise

Online recruitment reaps the rewards

I was astounded by Angela Baron’s comments in your article ‘HR must embrace
job sites’ (News analysis, 27 January), suggesting that online testing is
‘unsuitable for a well thought out recruitment strategy’.

Many large organisations are putting these systems in place. An example is
Tesco, recently voted number one for its ability to attract, develop and
maintain top talent by 220 of the UK’s top publicly-quoted companies.

Tesco’s entire graduate recruitment process is conducted online, including
online behavioural, numerical and verbal reasoning tests. Having online tests
early in the application process is a very cost-effective way of reducing the
number of candidates that are then taken on to relatively expensive
face-to-face assessment days.

In Tesco’s 2003 graduate campaign, online testing helped to significantly
reduce the number of candidates taken to assessment days, and raised the ratio
of offers following the assessment days from one in five to one in three
candidates. Costs fell by £2,000 per hire. I would say this is a clear example
of a ‘well thought out recruitment strategy’, and 220 Tesco peers would seem to

Andy Baker
Managing director, Workthing

The CIPD is far too costly for students

I saw your coverage on graduates getting a raw deal with little help or
support from the HR industry or representative bodies (News analysis, 3
February). I was not at all surprised.

I graduated in 2000 with an MBA. I found it very hard to get a job without
significant previous experience in an HR function. In the end, I took a job as
a personnel assistant for a major UK charity, but I was more of a very basic
administrative assistant in the personnel department.

I have since been fortunate in finding a role that will allow me to develop
my skills and do my formal Chartered Institute of Personnel and Development
(CIPD) qualification, but this is becoming increasingly difficult. Several
members of my study group are having great difficulty getting previous relevant
qualifications accepted by the CIPD as accredited certified learning.

The cost of becoming a CIPD member is also prohibitive. You can’t study
without becoming a member, but without membership, salaries in the
public/charity sector are low – around the £15-18,000 mark. When you already
have student debts, every penny is already spoken for to meet living costs
(especially in London). To meet the costs of the membership and training is a
large financial burden, especially for graduates straight out of university.

The overall impression I got of the CIPD is of a well-meaning, but old and
starchy organisation that is having problems shaking off its white, male,
middle-class reputation. This may not be the case at the top end, but the
message that CIPD students and potential students such as myself receive is one
of bureaucratic procedures and practices that prevent the organisation from
flowing efficiently.

I think it is a shame, because the information and ideals espoused in the HR
press by the CIPD seem to be practical and logical. It just doesn’t appear to
have filtered through to all levels of the organisation itself.

Rachel Shaw
MBA BSc (Hons), Details supplied

HR better get to grips with cyber-crime

Several viruses have nearly crippled some computer systems within
organisations recently. Yet a survey we recently commissioned revealed cyber
offences – both criminal and civil – are much more likely to be committed by
current and ex-employees than external hackers.

This lack of communication between IT and HR departments encourages hacking
activities that can cost businesses thousands to rectify and can also affect
staff morale and business reputation.

The survey revealed the average time taken for HR to inform the IT
department of a worker’s departure was three weeks. This kind of delay can
leave ex-employees with access to the company’s database, exposing the company
to hacking activity.

Surprisingly, the biggest threat of internal hacking comes from senior
managers, not junior staff. Managers were found to have accessed confidential
company payroll and sales list details among other activities.

Letting staff take personnel information from a system is a civil crime as
they can pass information on and break the Data Protection Act, leaving
companies open to prosecution.

More than half of all UK companies have suffered some form of cyber-crime,
resulting in the loss or corruption of data, and this figure is set to rise in
2004. Despite this, we have found the majority of UK companies spend as little
as 1 per cent of their total IT budget on security when the Department of Trade
& Industry recommends up to 10 per cent.

Organisations are aware of the threat of external hackers, but not of
internal ones. HR needs to be aware of the help it must give to IT to protect
valuable company data, morale and business reputations.

Milan Vjestica
Managing director, Cyber Protect

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