Portrayed in the worst possible light

03 March 2010

The Office of Fair Trading’s (OFT) mission is to make markets work well for consumers. They hope to achieve this by ensuring that businesses are fair and competitive, which is what we all want.

Since the OFT announced eye-watering fines for a number of UK agencies last year the press, chat rooms and blogs have been ablaze with mainly righteous indignation. This is hardly surprising. There is considerable difference between what actually happened, what the OFT says happened in its 343-page decision, what the OFT says happened in its two-page press release and how the press reported the story given their space restraints. In short, the headlines and the level of fines make the conduct look worse than it was.

Apart from the fact that three companies are now appealing the OFT’s decision to the Competition Appeal Tribunal, all eight agencies have been largely silent and their silence might have been read as not only guilt, but distain and/or arrogance. What is not well understood though is that until recently the eight agencies were legally prevented from discussing the case at all. This created a vacuum in which rumour and outrage has easily spread. So, although I certainly don’t speak on their behalf, a few thoughts, if I may.

What is not well understood though is that until recently the eight agencies were legally prevented from discussing the case at all. This created a vacuum in which rumour and outrage has easily spread.

The meetings of the eight agencies in question were under the name of the Construction Recruitment Forum (CRF). As far as I am aware, price-fixing cartels normally don’t name themselves. Come to think of it, they don’t normally meet at the Institute of Directors under carefully set agendas, yet this was what the CRF did. They also kept minutes of the meetings which were emailed to all members. These are not the actions of a group who are knowingly breaking the law, or knowingly or deliberately bringing the industry into disrepute.

In addition, it was a clear aim of the CRF (and it is recorded in its minutes) to develop beyond its initial subject matter and members to become a trade body which would raise standards in construction recruitment. To that end, it was agreed that the CRF should become affiliated to either the Recruitment and Employment Confederation (REC) or the Association of Professional Staffing Companies (APSCo) and both were invited to present their credentials to the CRF, which they duly did.

Neither was the CRF an instance of the biggest agencies ganging up on the smallest. The intention was to invite all quality construction agencies to join - the founder members ranged from Hays, the biggest, to AWA, which was a small business, with a good spread in between.

All that said, nobody denies that the agencies made mistakes. Each company admitted these three years ago and immediately took steps to put in place compliance programmes to ensure there would be no repeats. Most have been fined - more than was necessary, in my view. But, in my opinion, the members of the CRF did what they did unwittingly and with no intention to damage the reputation of the industry.

Eden Brown is widely known to have worked for many years to improve standards, support the REC and to promote diversity in employment. It is these values which shape the business today, not something that happened three years ago and has long since been put right.

Despite the REC already having sought assurances from each of the eight agencies about the corrective actions they have put in place, it is now, I understand, considering whether they have damaged the industry’s reputation. Perhaps what the REC should have been doing is communicating with the world outside the recruitment industry (since that is the world that’s important when considering the industry’s reputation) and explaining that in reality the recruitment industry is one of the most competitive, entrepreneurial and dynamic of all markets in the UK.

Ian Wolter is chief executive of Hamilton Bradshaw Human Capital and Eden Brown