Insider round table: Invest in Young People
Alasdair Northrop, editor, Scottish Business Insider – chair
Mike Bruce, CEO, Weslo Housing Management
Suzanne Burns, HR director, STV
Alfie Cheyne, managing director, Cheyne Engineering
Kelly Johnstone, director in Scotland, Springboard UK
Stephen Leckie, CEO, Crieff Hydro Family of Hotels
Peter Russian, CEO, IIP Scotland
Carolyn Stewart, managing director, people and internal services, Scottish Enterprise
Q Why is unemployment most severe in the 18 to 25-year-old age group?
Russian: I think we’ve got the facts which show it is severe, it’s three times the normal level of unemployment.
There is a positive trend and things are improving. The current youth unemployment rate of 18.8 per cent is nearly three times the average.
And there are around 50,000 people not in work or education in Scotland.
The interesting thing is the recession has highlighted it but it’s not the cause.
So if you go back pre-recession you still find the same trend that unemployment amongst young people is higher than the average.
I think there is an underlying challenge which relates to the way in which organisations and employers think about hiring people and a tendency to hire on the basis of competence rather than potential.
It’s an inevitable consequence of operating in environments where there’s a priority to perform and to deliver results as quickly as possible, and a consequence of HR’s use of the competence based approach.
If you operate on that approach you automatically effectively discard the potential people who don’t necessarily have the competence.
While there is a broader economic position, there’s a more fundamental question about whether we as employers are prepared to invest in the long term development of the workforce?
Or is it easier just to hire people in and out?
Cheyne: There are a whole raft of different factors. But we’re all looking for highly skilled and highly qualified individuals with potential, and rather than competence or qualifications, we hire on the basis of aptitude and attitude, and potential in that person to make the journey.
Previously, youths who joined the armed forces were more able to go into other trades than they would have been prior to joining.
There are youngsters from across Eastern Europe in Scotland who are prepared to roll their sleeves up and do absolutely anything.
Parents are creating a softly-softly approach to their children and I feel there’s a lot of that in today’s society – ‘my child is not going to do that’.
Currently we have a lot of youths signing up for the wrong career and they’re coming out of college at the other end, only to re-engage again and go back into another college or university, further education course, training again.
We have a schools engagement programme. We connect with over 30 schools right through Aberdeenshire and into Moray.
Can I also add what we look for, not just necessarily work experience, we also look for voluntary work, hobbies, what other things, what other achievements has that child made in their life?
What have they demonstrated commitment through, be it Boys’ Brigade, Guides, voluntary work, helping the aged, whatever.
Stewart: Hiring around competencies has been quite a long-term trend in HR and it leads you to look at the person with the best experience, not necessarily the potential.
The key severe issue around this is lack of work experience.
We speak to a lot of the businesses we account manage and up to 85 per cent of them say young people coming out of school, college or university are well or very well prepared for work but lack experience. And that’s what would lead them perhaps not to employ a young person.
Leckie: There’s disconnect between school and post-school reality for many young people, especially those who have disengaged from the formal or normal education world.
The learning participation rates in 15 to 24-year-olds in the UK are low by European standards. These young Europeans are coming across here better educated, they’re better skilled.
Also how do you get them to show enough confidence to get that first interview and explain look, I am an interesting person, I’m excited about working for you and your company.
And many of these young folk just don’t have that skill at the moment.
How do you start off with that skill? It has to come from school. So further and higher education outputs are not matching employer demand, leading to under-employment for many, and skill shortages for key sectors.
We have that in our industry. Soft skills are not valued enough.
Burns: The reasons are complex, both structural and policy related, and further exacerbated by the severe economic contraction we have experienced in recent years.
However, overall, I think progress is being made – I would put the success of Modern Apprenticeships into that category.
The recession has highlighted the fact we actually do not take the long-term view on investment and skills.
There’s lots of warm words on the part of employers about their commitments in this area but the recession has demonstrated the reality is probably still quite removed from that.
Another issue is the strong focus on access to education and attainment rather than focusing on the outcomes that education is producing.
A thriving economy requires an appropriate balance between academic and vocational.
And what we’re seeing with the particularly high levels of unemployment in the 18 to 25-year-old group is they’re victims of circumstance of that focus on educational attainment.
One of the biggest challenges for many employers is the range of provision to engage young people in work is so vast and so confusing.
To navigate through the range of providers is a complex maze.
Unless you are an employer with the resources to be able to do that – and a huge swath of our economy don’t – it goes into the too difficult box and you go for the quick and easy fix.
Bruce: People tend to go for experience – it’s a safe bet – as opposed to perhaps looking further than competencies.
It’s very much a question of trying to develop and recognise potential.
But it’s not just about that, it’s about confidence and self-esteem.
I think employers have to investigate ways to instil these in young people.
There seems to be a real disconnect between the school and perhaps even the universities and the workplace.
We, on a regular basis, will have kids of 14, 15 come and spend a week or two with us.
As part of the induction process they’ll meet me in the morning, and I’m astonished at the timidity some of these kids display, who perhaps find it difficult to look me in the eye even.
And there’s nothing that gives us greater pleasure than seeing, later in the week, that same kid sitting having their lunch and a laugh and a joke with their colleagues who are looking after them for that week.
So, in that sense, we have to treat them also as fragile emotionally coming into the workplace, because invariably they’re not ready.
Johnstone: From our charity’s perspective in dealing with this cohort of young people, the main issues they’re facing are probably around being disengaged at school.
So if they haven’t had an academic focus they end up wanting to go down a vocational route and that’s not been made available at school as much as it should be.
The other area around the vocational skills that has been highlighted in the Wood Report is that connecting to further education.
So if someone is disengaged at school why is there not more collaboration with further education to move them into National Certificate modules and so on?
That is being worked on with the newly formed Developing Scotland’s Young Workforce team
It is actually quite unbelievably foreign to many parents in some instances to arrange work experience for their children.
If you haven’t got a focused or driven or determined parent or parents that child will inevitably not have work experience.
Some young people have a real lack of confidence in social skills.
They can’t communicate properly because that’s just not the way to communicate these days.
We call it the Y generation – they’re more focused on their phones or their tablets or communicating via text message.
So actual face-to-face communication is more difficult for them and I think we have to put a bit of focus onto that.
We need to teach social skills, confidence building and communication.
It should begin at primary school and bring it all the way up to further education.
The curriculum and what we’re providing in forms of education has to sit with the century we’re living in today.
Q What can businesses and public sector funded organisations do to address youth unemployment?
Stewart: We account manage around 2,000 growth companies in Scotland and we touch around 10,000.
Part of our role is to help businesses grow and help Scotland be internationally competitive.
And what we’ve been doing is linking youth to both creating a future talent pipeline for those businesses and linking youth employment to their overall growth strategy.
And that is about seeing young people as an asset, not a cost.
That is about not being short term and investing in the long term.
So along with a number of our other partner organisations including IIP Scotland, we have been looking at what programmes could help switch employers on to a young person as a long-term talent pipeline for them.
One example is the ScotGrad Programme that’s available for employers.
That gives a business an opportunity to work with a recent graduate on a specific growth project for their company.
It gives the young person invaluable work experience and it also gives that fresh thinking, specialist knowledge and new ideas to that business.
In terms of what we’ve done, we had a look at our workforce about four years ago and it was really static.
Public sector pay was deflated, we weren’t taking people on, nobody was leaving, people were working longer.
We discovered less than two per cent of our workforce were under 25 and we thought that was really unhealthy.
So we brought back in graduate programmes which we hadn’t run for four or five years and we also created an apprenticeship programme.
That’s been a revelation for us as an employer. We hadn’t had school-leavers as employees for quite a while.
And they’re fantastic at technology; you put them on a digital project, they’re off. They have skills we don’t.
Leckie: We say if you’re going to spend a lot of your life working you might as well make it fun, and we can do that in this industry for you.
The British Hospitality Association has had the Springboard Big Conversation event twice in Scotland where we invite a few hundred young folk along to chat to us about what it’s like to look for a job, what it’s like working in this industry if you’ve not thought of working in this industry before, and that has worked really well.
The Hospitality Industry Trust Scotland is a massive charity that helps hundreds of young folk be trained, be educated around the world. That is good for this industry.
Burns: In a nutshell we need to increase our commitment to employ more young people.
This was a key finding of the Wood Commission – that employers should consider themselves co-investors in engaging young people.
If we consider the example of work placements, this is an experience that isn’t achieving its full potential at present.
Too often an employer will take the view they are simply a supplier and the objective has been achieved when they have fulfilled the requirement for an S4 pupil to be provided with a week’s work experience, rather than stepping back and taking a broader view of the quality of the experience and impression it has given to the pupil of the world of work.
An initiative STV is involved with at present is the Glasgow School and Business Partnership Framework – a pilot programme with the ambition of linking every secondary school in the city with an employer.
Through this framework we are trying to focus and channel our efforts, and already only six months into the pilot the benefits that are accruing are tangible.
The benefits are mutual for the company and the school pupils.
The programme we are developing is providing opportunities for our development of our staff supporting and mentoring young people.
Cheyne: What can business do to address youth unemployment?
Turn it on its head; what can they do to address and generate employment?
This is about business leaders. This is nothing to do with the youths themselves.
Business leaders set an example, setting strategy, understanding their business is going to be here in three, five, fifteen, twenty five years’ time and planning for the future of that business.
So it’s about building that whole pipeline of talent and growing the thing; who is the next CEO of your organisation?
We’ve circa 350 staff. Currently we have 70 under-25s, about 20 graduates and a further 50 apprentices.
So what we’re doing is creating this whole pipeline of talent to come in and giving them this huge opportunity.
We have a 27-year-old graduate who has just been assigned a £5m business service unit to manage, reporting into the chief operating officer.
He has a team of 25 personnel to organise and manage.
He has been with us four years in our graduate scheme, and then right, off you go son, you’re running now.
So it’s about businesses giving some of these youngsters the opportunity
But it’s also getting the financial piece right.
We don’t get any return in the first 24 months.
We’re into 36, 48 months before we’re starting to see any real return out of that investment in that person.
However, for smaller organisations and those that employ up to ten people; can they afford to take on that apprentice?
In many cases, no. They don’t have the structure in place, they don’t have the HR network support structure, they don’t have the links with the local colleges and all these different things.
So I believe we’re missing something in Scotland – a body which helps businesses do all that. We’ve got tens of thousands of white van tradesmen. Where is the support structure for that small business in the country? Where is his tax relief for taking on that youngster?
So there’s a bigger Scottish governmental piece required that I think is done in other countries.
Bruce : What can businesses do to address youth unemployment?
Well, they can start employing youths.
Think about it; why would you not look to bring young people into your business?
In our case, we have about 30 tradesmen who do maintenance of our houses on a day-to-day basis. So of course it’s natural for us to have apprentices.
We’re able to create a couple of apprenticeships every two years and in that sense we’re rearing our own, as it were, and that’s a good thing.
And we would like our tradesmen to stay with us so we can benefit from the training we’ve given them.
We’ve got two tradesmen now in their mid to late twenties who started as apprentices with us.
Johnstone: There are quite a lot of businesses in our sector that are already very proactive in work experience and providing opportunities for young people.
That includes small businesses, as they tend to see the return on investment.
We run a programme around accrediting work experience.
So it’s fair enough to say to businesses to get engaged and provide placements and provide experience, but that has to be of a certain standard and quality, because otherwise you have the reverse effect on the young person.
So currently our job is trying to get employers involved.
One of our programmes is the Learning for Life Diageo Programme.
At the minute we’ve got 200 different businesses engaged, and they helped us place 244 young people last year on a two-week or more placement.
And out of that 70 per cent are now into full-time work.
Russian: Our client base stretches from a small opticians in Alloa with four people, employing one young person, through to banks and NHS organisations with thousands and thousands of people. And so there’s not a one-size-fits-all approach.
This is about changing thinking. The statistics show the vast majority of employers are not hiring young people.
So the first thing we might make progress on is – ‘think about it’. And that maybe requires a change of mindset.
The ambition has to be to get away from the response which is ‘well, we don’t hire young people because we can’t find the talent’.
Well, how proactive are you in terms of actually going out and finding it?
The opticians I mentioned had no huge resource, no big HR department, but went and had a conversation with the local college and said look this is what I need.
It probably took an hour of time to do it and it came out with a result.
Medium and larger organisations should not look at this as a CSR activity, because if it is then I don’t think it’ll ever be valued.
Standard Life are a really interesting organisation from this perspective.
They started off and had involvement with the Edinburgh Guarantee Scheme because they thought it was the right thing they should be doing as a big employer.
And now they’re saying we can’t see how we can resource our IT and customer service departments in ten years’ time unless we start hiring young people now.
Our proposition behind Investors in Young People is we believe hiring and developing young people is different to just being a good employer.
There’s something different you have to do, and whether that’s about the type of engagement you have with education or whether it’s about a more developed approach to using qualifications, it’s the recognition we need to do something different.
And key to that is about this transitioning to work and helping people understand and get into work in a way which is different to a normal recruit and hire.
The good news is there is real interest from employers in this, and we already have 200 organisations actively involved.
If we can build on this, we should be more optimistic about really making a positive change to the way in which young people are recruited and developed, and that’s good for business, for young people and the economy in Scotland.
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