Recruiters caught in fallout

By JULIE MIDDLETON

The debacle over the hiring of credentially-modified John Davy as CEO of the Maori Television Service shone a searching light onto the doings of recruiters.

The company that recruited the Canadian con-artist, Millennium People, and the MTS board have been publicly flayed. MTS is considering legal action against Millennium People, whose directors claimed to have made extensive reference checks on Davy.

As Davy was sentenced last Wednesday to eight months in prison for his fraud, Fleet and Partners head Barry Dreyer bluntly called the "negligence over Davy" a "continuing blight on the recruitment industry".

But the industry has long dreaded such a farcical situation. In New Zealand - unlike other countries - anyone can set up shop as a recruiter and no proof of skills is required.

The big fees recruiters can earn - up to 30-odd per cent of a salary package's value - is a potent lure; unlike the real estate and car sales fields, there's also no registration or regulation.

Auckland in particular is seen as over-supplied with recruiters. "There are lots of fly-by-nighters who lack expertise but decide to have a go," says Pohlen Kean's Nicola Pohlen. "This gives our industry a bad name. It is ridiculous ... People are a company's most precious resource."

And job-seekers placing their faith - and their careers - in the hands of strangers have had their confidence shaken too, judging by letters sent to the Herald after it revealed Davy's ruse.

"How many honest, worthy applicants for jobs," wrote one, "have been pipped at the post by the unscrupulous taking advantage of lazy, incompetent recruitment agents?"

Perception is everything: those who are job candidates today, says Richard Manthel, general manager of Robert Walters, may be clients in five years.

Debate in the wake of "Davygate" tends to split people into three camps: those who welcome some sort of state licensing; those who favour self-regulation; and those who reckon New Zealand business is regulated enough, and have faith that the market will decide.

Curiously, the Consumers' Institute doesn't feel it has a role: "We believe this is not really a consumer issue," sniffs research manager Grant Hannis.

But when you hear that England has had laws setting out minimum standards for recruiters since 1976 - inspectors check agencies for compliance, and misconduct can earn a 10-year ban - it's hard to escape the feeling New Zealand might have been doing an ostrich act.

Even the Government has loosened what grip it had on the hiring of chief executives for Government entities such as MTS: responsibility passed from the State Services Commission to individual boards in 1988.

In Australia, licensing regimes of various types exist in every state except Victoria.

In New South Wales and the Australian Capital Territory, for example, licensing begins with payment of a A$102 ($121) fee and a public notice announcing your intentions.

The Department of Fair Trading administers the scheme and can shut down jobs agencies by stripping licences.

But tweaks to the system are in line - the federal Government has ordered various law reviews, some touching recruiters, in each state.

Greg Dhu, the Queensland/Northern Territory's Recruitment and Consulting Services Association head, says if others follow his state's lead, self-regulation will become the norm.

The sunshine state's barriers to entry used to be "draconian", he says, and reflected protectionist leanings of the past.

Setting up as a recruiter demanded public notices, police checks, interviews with business partners and an appearance before an industrial relations committee.

New laws passed in April have put Queensland recruiters into a final two-year period of light state licensing, without interviews and police checks, says Dhu.

When that time is up, the RCSA and a cross-industry advisory board will oversee self-regulation.

And Dhu has faith that the market will deal to underperformers: "If you're a shonky operator, you won't last too long."

Back in New Zealand, Executive Taskforce's Kevin Chappell advocates licensing. "You just don't want horse-traders out there," he says.

But Aacorn's Steve Green echoes a greater proportion of recruiters when he says that "the public remains unsure of the professionalism implied by, for example, [licensed] real estate agents and car salesmen".

"If licensing implies setting the standards for professionalism, having disciplinary procedures with genuine teeth, and regular audits for best business practices, we approve," he says. "If licensing is simply a certificate on the reception's wall, then the status quo will be maintained."

But he thinks Government involvement is overkill: "There is enough legislation in New Zealand to sink a battleship."

Green is among those who see "excellent scope" for self-regulation through the two bodies most relevant to Kiwi recruiters - the Human Resources Institute and the New Zealand arm of the Recruitment and Consulting Services Association.

The HRINZ was already producing best practice guides when John Davy and Millennium People hit the headlines and one of the institute's two vice-presidents, Crispin Garden-Webster, says it supports any move that improves standards.

The local RCSA is already discussing regulation, given its Australian cousin's involvement in legislation there.

"Regulation is happening by evolution," says president James Cozens, "and the RCSA are keen to be part of this. We have been heavily involved in the Queensland changes and would see this as the preferred model."

The local branch of RCSA is far smaller than its 3200-member Aussie cousin. Here, it has one full-time staff member and a voluntary council of seven, and claims 80 corporate members - big-hitter TMP Worldwide among them - and "more than 100" individuals. Millennium People's directors, Wayne Ball and Makere Papuni, were not members.

Although there are no concrete figures on the size of the recruitment industry in New Zealand, RCSA appears to have wooed about half of it.

Some industry heads, such as TMP general manager Denis Horner, are staunch supporters of RCSA; others doubt it has the ability to make an impact, and question the credentials of some members.

Cozens rebuts such charges. RCSA membership, he says, imposes strict rules and individuals have to prove experience and establishment in the industry. Corporate members face an audit of their policies and practices.

Cozens says two RCSA members spend "four or five hours" with would-be members checking out policy and practice, fee structures, and compliance with health and safety and privacy legislation. Ninety days are allowed to fix faults.

Members are required to stick to a code of conduct; breaches can lead to disciplinary proceedings. Cozens says one corporate member has had its membership cancelled for a breach, but won't name it.

But Kevin Chappell warns that industries overseeing their own can become "self-effacing". He prefers an independent body with legal clout, like the doctors' medical council.

Free-marketeers such as Fleet's Barry Dreyer oppose any sort of regulation: "In the end, it is the market that will decide."

Law professor Bill Hodge agrees. "A law suit for negligence or breach of contract would be the most cost-effective, simple way to rid the industry of the incompetents and frauds."

MTS is considering suing Millennium People; Finance Minister Michael Cullen has said that the recruiter's contract with MTS guaranteed the quality of candidates.

The moral of this story? For the time being, it's still buyer beware - whether you're a candidate, a recruiter or an HR head contracting out search services.

"Surely, the lesson here," says Fleet's Barry Dreyer, "is that if you are to use a professional service firm of any sort, you should do referee checks on them as well."