Guidance

Seminar 1 notes: SMEs Responding to the challenge of Partnering with Defence

Updated 30 March 2017

Presenters: Jon Beake, Regional Employer Engagement Director (REED), Wessex Reserve Forces’ and Cadets’ Association (RFCA) – Chair. Emily Hewitt, HR and Quality Assurance Manager, Waves Training Solutions. Malcolm Warr, Federation of Small Businesses.

0.1 Seminar Outline

Jon Beake chaired the seminar and began by introducing the session for small- to medium-sized enterprises (SMEs). Definition of a Small and Medium Enterprises (SME) is an organisation with fewer than 250 employees with a turnover of less than £29million.

Emily Hewitt is from Waves Training Solutions, an SME from the South West and recipient of the Employer Recognition Scheme (ERS) Gold award in 2016. Emily started by providing some of her background. Emily left the military – the Royal Artillery - 3 years ago and wasn’t sure what she wanted to do. A friend of hers who runs Waves Training Solutions asked her to join. When Emily asked in what capacity, her friend replied ‘You’ve commanded 160 soldiers. You can do anything’. Emily joined Waves Training as their Quality Assurance and Human Resources Manager. Emily was given the task of bringing Waves Training Solutions to Employer Recognition Scheme (ERS) Gold standard. Emily is a veteran, a reservist and also a military spouse.

Waves Training Solutions is a learning organisation and consultancy based near Salisbury in Wiltshire that started with one person five years ago and has now grown to 26 full- and part-time employees a high level of whom are from the Armed Forces Community, including veterans, reservists, military spouses/partners and wounded, injured and sick (WIS).

As for the business itself, revenue has increased year on year, however, net profit has decreased. Mainly a Defence contractor, Waves is now trying to diversify their client base, and the products and services they offer. Waves’ ethos is built around service to the military and helping in whatever way they can to make a difference and to give back. That’s by supporting service leavers and those who are currently serving in their role as Defence contractor.

Why did Waves partner with Defence? They are absolutely passionate about the military. When they made the decision to go for ERS Gold, they knew it was going to be hard work but also that they wanted to make the difference, and give back to the Armed Forces. From a personal perspective, each employee who is or has been involved in the military has grown and benefited from their time in the military. Waves has given them the opportunity to grow further and use those skills they acquired in the military.

Emily has also seen her peers leave the military to go into jobs that are low paid and do not make use of the skills they gained in the military - they are confident people in uniform but lose confidence as they leave the service. Waves signed the Armed Forces Covenant in 2014 with honest promises. At the time, Waves didn’t see a lot of reciprocation from Defence. They have given a lot to the military but are only just beginning to see the tangible benefits from Defence since becoming a gold award winner. They are now part of the Gold ERS alumni group started by Atkins.

However, from an employer perspective, there needs to be more being given back by Defence.

How did Waves achieve an ERS Gold award? The first thing Waves did was get in touch with their Regional Employer Engagement Director (Jon Beake) and build an action plan together. There was a long list of things that Waves could do to support the armed forces community. Waves re-signed their Armed Forces Covenant increasing and further tailoring their pledges. Waves also visited other employers in the area to speak to them about the Armed Forces Covenant and partnering with Defence before referring them to their Regional Employer Engagement Director. Of 20 businesses that they spoke to, four have signed the Armed Forces Covenant.

Waves give a large amount of support to military charities, including taking part as a company in sponsored activities (such as walking and cycling). This year, Waves will be encouraging 25 other companies to join them.

Waves improved their reservist policies, including adding sections on mobilisation, and put them onto the website. Waves have also extended the two weeks extra leave they offer to reservists to include employees that wish to participate in Team Rubicon, a disaster relief charity that recruits armed forces veteran volunteers.

Waves have expanded their recruitment policy, formalising their pledge that they encourage applications from those with an armed forces background. They have also advertised for service leavers to do work experience placements. Some of their work experience candidates have gone on to join Waves permanently.

Waves also have close relationships with local press and radio where they are able to tell their story, encouraging other employers to support Defence and the armed forces community.

What are the benefits to organisations of partnering with Defence? There is a huge pool of talent and transferable skills (both generic and specific). For employers, it is a case of recognising those skills. None of the military employees at Waves have gone sick or created disciplinary issues. Maybe Waves are just lucky or maybe it’s because of the type of people they have in their organisation. Their employees aren’t 9-5 – they will work until the work is done and stay to help others when needed. Waves employees work as a team to produce the best quality product.

One of the biggest challenges has been the lack of business and commercial acumen. All of them have learned on the job. In Waves’ experience, service leavers lack knowledge and skills around finance and budgets and will need extra guidance and training from employers. One of Waves biggest benefits of employing reservists is the hook back into the military. Reservists keep up their skills and qualifications through their reserve service.

With regards to spouses, Waves sees them as untapped talent with skills and experience that employers need to recognise. The challenge for spouses is that they are posted every two years. Emily has just been posted to London with her husband and now commutes down to Wiltshire two days a week. She has been given the flexibility to also work from home two days a week. Another of Waves spouse employees is also wounded, inured and sick and finds it difficult to work all her hours in the office so is allowed the flexibility to work from home where she is more comfortable. Waves recognises that she does a phenomenal job and couldn’t be without her.

In summary, Waves encourages employers to think what the Armed Forces Community could do for their businesses. There are huge amounts of people with great skills out there. Remember that there are Regional Employer Engagement Directors there to assist. The second part of the presentation was by Malcom Warr from the Federation of Small Businesses (FSB). Malcolm has had an eclectic career that includes working for Deloitte, Gallagher’s (a small business) and as the reconstruction director for a consortium of businesses in Rwanda.

Malcolm began by highlighting the communications gap between small businesses and the Ministry of Defence. Malcolm wanted to talk about how to bridge that gap. Malcolm realised before the conference that he is the joint author of the definition of partnering with the Defence community coined when trying to privatise a dockyard. The definition is mutual trust, risk and reward.

When small businesses are trying to get themselves into a contracting situation with the vast bureaucracy of the Ministry of Defence or larger businesses. Innovations generally come from smaller businesses – some examples on the accompanying slides. Another slide lists the pitfalls when small businesses are working with Government and large businesses.

In 1990 when small businesses were first encouraged to partner with Defence, there was a list of barriers to small businesses working as contractors with Defence - it was almost the same as the FSB list shown on the slides today. So, in over 25 years, the challenges of small businesses working with Defence haven’t changed much.

When it comes to Defence contracts, one idea that Malcolm had (following conversations with Secretary of State, Michael Fallon, and other important people) would be nominating a champion within each large business that looks after small businesses and who understands the complexities and challenges of small businesses. Malcolm encourages large businesses and Government departments, including the Ministry of Defence, to look beyond the supply chain champion arrangement and move into a small business champion arrangement to improve the communication and links between small and large organisations.

0.2 Questions

Question 1: Question from the charity Soldiers Sailors Airmen and Families Association (SSAFA) who firstly thanked Emily and Waves Training Solutions for all their fundraising efforts. It’s a very interesting thing with the Armed Forces Covenant when companies pledge to support military charities, I think they don’t realise the potential of corporate strategic partnerships with charities. There are ERS gold award winners that partner with charities very successfully and it solves their business problems as well rather than just being philanthropic. It’s just something for organisations to think about when going for gold ERS and it would be wonderful and much needed for the charity.

Malcolm agrees as it is about talent and charities provide yet another talent pool for businesses to tap into and there needs to be a mechanism to allow that to happen.

Question 2: Has there been any experience of groups of SMEs applying as a group? For example, the South Bank University has about 90 companies working on their campus and have reduced the rent they could charge and instead encouraged businesses to offer internships and work placements to the student body. Individually, they probably wouldn’t apply to participate in these schemes and, likewise, the ERS awards. Has anything like this been done like this from a Covenant perspective, contracting or recognition perspective?

Malcolm points out that there are issues with this. One of them being intellectual property (IP) – how do you protect a small businesses’ bright idea. One small business that Malcolm was mentoring has just had an idea poached by a government. Also, who takes the risk in this arrangement? There are some contracting mechanisms in place where the corporate entity, or tier 1 supplier, and tier 2 and tier 3 sits below in protected in terms of IP. Another benefit is where businesses simply can’t compete in terms of expensive and bureaucratic bidding processes – they just don’t have the money – they would have the clout of the larger organisation above them. We need to work closely with smaller businesses and make them feel like they are part of the community. Emily said that Waves Training do collaborate with other businesses on tendering on the bigger bids and it works well.

Jon Beake has personally had no experience of businesses collaborating to sign the Covenant and gain recognition but it might be more difficult as each business has its own reasons for signing the Covenant and each Covenant should look quite different.

Question 3: Malcolm, you said that small businesses had difficulty getting in touch with the MOD. In my experience working with the MOD, if you get to know the right people, it opens doors and I have never been let down in all parts of the world. I just feel that SMEs should get out and talk to various people within MOD. In the US, for example, 15% of all Government contracts have to be given to SMEs. In this country, we don’t have a percentage of SMEs getting prime contracts.

Emily responded that it’s very recently been brought in that 25% of government contracts should go to SMEs. However, Waves haven’t seen that yet. There is a paper online but it hasn’t filtered through yet. Malcolm responded that we need people positioned that small business can go to who have contacts in the larger organisations.

Question 4: Can I pick up on the theme of collaboration? One of the challenges for small businesses is how is their voice heard? In the same way that there are alumni groups for Gold award winners, perhaps one idea would be for groups of SMEs to club together and share their resources, especially for organisations who aren’t Defence contractors but just want to help out. Also, how can we work together with organisations like the FSB to provide services to Armed Forces people?

Malcolm says that one of the problems with working with small businesses is that there are a lot of organisations out there like the FSB who do a lot of lobbying but need to be more proactive. Jon said that the ERS Gold alumni exists and he knows that some of the Regional Employer Engagement Directors are trying to do something similar with their Silver award holders.

Question 5: Emily, you mentioned that you didn’t feel you had a reciprocal arrangement with Defence. Could you expand upon that?

Emily said Waves signed the Armed Forces Covenant and, at the time, saw very little back from the military. Waves were employing military people, supporting military charities and participating in Armed Forces Week but felt they were getting nothing back. They do now with the ERS Gold alumni group and there are things ahead that will provide employers with more tangible benefits than before.

Jon said we (Defence) made the mistake of assuming that the tangible benefits of partnering with Defence in all about the people and recruiting. Of course, it is a big benefit but one that Waves were doing already. Other benefits that you might expect is access to Defence estate, booking hot desks and event spaces – we are looking at that at the moment. Other benefits are attending Defence events and employer forums. They will vary according to opportunities and location.

Question 6: Emily, what did you expect to get from the military?

Emily responded that, to be fair, probably nothing. Waves support Defence because they want to and it’s important to them. The question arose when Waves were visiting small businesses and talking about the Covenant and they were being asked, what’s in it for us?

Malcolm said that what Waves Training is getting as a benefit of being a gold award winner is access to Ministry of Defence information.

Question 7: For SMEs with no military knowledge or experience, what’s in it for them to partner with Defence?

Emily said because of the talents, the skills, experience and qualifications that their reserves gain and then bring back into the company. Also, the military contacts.

Malcolm said that knowledge transfer is another benefit and building a closer relationship with the MOD. The MOD needs to be more aware that small businesses’ IP is very fragile and help to protect it.

Question 8: You also mentioned cadets. Should you extend the same leave to cadet force adult volunteers as reservists? Also, cadets provide another pool of talent for apprenticeships and employment.

Emily responded that Waves do offer the same leave to adult volunteers and that they have tried engaging with local units.