Employing Reservists: Who Bears the Cost? Research Insights on Financial Impacts

1. Who pays for Gareth? Alcock, S. Greenhalgh, K. Taylor, L & Murphy, P Nottingham Business School and Nottingham University Business School

2. Why Gareth and why this topic? • This might give you a clue

3. Background • Strategic Defence and Security Review - October 2010 • Most recent announcement of redundancies 18th June 2013 • Announcement of significant increases in the number of reserve force personnel – July 2011 • Green paper consulting on ‘Future Reserves 2020: Delivering our Nation’s Security Together • Consultation period ended January 2013 • A White paper was published in July 2013

4. Timeline for restructure of the armed forces

5. Feasibility of timeline – the numbers

6. Proposals and Early indications • Larger numbers of reservists need to be recruited • consequential need for greater numbers of employers willing to commit resources linked to employing reservists • Indication of longer ‘tours of duty’ for reservists • The government was considering making it illegal to employers to ask prospective employees whether they are a member of the reserve armed forces

7. Areas ripe for research • Amongst others: • Numerous issues connected to Human resource management for our HRM colleagues (including legislative implications) • Psychological impact on reservists and their civilian co-workers for our Psychology colleagues • Strategy (inverted buy-in issues)and behaviour of management • Our interests as accountants is concerning the relevant cost and benefit implications for the organisations employing these reservists

8. Cost effective? • Secretary of Defence accepted that Army 2020 was “designed to fit a financial envelope” (House of Commons 2014, para 4). • Commons Defence Select Committee highlights concerns that: "the financially driven reduction in the numbers of Regulars has the potential to leave the Army short of key personnel until sufficient additional Reserves are recruited and trained." (HoC 2014, para 63). • Media have portrayed the plans as: ‘defence on the cheap’

9. Cost effectiveness • The National Audit Office is to review & report on the robustness of the Ministry of Defence’s plans. • Based on the Review into the United Kingdom’s Reserve Forces (MoD 2011) which undertook work to develop a Regular: Reserve Cost Comparison Model. • Their analysis indicated that, ‘the steady-state costs of a TA infantry battalion are 20% of those of a Regular battalion of similar size. • The costs of a TA infantry battalion mobilised for 12 months, including a six month operational tour, are 87% of a Regular battalion over the same period’ (MoD 2011, P41).

10. A good offer for employers? • Recognition of need to increase the numbers of civilian employers willing to employ reserve force personnel. • Recognition for the ‘need to a new approach’ (MoD 2013, p.41). • What did the offer address? • Measures announced in the White Paper (2013)

11. Background motivation • Era of Austerity – reduction of ‘regular’ soldiers and a significant increase in reservists - is this a cost reduction exercise? • According to Future Reserves 2020 this is ‘Cost- effective manpower balance’ (p.6, 2011) • There will be: • Less numbers to pay ‘full-time’ • Ready response team as and when needed and only paid as and when needed. • Employers to be reimbursed

12. Current Financial assistance • You don’t have to continue to pay your Reservist employee whilst they’re mobilised as they’ll be on military pay. • You can claim financial assistance to cover additional salary costs incurred. • You can also claim for certain one-off costs including: • agency fees • advertising costs to find a temporary replacement • There’s no maximum amount you can claim for such non-recurring costs, but you must be able to support your claim with invoices or bills. • you CANNOT claim for loss of profits, turnover or goodwill http://www.sabre.mod.uk/Employers/The-Mobilisation-process/Financial-assistance.aspx

13. Methodology • Documentary sources, such as UK Government publications were reviewed in order to understand the background and strategy • Review of available literature on reserve armed forces in international settings • A series of semi-structured interviews , were conducted with two sample groups: • forces personnel (both Reservists and Regulars) • employer’s representatives.

14. The interviews • Sought to elicit responses to the questions which posed themselves from the above investigation. • Are the target numbers feasible within the given timescale? • How do employers perceive the employment of reserves? Are perceptions changing in light of the ‘offer’? • Does the offer to employers provide for mutual benefit in terms of skills transfer? • How do employers perceive the ‘offer’ in terms of mitigating any challenges they may face in employing reserves? • Does the offer mitigate the perceived costs of employing a Reservist?

15. Initial findings- No. of employers • Anecdotal evidence suggesting that a substantial number of reservists currently withhold their membership of the reserve forces from their employers • Therefore the current numbers of employers willingly engaging reservists is potentially far smaller than the government appreciates. • the numbers of employers requiring convincing to employee reservists could therefore be far greater than anticipated.

16. Initial findings –Target No.s and timescales • Reservation about whether the target numbers were realistic within the given timeline. • One interviewee, currently serving in the reserve forces and undertaking a recruitment role observing that, “We’ve done so little for so long, and now they expect us to just turn the tap on. It’s going to be a long slow process” • Some of those who have chosen redundancy have now chosen a life away from the military so they are not interested in signing up for reserve forces. • Some of those made redundant: ’you’ve just fired my from my job, why would I want to do that job as a volunteer?’

17. Initial finding – employer perceptions • Not viable for my organisation This is not the type of business where you can put someone in for 6-12 months to cover for someone who is away.’ • One employer we interviewed disagreed with the notion of employing Reservists on principle. • Perceptions had not changed • BUT…

18. Initial finding – employer perceptions • Benefits flow only one way • Skills transfer questionable • Concern regarding the extended tours of duty • Finally… • the employers we interviewed expressed some concern over the monetary offer to employers. • They were doubtful as to whether the offer mitigated the perceived costs of employing a Reservist. • However, they were unable to offer specific examples of the costs which may be incurred and not recouped. To be continued!

19. Questions?