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As employers continue to navigate their way through the cost-of-living crisis, there will be challenges along the way. With everything is more expensive than it has ever been before, new and existing employees will require more financial support than has been previously expected.

Here, we outline how you can transform the prevalent recruitment and retention challenges in the labour market into an opportunity to attract and retain talent.

two man shaking hands in office

Prepare For A Buoyant Labour Market

For the past few years, the world has been an unpredictable place. 2020 saw the rise of the COVID-19 pandemic, while 2022/23 saw the cost-of-living crisis take effect. With ongoing uncertainty, employers are hesitant to implement a concrete new way of working.

This hesitancy to define the future vision of the business may be a source of recruitment and retention difficulties, as people seek out those employers who can commit to flexibility and offer a clearer path. Yet the impact on the bottom line of recruitment and retention difficulties is hard to ignore. The cost of replacing employees is estimated to cost between six to nine months of their salary.

“Managers typically have their own job, and when they have an open position, technically may have two jobs.”

Theresa Adams, senior knowledge adviser at the Society for Human Management Resource

There is a significant impact on the team, as the drawn-out recruitment process, which often involves multiple interviews for job seekers, reportedly takes an average of 23.7 days. Hiring practices can involve time-consuming steps such as screening CVs, interviewing candidates and scheduling follow-up interviews. In the meantime, these built-in delays mean that managers moving the process along are often straddling roles, compounding delays. This impacts the employee experience of the whole team.

Industry Hot Spots

Labour shortages are well documented, with particular sectors having acute problems. Sectors such as construction have indicated that they are experiencing specific recruitment and retention challenges, particularly around specialist roles. Salary pressures, fuelled by the growing cost of living, are driving matters to evolve quickly. Employers are introducing specific initiatives to meet the current challenges, including introducing greater flexibility and encouraging new talent to enter the industry by focusing on the relevant skills involved for roles.

Strategies to overcome recruitment and retention challenges


Social media as a recruitment tool

According to the latest data from the Paydata UK Reward Management Survey, three-quarters of employers are using technology, such as LinkedIn recruitment, as a key recruitment tool. Social media as a recruitment tool is a huge opportunity for companies to target the relevant individuals with the required skill set, helping to screen potential applicants more accurately. Technology is also identified as a valuable tool to monitor labour turnover data more closely. Employers can quickly identify areas of the business affected by high levels of labour turnover, developing targeted support for individual teams as opposed to more generic policies across the firm that have less of an impact.


Widen recruitment networks

Whilst one in three also opted for the greater use of external agencies – the more traditional route of asking a professional recruiter to find the right talent – 54 per cent are encouraging or incentivising employee referrals. This follows the logic that employees can use their own network to solve recruitment issues and be rewarded for finding the right talent. Only 14 per cent said that they paid a significant recruitment premium to attract talent.


Empower individuals to balance their priorities to drive their productivity

One thing that came from the pandemic is that businesses learnt that they could afford to be a lot more flexible when it came to having their employees physically in the office or structuring roles in different ways to support and attract a more diverse workforce. Indeed, nearly three quarters of employers quote using flexible working as a recruitment tool. As people are the greatest assets of businesses, empowering them to shape work and maintain productivity in a way that lets them balance their priorities in life is a competitive advantage for many companies. It will be critical in the recovery and ability of companies to remain agile in the wake of the cost-of-living crisis. This starts with defining your approach to working during the current financial situation. Communicating this approach and being clear about what employees can expect will directly impact the diversity of the candidates who apply and who choose to stay.


Broaden the talent pools to consider

This flexibility and gear change to favour virtual working has meant that those previously excluded from work can access this from wherever they are based. Remote working creates numerous new opportunities to find the right talent; it is easier to recruit from a wider geographical base or meet the needs of those who are disabled, carers or parents in achieving greater work-life balance.


Ensure line managers are fluent in hybrid working

The main criticisms of agile working stem from the potential cultural impact. Questions around whether more junior employees will sufficiently be able to benefit from osmosis by learning from experienced colleagues or whether productivity will, in fact, be maintained across the organisation all centre mainly around the line manager as coordinator of the employee experience. Being clear on the degree to which flexible working is adopted guides and supports the approach of line managers in how best to manage their teams and provide the best possible employee experience for them. This is linked to helping their team progress, mapping out personal development programmes and managing career progression. Individuals need to see the opportunities that are available to invest in and stay at an organisation.


Improve the employee experience

Employers have taken the opportunity to counter challenges by developing existing talent, with two thirds of employers making greater use of internal recruitment. Employers highlighted how individuals who already work for the business could seamlessly pivot between roles, and greater learning and development programmes are required to ensure individuals clearly see their future at the organisation. Equally, analysing employee exit interviews is recognised as a valuable tool by three quarters of employers. Identifying the drivers behind employees leaving can inform the current approach to rewards and benefits and help to address any wider cultural issues that could sustain employee turnover. This directly links to ensuring that the employer offers a strong employee value proposition (EVP). An EVP that speaks to individuals and aligns with their sense of purpose can help with attracting and retaining talent.


Be creative about how you can recruit

Social enterprises have been highlighted as a means of attracting talent to employers. In the context of travel and thinking outside the box when it comes to your approach as an employer, Women in Travel works with a range of employers, from hotel companies to tour operators, connecting women they have trained to those who require their skills to support their own business. This directly boosts a company’s values and Employer Brand, linking them to vital causes by providing them with a recruitment pipeline from those who are under-represented in society. Companies should reflect the societies they serve, and diversity and inclusion are already board-level priorities for many.


Strengthening reward strategy

Respondents to our survey noted that they are reviewing their approach to rewards and benefits holistically. The role of pay scales and bands is to organise pay effectively, identify the right pay range for each role, ensure they are competitive with the external market and provide an important objective framework to achieve fair pay throughout the organisation. A clear and transparent pay system can satisfy individuals that they are being competitively paid in the market. With communicating the wider reward package a key strategy for employers, total reward statements were also cited as an important tool in times of constrained pay to show individuals the investment that the organisation is making in each employee that goes beyond just pay.

Get in touch

As you plan your own approach to attracting and retaining top talent in 2023, please get in touch with us if you have any questions at all about how to drive the most value from your reward strategy. We are on hand to help you manage your pay and reward practices and can help you to cultivate a strategy that results in you retaining top talent. We will help you to maximise the benefits to both you, as an employer, and your people.

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