The recruitment and retention landscape
In the last six months, 69 per cent of respondents so far have reported difficulties in retaining people, while 62 per cent anticipate similar challenges over the next six months. Similarly, in the last six months, 75 per cent of respondents so far have had difficulty recruiting people. 65 per cent of respondent employers anticipate recruitment challenges ahead in the next six months. The high number of job adverts remains sustained, underlining how important it is for organisations to be clear about what they are offering existing and prospective employees.
The majority of respondent employers, 94 per cent, cite ‘labour shortages in the market’ as a challenge that they sometimes or often experience. This is followed by 93 per cent of respondents so far saying that they encounter a ‘lack of suitable candidates’. The pipeline of talent in specialist areas is reportedly acute in the UK labour market. Driven by the Great Resignation in the wake of the pandemic, many took the opportunity to retire or retrain post-pandemic.
1. Skills-first recruitment and retention
The World Economic Forum advocates for a ‘skills-first approach’ when filling positions. This hiring approach offers companies the opportunity to fill critical skill gaps by broadening the range of candidates they consider. By setting qualifications as a pre-requisite, this eliminates a high proportion of the labour market from the outset.
Therefore, to pave the way for greater social mobility too, they recommend that candidates should be primarily assessed on their skills and abilities. This helps to overcome the issue that demand is outstripping the supply of talent across a number of sectors. Instead, individuals can be developed and retained by eliminating academic qualifications as an automatic hurdle that candidates need to meet.
2. Offering an incentive to join
Reported pay levels for 2023 range from five per cent in the lower quartile to 6.5 per cent in the upper quartile, driven primarily by external relativities, including inflation. With budgets being squeezed for employers and employees alike during the ongoing cost of living crisis, organisations that can offer competitive pay in addition to immediate benefits upon joining are winning the war on talent. Benchmarking pay data can help pay levels across the organisation remain competitive, with line managers being able to offer evidence-based reward packages that are objectively fair.
62 per cent of respondents to our survey so far report that they have had to offer new recruits salaries which conflict with those paid to existing employees. 65 per cent of these have had to offer up to 10 per cent more than those paid to current incumbents, with 35 per cent offering up to 20 per cent more. This is popular in sectors particularly affected by skills shortages, including renewables, construction and utilities.
Around half of our respondents think that the need to offer a premium will stay the same over the next six months. It is important for organisations to consider whether this is a sustainable, long-term approach or whether this risks undermining internal pay equity across the organisation for short-term benefit. Joining bonuses are a popular alternative, preserving the pay frameworks in place.