Pay Attention to Retention

Employee retention biggest threat to company growth

The widely-reported skills shortage continues to impact many millions of industrys ongoing efforts to recruit and retain employees, illustrating well the wider challenges for employers in every sector in the current economic climate.

Our analysis shows that employee retention will be one of the biggest issues facing business owners across the board for the rest of the year and beyond. There are multiple reasons for this, but it starts with a surge in demand in the market, paired with a lack of skills, creating a candidate vacuum in the jobs market, especially in IT recruitment and Accountancy recruitment.

This acute reduction in the number of new candidates looking for employment is down to a number of factors including the sharp rise in demand across all industries coming out of the pandemic, furloughed staff, hesitance in seeking out new roles due to economic uncertainty, fewer EU candidates post Brexit, and highly-skilled candidates already snapped up at the beginning of the pandemic after finding themselves out of work due to redundancy.

These pressure points, combined with significantly high volumes of roles - the latest figures from the Office of National Statistics show there are almost 1 million live job vacancies in the UK - means hiring, employee engagement and employee retention are critical concerns for all employers as we enter the last quarter of 2021.

There are no sectors that are immune from the problems, but some face a tougher battle than others. As we predicted in February, and as our research shows, IT vacancy volumes are now treble those of March 2021, sitting beyond pre-pandemic levels. Those companies looking for the core tech skills of cyber security, software development and cloud technologies in the IT sector are finding it increasingly difficult to hire. So, what can employers do to address the issues they face?

Why are staff having their heads turned?

While it is in no way the only solution, remuneration remains important. The supply and demand challenge is driving an increase in average salaries across all roles and all sectors as many candidates are being presented with multiple offers and counter offers from current employers. We are also seeing the reintroduction of a contractor recruitment market as businesses look to consultants, temporary hires and contractors to fill the gaps, especially where they are struggling to attract high calibre candidates or under time pressure with critical projects.

Candidates are demanding not just more money but a better working environment, with more flexibility. With many having had 18 months of working from home, some are reluctant to return to a 9-5 office based role. Although it’s clear that a number of companies have taken on board this seismic shift in working patterns - remember that at the start of 2020 wfh, even one day a week, was often seen as more of a favour than anything else - we are still seeing some big names insisting on full time office presenteeism. Earlier this year, Goldman Sachs boss David Solomon rejected remote working as a ‘new normal’ and labelled it an ‘aberration’ instead

This attitude can lead to real problems in terms of candidate attraction and we predict could lead to existing employees seeking new employment.

Minimising the impact

Savvy firms who understand the need for greater employee engagement also appreciate the freedom it affords them. For those that have embraced the flexible future of working from home and hybrid working, the constraints of geography and location are no longer a barrier to skills. Seeking employees from areas that have historically paid a lower salary to local workers has opened up a new avenue for those that can make remote working a success.

These employers are reviewing the competitiveness of their company offerings to attract new recruits, conducting salary benchmarking, analysing the competition for key company skills, working conditions and flexible work options offered by those competing for their staff.

With employees returning to the office from an extended period working from home, there are likely to be mixed emotions surrounding old office policies. A simple feedback survey or individual check-ins are widely considered to help gauge the temperature of the existing team and identify any slip in company engagement^[1].

Where budgets are unable to stretch to fully trained employees, employing candidates earlier in their career and offering career development may be the answer. The 18-25 year old age category were hardest hit by the pandemic led recession and trainee roles are still attracting a good volume of interest from potential candidates.

Analysing job data, we predict a further tightening of the job market in the months running up to the end of the year. Hiring the right talent and good employee retention requires long-term thinking and multiple strategies. Forward-thinking employers, with the right analysis of current and future employees’ needs and expectations, will put themselves in a much stronger position to grow and prosper.

^[1] Forbes.com