Britain’s jobless rate has fallen to its lowest level for over 47 years. In fact, for the first time ever, there are fewer unemployed people than job vacancies.
This is resulting in an unprecedented ‘war for talent’ and an unprecedented wave of pay hikes, but what does this actually look like for London’s business community?
When it comes down to it, the term ‘war for talent’ reflects a fundamental shift in power in the job market, in favour of the employee, according to Hannah Ford, a partner and employment expert at law firm Stevens & Bolton.
The twin themes of Brexit and coronavirus have created ‘perfect storm conditions’ for recruitment – restricting the number of available workers in the UK economy, Ford told City A.M. in an in-depth interview about the state of the job market.
Her point is that employers are now having to fight to recruit new employees and retain their existing workforce in such a competitive landscape. Throwing cash at the problem by upping pay, or offering sign on bonuses, is no longer a sustainable solution.
With demand for staff growing across every sector and region of the UK, and candidate availability still falling, it’s a battle to secure talent. What are the key things attracting individuals to a role at the moment? Is flexible working really the be all and end all?
Employers need to think innovatively: bonuses and pay hikes have become the norm in many sectors. Flexibility around hours and location is a real attraction, particularly in London’s business community and many employees, having had a taste of life without the commute, now see flexibility as more important than remuneration. Employees are also attracted to businesses who demonstrate a commitment to their employees’ wellbeing and health – for example, by offering annual physical and mental health checks, boundary setting on working hours and encouraging time out.
However, attracting talent is only half of the story. What about keeping hold of existing highflyers? What tools and remedies can employers deploy? For example, fleshed out compensation packages or greater annual leave?
To make themselves as attractive as possible, numerous businesses have increased employee pay by around 10-15 per cent, led by those in London who are concerned about their appeal post-pandemic. This has had a knock-on effect on businesses outside of the capital who have been forced to implement bonus schemes and carry out salary benchmarking exercises against competitors in the city and beyond to prevent employees from being poached.
“It’s a pretty aggressive market. And it’s not just about pay, employers are also offering EMI options to try and ‘lock-in’ employees for a longer term.”Hannah Ford
However, a pay top-up on its own doesn’t cut it these days. The overwhelming feeling is that employers wishing to retain their staff need to differentiate themselves from competitors through their culture and values. Many businesses are therefore actively seeking to engage with their workforce to consult with them about changes, not just because they have to but because they want to know what they think. Regular ‘pulse checking’ surveys have their place here to remain connected with employees when they are dispersed between office and home.
And what problems do these changes cause for employers? Are employment contracts simply being ripped up and started again from scratch?
It is a lot for employers to think about, as changes to pay and benefits, work location, hours of work and annual leave entitlements should all be properly documented. However, for existing staff, this can normally be achieved by an update to enhance existing terms.
“Many of the tools for attracting new talent, like policies, values or commitments, are non-contractual benefits.”
Setting up a hybrid working policy that gives flexibility around place and hours of work, a values system that articulates a commitment to environmentally conscious behaviours or a policy that delivers a clear track to promotion in the employer’s business doesn’t have to be overly complicated.
What’s your top tip on how businesses can navigate this new ‘war for talent’ terrain?
Overall, I think it’s a case of remaining current; staying appealing and competitive. However, on a practical note, there are two things that employers can do to really widen the talent pool available to them. Firstly, consider obtaining a sponsor licence, which means you can sponsor non-UK nationals to work for you in the UK.
Why is that a good idea?
You’re therefore inherently less likely to suffer from restrictions in the number of available workers, as you could in theory recruit from anywhere in the world, subject to the immigration rules. There are, of course, cost and compliance implications and the licence takes at least 3 months to apply for, but it significantly widens the talent pool, particularly to include EU workers who can no longer easily live and work in the UK post-Brexit.
And what else?
Follow through on your commitment to diversity and Inclusion: employees expect far more than ‘lip service’ here, so a policy needs deliverables and accountability. This could take the form of inclusive job descriptions, widening search pools and recruitment channels, or blind recruitment to ensure applicants are not deterred from applying.
Businesses who recognise this and make appropriate changes will find that they are fishing in a far bigger pond – namely, a talent pool with multiple perspectives, knowledge and ideas. Many may be surprised at the edge this affords in the war for talent and the improvement it yields when it comes to workplace culture and financial performance.