Finding and keeping talent in a candidates’ market: future trends

The first quarter of 2022 has seen a number of record highs reached in vacancies, employee numbers and movement into economic activity. This has created what has become known as a “candidates’ market”, whereby employers are having to find increasingly creative ways to attract and retain talent for the business. In this article, we review the current position in the employment market and identify those areas that employers are focusing on for the next quarter in order to ensure a complete and productive workforce.

The current position

In the first three months of 2022, job vacancies in the UK were at almost one million, a record high. However, the rate of growth in this number has started to slow according to the latest Labour Force Survey (LFS), released by the Office of National Statistics in May 2022. These figures show a decrease in the unemployment rate in the UK from January to March 2022, with a record high number of people moving from economic inactivity to employment. Another record also reached was the number of payrolled employees for April 2022 at 29.5 million.

According to the CIPD’s spring Labour Market Outlook report, published in May 2022 and based on data from over 2000 employers over the previous quarter, 74% of employers report plans to take on new staff in the next three months and 45% have found their vacancies hard to fill. This means employers need to address their approach to recruitment and come up with some new ideas in the current candidate drive market.

How are employers responding?

Recruitment

According to the spring report, 16% of employers with hard to fill vacancies plan to do nothing over the next three months to increase their chances of filling them. This is double the number of employers who reported this in the last six months. Does this mean that, as Jonathan Boys, Labour Market Economist with the CIPD has said, they are at the “…bottom of the bag of ideas”? Not necessarily, but it certainly seems that they can do with some help.

One way in which employers (44% in fact, according to the spring report) have responded to hiring difficulties is to offer more money. But it now seems the limit is being reached in how much more can be paid: only 27% of employers now report plans to increase pay for vacancies that are hard to fill, down from 44% of employers over the preceding six months.

According to Jonathan Boys, the most recent survey data suggests a shift instead to looking at the “total employment offering”. This has led to 38% of employers advertising jobs as flexible, whilst 18% of survey respondents planned to improve job quality. By making the job itself more desirable and introducing flexibility, employers will widen the pool of potential candidates to those who may struggle, or prefer not, to commit to traditional ways of working.

Employers are also getting creative in the sources from which they are drawing potential recruits, such as hiring more apprentices (24% intend to do this in the next three months) and making a greater effort to recruit older workers (14%) and parent returners (11%). These go hand in hand with the move towards greater flexibility in work, as these groups may see money as a less motivating factor than other benefits an employer can give.

Retention

When an employer faces difficulty in recruiting, the need to retain existing staff and talent becomes all the more important. As only 6% of employers intend to reduce staff numbers in the next quarter, and redundancy intentions appear to be low at 13%, actions are becoming more focused on what can be done, not only to maintain existing staff, but also what additional skills those existing staff can bring to the workplace.

Forty per cent of employers report the intention to invest in staff training and development. This not only gives the employer the opportunity to obtain desired skills without having to go externally and recruit those with them already, but it can also feed into a long-term talent management plan, providing employers with their leaders of tomorrow that already know the business well and are more motivated, loyal and engaged.

Another tool employers can use to increase retention is investing in leadership and people management capability (32% of employers reported this as a priority over the next three months). One of the key reasons for an employee leaving is a poor line management; this is not necessarily the manager’s fault. They may not have been properly trained and may have been promoted to the role due to their technical rather than people skills. The line manager themselves may choose to move on if they do not feel adequately trained and supported to perform their duties. As such, employers looking to improve their retention rates would benefit on focusing on building the capabilities of their managers and leadership team.

Wellbeing

Wellbeing is an increasingly important trend in HR: 35% of employers reported plans for a greater focus on employee wellbeing. According to data published by the CIPD in April 2022, one in four employees have reported money worries affecting their ability to do their job, which can have significant implications not only for the employee’s performance but also for the performance of the business as a whole.

Wellbeing trends support the individual employee as a whole person, not just during their working hours. By promoting the physical, mental and financial health of their employees, employers can reap the benefits of a happier, more productive and loyal workforce.

Wellbeing offerings might include access to an employee assistance programme and providing support in all areas of life, including financial management and debt relief advice. It can also be offering access to collective or social experiences and encouraging good life choices.

Boomerang employees

A final consideration for employers is that of “boomerang” employees, ie those that leave and then decide to return. This may be for a variety of reasons and not always because they regret their decision to leave (for example, dependant care may make the new role more difficult). Employers may be reluctant to welcome these returners back. They have, after all, already left once. But in rejecting them, they may be missing out. Welcoming back boomerang employees can have the following benefits.

  • They are already familiar with the company’s work, systems and employees. This reduces the time spent onboarding the individual and reduces the need for training on products, etc.

  • They already have relationships with colleague and clients.

  • They are an excellent source of data about why they left in the first place and what has driven them to return. This data can in turn be used to improve recruitment and retention in the wider business.

Final thoughts

In a candidates’ market, employers need to make themselves stand out. Bringing together good pay and benefits, flexibility, development opportunities, management capabilities and a wellbeing focus may seem daunting and sound expensive. But this does not have to be the case. Finding creative ways to achieve these will benefit employers in the long run and ensure they have the people and skills they need in the long term for success.