Beating the talent shortage: do you need to do something different?

We asked employers how they’re negotiating the talent crunch: despite the headlines, it’s not all about pay.

We asked employers how they’re negotiating the talent crunch: despite the headlines.

‘'If now isn’t the time to fundamentally review your approach to reward, when is?''

With over one million job vacancies in the UK, it’s no surprise that 70 percent of companies we spoke to find it difficult or very difficult to attract and retain employees. Scott Cullen reviews the results of KPMG’s recent pulse survey on how employers are tackling the issue.

Let’s talk about the challenge

The employment market’s hot, with record job vacancies and huge salary increases for lorry drivers in the headlines. But what’s really happening?

Brexit combined with COVID-19 has meant a significant reduction in overseas workers coming to the UK, leading to acute shortages in more manual roles in areas like supply chain, retail and agriculture. Coupled with increasing demand, companies are struggling to fill and retain these roles from the UK workforce and large pay increases are being quoted.

Insights from KPMG’s pulse survey

Our cross-industry survey shows some industry-specific shortages (e.g. kitchen staff, retail, call centre, nursing, etc) which appears to back up a general lack of operational type roles.

The only cross-industry roles that were highlighted as issues (60 percent of respondents) are in technology/digital. This is no surprise, as these types of roles have been hot for several years, and with digital transformation accelerating post-COVID-19, shortages will only get worse.

We asked what companies are doing to address attraction and retention, the top answers were:

1. Pay increases to attract (76 percent of respondents) and retain (48 percent of respondents) key skillsets.

The issue here is how long we’re likely to see pay spikes last.

Increases in base pay impact the bottom line going forward, but are large increases sustainable in the longer term if spikes are short-term?

A retention bonus or temporary skills premium may be a better bet for a skills spike.

Our survey shows retention bonuses are much more likely to be used by larger companies (57 percent of respondents) as opposed to smaller ones (just 19 percent of respondents).

2. Increased flexible working to attract (76 percent of respondents) and retain (59 percent of respondents).

This has to a large extent been forced on employers by COVID-19, but many are now embracing it, with 42 percent of respondents saying that over half their workforce will adopt hybrid working going forward.

Flexibility and work/life balance have become more important to employees, and therefore equally important to employers.

Those that allow more flexible working should find it easier to find and keep talent.

3. Focus on skills and career development (over 50 percent of respondents).

Like flexibility, this is critical.

Most employees will only think about moving if work impinges on their private life, they feel stuck, or feel like they are treated unfairly.

Having structures in place that enable employees to see how they can progress and/or learn new skills is critical – but something most employers need to do better.

Clearly there’s a double benefit here, not only retaining but also developing scarce talent.

4. Recognition to attract (41 percent) and retain (45 percent of respondents).

Use of recognition has been a growing trend for a while.

An annual bonus is not hugely motivational, but more frequent recognition can be.

What else should employers think about?

The hybrid working change is fundamental.

Digital transformation is accelerating.

Now’s the time for organisations to re-think:

  • Their overall approach to reward.

Things have changed, what do employees really want from a reward package now? Just like flexible working, organisations that address this will find things easier. Get rid of expensive obsolete benefits and replace them with things that are really valued. It’s definitely not all about pay.

  • Segmentation is now more relevant than ever.

What’s your approach to 100% home working v Hybrid v 100% on site? How are you going to treat digital talent and other critical groups?

  • Reward structures.

To get pay, career, skills development etc right organisations need robust job structures and underpinning technologies.

In conclusion, pay is critical to attract and retain talent. But it can also make organisations uncompetitive if managed badly.

If you would like to discuss any of the issues raised in this article please contact Scott.