Recruitment –we have a problem
It isn’t just a talent shortage; the impact of technology, a continuing abundance of vacancies and the evolving employee/work relationship have made hiring more challenging than ever before.
The UK’s overall job vacancy rate continues to trickle down, falling from well above 1,000,000 open positions in March 2023 to 916,000 by end of March 2024 – a fall of 18%.
This change appears to indicate an improving jobs market, with the number of unemployed per vacancy increasing to 1.6 persons (Dec ’23 to Feb ’24) compared to 1.4 persons in the previous quarter. However, as always, details count.
Some sectors are faring better than others and the headline statistics do not reflect the true situation for many businesses and industries across the UK. Where hiring pressures are easing in some quarters, they are increasing in others, and some roles – particularly in business administration and support, social care, IT and tech, engineering, healthcare and life sciences and other highly skilled professions – are becoming increasingly difficult to fill as demand continues to outstrip supply.
UK vacancy rate in business admin and support services – March 2020 to March 2024.
Source: ONS April 2024.
Moreover, even as 41% of surveyed UK businesses reported an intention to hire in Q2 2024, up to 86% of those same businesses said they were struggling to secure the talent they need – and 39% were simply hiring to backfill the vacancies created by employees leaving for pastures new or exiting the workforce all together.
Of surveyed businesses are seeking entry level employees – the most in-demand of any job category.
Source: ManpowerGroup UK 2024
The reality is, depending on the sector they operate in and the type of workers they need, the hiring picture is showing little improvement for thousands of UK businesses. Part of the problem is demographics – the UK population is ageing – but other negative factors include the lingering effects of Brexit, university leavers unprepared for the world of work, greater demand for technical skills as technology plays a larger role in the economy, and an inability for many businesses to adapt to a rapidly evolving employee/work relationship. Ultimately, no matter how the causes of the problems are perceived, recruitment in 2024 and into 2025 will remain challenging at best. UK businesses must deploy every tool in their hiring toolbox to overcome the strain.
37% of UK employers have hard-to-fill vacancies – in the public sector this number rises to 52% (Source: CIPD)
Labour turnover rate in UK manufacturing still above pre-Covid levels at 16% (Source: Make UK)
20% of UK employees expected to quit their jobs in 2024. (Source: Personnel Today)
6 – 9 million UK workers had a poor experience of work in 2023. (Source: CIPD)
Average time to hire – UK April 2024 – 4.8 weeks. (Source: Totaljobs)
59% of UK businesses facing increased competition for talent (Source: Totaljobs)
52% of healthcare and life sciences and 47% of IT businesses promoting flexible working (Source: ManpowerGroup Q2 2024)
Average cost to recruit - £6,125 - £19,000. (Source: CIPD)
Average total cost of employee turnover per worker: £30,614. (Source: Oxford Economics)
The relationship between employees/work/employers is evolving – going through a rapid period of change that gives more power to workers and prioritises the desire to secure work that is fulfilling, delivers a better work-life balance and creates opportunities to grow their career. The fallout from these developments is that many of the traditional methods of hiring are becoming increasingly inadequate. Too many businesses are clinging to outdated hiring methodologies, which not only fail to address the current recruitment challenges but may exacerbate them further.
1 Recruitmentin a silo:
Many companies still view recruitment as a standalone process rather than an integral component of a comprehensive, interconnected strategy. This compartmentalised approach neglects the symbiotic relationship between recruitment, reskilling and retention. By failing to recognise recruitment's role in fostering a skilled and engaged workforce, organisations miss out on opportunities to cultivate talent internally and sustainably fuel their growth.
Source: Personnel Today 2024
2 Emphasis on experience, not skills:
Employers continue to prioritise candidate experience over an assessment of their skills. While a positive candidate experience is important, it should not overshadow the crucial evaluation of candidates' competencies and aptitudes. Skills-based hiring instead of experience-based hiring can give employers an advantage in a talent shortage, allowing them to better fill the skills gaps in their workforce and avoid the risk of hiring candidates who may have generous experience but still lack the necessary hard or soft skills to excel within the role.
3 Failure to address candidate needs:
The perspective of candidates, particularly younger cohorts such as Millennials and Gen Z, is often overlooked in the hiring process. These digital natives are typically seeking more than just a job - they want roles that offer meaningful progression and personal fulfilment. Failing to align hiring practices with candidates' aspirations and values can result in disengagement and high turnover rates, undermining stability and growth.
4 Weak Employer Value Proposition (EVP):
EVP is the secret sauce that makes candidates want to work for your company. However, organisations often struggle with this requirement – presenting a weak EVP that fails to capture candidates' attention or differentiate the business from its competitors. Without a compelling proposition that highlights the unique opportunities and benefits of working for the company, businesses struggle to attract top-tier talent.
Of UK employers believe employee soft skills are more important than ever.
5 Issues with diversity:
The failure to address the diverse needs of today’s multi-generational workforce presents a significant challenge in talent acquisition. Each generation brings its own preferences, motivations and work styles to the table. Failing to tailor roles and incentives to accommodate these differences limits the organisation's ability to attract and retain talent across age groups, leading to missed opportunities for innovation and collaboration.
6 Poor skills audit:
Weaknesses in workforce planning compound the hiring woes faced by businesses. Inaccurate assessments of the skills and capabilities required for future success result in mismatches between talent supply and demand. Without a clear understanding of the organisation's evolving needs, businesses struggle to identify and nurture the talent required to drive innovation and competitiveness.
Unfortunately, problematic as these issues are, an even greater hiring challenge lies ahead for UK employers - current and future skills needs are changing, and many businesses are not ready for this transition.
Organisations that still hire based on experience risk being left behind as the focus shifts to securing the necessary skills to meet the challenges of the new business era.
A revolution in skills is underway - propelled by technological, environmental, societal and innovative drivers that are reshaping the landscape of employment and necessitating a shift in the skill sets valued by employers. Skills that were important before may no longer fit the requirements of businesses in the very near future. Organisations that continue to value experience over skills – still the most common method of recruitment – are at risk of being left behind by more future-forward competitors.
Source: HR Grapevine
Going green: The green business transformation is catalysing a demand for sustainability-related expertise across industries. As organisations strive to minimise their environmental footprint and adopt eco-friendly practices, professionals with skills in renewable energy, carbon accounting and sustainable supply chain management are in high demand.
The march of technology: Advances in technology, particularly in artificial intelligence (AI), are reshaping job roles and skill requirements. Automation and machine learning are streamlining processes, but they also require a workforce adept at leveraging those technologies. Skills in data analysis, programming and AI development are becoming increasingly essential for staying competitive in the digital age.
Flexibility: The shift towards hybrid and remote working models is fostering a greater emphasis on autonomous skills. With many employees working remotely and needing to function more as one-person business units, individuals must take on more individual responsibilities and demonstrate self-sufficiency in their roles.
Niche is the new black: There is a growing need for more specialised skills as work becomes more tightly focused. The era of 'generalisation' is giving way to a demand for expertise in niche areas. Employers are increasingly seeking professionals who can offer precise solutions to specific challenges, driving a shift towards a workforce with deep, specialised knowledge.
Source: Forbes 2023
The vast majority of UK businesses are struggling to secure the talent they need, but they may be unaware that their own internal issues could be making the challenge more difficult.
Many of the problems affecting recruitment are overt, easy to recognise and relatively simple to address. However, other, more subtle and stubborn issues often lurk beneath the surface. Often endemic to an organisation’s way of doing business and typically misunderstood or ignored, these powerful agitation factors may impact hiring in less obvious ways, but they still create formidable barriers to recruitment and retention.
Common agitation factors include:
Failing to give workers what they want.
Today's workforce is empowered, seeking more than just a pay cheque from their employers. With a talent shortage amplifying their choices, employees are prioritising factors such as work-life balance, flexible schedules and opportunities for career advancement. They crave training and development initiatives that propel their careers forward. More importantly, when they don’t get what they want, they vote with their feet and move elsewhere.
Additionally, alignment with company values, especially regarding DEIB, ESG and a compelling Employee Value Proposition, hold significant sway, particularly among Millennials and Gen Z. Leadership that comprehends these desires and champions employee wellbeing and contribution is crucial. Loyalty can no longer be assumed; it must be earned through meaningful engagement, recognition and support for individual growth within the organisation. Businesses that fail to grasp the importance of these dynamics and make the necessary amendments to their operations and workplace culture will likely continue to struggle to attract the talent they need.
Opportunity for career growth
Fair pay & conditions
Flexible working
Meaningful work
Strong DEIB policies
Transparent management
Leadership shows empathy to worker needs
Source: CIPD
Businesses often fail to understand that Early Careers candidates may look at work differently from their more experienced peers. This can create further obstacles to recruitment as organisations fail to provide strong or different value propositions – the ‘why’ you should work for us. This is a major problem – today’s EC candidates are tomorrow’s C-suite members – without this important fresh blood, businesses will struggle to maintain growth and relevance.
The phrase ‘early careers’ (EC) refers to individuals who are at the beginning or early stages of their career. Typically, this refers to anyone with less than three years of work experience and can also encompass anyone in education who is looking to build their industry experience and insight. This includes entry-level and graduate roles to internships, placements and apprenticeships as well as work experience and shadowing opportunities.
Unfortunately, businesses frequently overlook the unique preferences of EC candidates, an oversight that poses significant challenges as EC candidates represent the future leadership pipeline. Without attracting and nurturing this vital talent, organisations risk stagnation and irrelevance. Strong and differentiated value propositions are essential to engage EC candidates, highlighting the reasons why they should choose to work for a particular company. Failure to recognise and address these differences undermines the ability to secure the innovative and diverse leadership needed for sustained growth and relevance in the long term.
Opportunities to kick start their career – which may include ‘sampling’ different roles
Training to give them better ‘work relevant’ skills that complement or even supersede their educational learning
A clear career path with opportunities for growth and promotion
Positive workplace culture
Strong DEIB policies and EVP
People managers and hiring managers are facing escalating pressures due to the complexities of managing hybrid workforces and catering to employees' heightened focus on purpose. This places managers in the precarious position of the ‘squeezed middle’, often leading to burnout caused by the significant recruitment demands of recent years. Moreover, issues surrounding DEIB commonly persist, with biases influencing hiring decisions and hindering diverse thinking.
Source: BBC 2024
Excessive reliance on artificial intelligence (AI) for candidate selection overlooks nuanced qualities and experiences that may not be properly captured by algorithms. This neglects the full potential of more seasoned workers and other underutilised talent pools, resulting in missed opportunities for diverse perspectives and skill sets.
Leveraging AI and technological filter tools for fair and merit-based decisions can fosters equity, support a company’s EVP and boost the bottom line. By ensuring fairness through their use and development of technology in hiring and promoting the results, employers can build trust with customers and stakeholders, reduce legal risks, and enhance their brand reputation. Ultimately, equitable AI systems can improve important decision-making processes, leading to better resource allocation and innovation – an approach that can create a competitive advantage, as it promotes a positive work environment and attracts the highly-skilled talent that is crucial for financial success and sustainable growth.
Despite efforts to attract graduates, inadequate engagement strategies, especially for roles requiring extensive onboarding such as those with high security clearances, can lead to elevated turnover rates and wasted resources.
Poor assessment experiences leave both candidates and companies in the dark regarding role fit and organisational alignment. Lack of clarity on job expectations, company culture and values contributes to misalignment and dissatisfaction on both sides.
Many hiring managers lack an understanding of skills-based hiring and often fail to recognise when to foster internal talent mobility and create opportunities for new hires. Insufficient motivation factors, lack of internal policies/procedures and inadequate HR training compound these challenges.
Businesses face a dilemma with college leavers who are ill-prepared for the world of work. In many cases, it is necessary to pivot towards hiring for soft skills alone and providing additional training to bridge hard skill gaps. Adapting to these shifts typically requires a comprehensive overhaul of hiring practices and managerial training – time-expensive actions that many businesses either cannot or are unwilling to undertake.
Where does this leave UK employers?
For all the reasons presented in this guide so far, it is clear that the challenges in recruitment are not going away anytime soon. To succeed in 2024 and 2025, businesses must adapt their hiring practices, skills focus, workplace culture, candidate support and retention strategies to meet the changing shape of the UK jobs market.
Source: Startups 2024