Employers with better wage offering likely to attract talent more easily
Employers are likely to face a tighter labour market, particularly in technical fields, as access to talent becomes increasing scarce on the back of strong growth. Despite this, executives fail to upscale pay and conditions offerings to compete for talent, a key concern for prospective employees.
Following years of high unemployment rates resulting from the 2008 financial crisis, recent figures show that, across the G7, headline employment figures have reached heights last seen in the 1970s. The increase in employment levels, is starting to affect hiring, with companies increasingly finding it difficult to attract and retain talent.
A new report from people consultancy Mercer considers how companies are meeting the challenge of a tighter labour market. The paper, titled ‘Talent Trends’, is based on more than 400 business respondents, 1,700 HR respondents and 5,400 employee respondents.
This year’s report finds that the top priority for respondents continues to be to attract top talent externally, which most respondents (92%) admit is set to become more difficult as shortages make themselves felt. The development of leadership for succession comes in at number two, followed by identifying high potential employees.
Focus on developing workforce skills comes fourth, while supporting employees’ career growth, a key concern among employees, comes in at number five. Increasing employee engagement rounds off the top six – with low productivity being a hinderance for many employers.
When it comes to talent bottlenecks, various technical roles continue to be seen as under-supplied – with IT / technology roles and core operations roles noted as operating with the highest such discrepancy. Marketing and leadership positions, too, have relatively large levels of under-supply of talent. Administrative, finance and customer services roles, meanwhile, are most often noted as suffering from oversupply.
When it comes to filling talent gaps, many of the respondent organisations say that they will seek to build capacity from within (70%), followed by 48% who said they will seek to acquire talent. Finally, 40% said that they will seek to borrow talent via outsourcing – with some reports predicting that the UK outsourcing sector could see 20% growth this year, on the back of a technological skills shortage.
Organisational changes
The vast majority of the organisation executives approached (93%) said that they plan to make design changes to their companies in the coming two years. Some of the changes can be relatively wide scale, including the flattening of organisational structures (33%), eliminating roles / departments (31%) and decentralising authority (31%). The most significantly reported shift (41%) of respondents, is moving support functions to shared services.
Outsourcing operations to low-cost locations is the least cited, at 16% of respondents, while outsourcing part of the business model and increasing regional control come in at 20% apiece.
Businesses face the need to up their pay to access a dwindling pool of talent, however. Many employees continue to see fair and competitive pay as their primary concern. Employees have, in recent years, seen stagnating or even declining real-wage growth, as bargaining power decreased for low-level workers while management pay, particularly for the executive, remained largely unaffected – which, for instance, prompted the UK governments to introduce disclosure policies pay levels.
Given the higher-rewards higher up in an organisation, workers continue to eye promotion, and are on the lookout for leaders who provide them with clear direction. More flexible work options and career path information take seventh and sixth position respectively.
In terms of what is found to make for a unique and compelling Employee Value Proposition (EVP), considerable differences are noted between different groups. The executives strongly believe that culture (50%) and brand recognition (40%) are strongly correlated, while pay/reward (14%) and benefits (10%) are of less interest. Employees, meanwhile, cited pay/reward (33%) and benefits (30%) as the most impactful factors, with culture and brand recognition at 22% and 13% respectively. HR is more in line with employee perspectives, at 38% pay/reward and 33% benefits.
