Unless you’ve been living under a rock for 6 months, you’re probably aware that there is a lot of doom and gloom in the world right now. You only need to watch the news for ten minutes to hear about soaring fuel prices, astronomical energy tariffs, public sector strikes and on top of all that there is speculation of a recession on the horizon.
As a Recruitment company we have seen first-hand the peaks and troughs of the employment market over the last couple of years. The pandemic forced people to reconsider their work/life balance which led to candidates leaving their roles in droves and coining the term ‘The Great Resignation’. On the back of this we saw a huge surge in the number of vacancies and the market was thriving. However, the UK is now witnessing an economic downturn and there is understandably a lot of uncertainty as to how this will affect the job market. We’ve already begun to see candidates withdrawing from roles due to their concerns about the recession.
In this article we look to offer our advice around the topics of salary, flexibility, and benefits to help you navigate the potential challenges created by a recession. Although we can’t predict the impact it will have, we can advise businesses on what to be aware of and the changes you may need to make to ensure your company’s recruitment process is recession proof.
‘The Great Resignation’ naturally generated a huge quantity of vacancies, so much so that vacancy numbers were greater than the UK’s unemployment rate earlier this year. Candidates had more choice than ever before, but this created a competitive market where employers were forced to over-inflate salaries in a bid to outcompete other businesses. This is not a tactic we necessarily agree with as it tends to create a false economy and can create more problems later down the line.
Unfortunately, in today’s market there is no let-up in terms of salary. Impacts such as the cost-of-living crisis is continuing to drive salaries up and candidates expect a lot more in today’s market and are fighting hard for competitive offers. On average candidates will only consider a move for a circa 7% uplift in salary, compared to roughly 3% pre-pandemic. This demonstrates the power that candidates have and the need for businesses to really understand their candidates’ financial needs from the get-go.
A common and ill-advised trend we’ve seen recently is ‘low balling’ initial offers from hiring managers. For example, if the employer knows a candidate wants £50k, they put an offer in at £48k to see if they will accept. This can be a dangerous game to play, particularly if you are set on offering to that candidate. They are likely to negotiate you back up to the £50k and this creates an element of mistrust between the candidate and yourselves from the beginning.
In this current market it’s so important to offer the candidate what they’ve asked for, obviously within reason, but whatever you do, don’t make it a negotiation. You either risk losing the candidate or risk creating a bad relationship between employer and employee from the outset. The best way to tackle this is to ensure that you’re talking about salary early in the process and getting to know your candidate. The cost-of-living crisis will be affecting people differently, so you need to understand why they’re moving and what remuneration they need from their next role to ascertain the salary you need to accommodate. Addressing finances at the outset will help you to identify whether they’re a good fit for the role and can save you and your candidate time and effort if their salary aspirations don’t match yours.
Gone are the days when 20 days annual leave plus bank holidays was competitive as a benefits package. Candidates today are looking for companies who can deliver in areas such as diversity, wellbeing, and sustainability. In a recent survey we conducted we found that over 67% of candidates prioritise lifestyle factors such as flexibility and wellbeing over monetary benefits. Our advice to clients is to get a good understanding of your entire package, this includes salary but is certainly not limited to. Look at competitors and speak with your consultant at Four to get a better idea of what is sought after in your industry.
If a recession does hit the UK it’s likely to create a shift in the employment market, particularly in regards to remuneration packages and what candidates are demanding from employers. Benefits linked to travel, health and pension are likely to be more sought after and we would suggest prioritising these areas if you decide to re-vamp your offering.
List of recession proof benefits:
Again, this is an important area to discuss with a candidate early in the process in order to understand the benefits they have had with their previous company. We would also suggest that you better their previous package or at least equal it – consider the motivations for someone making a career move and what impact that has on their lifestyle, home life and ongoing prospects.
With the pandemic came the home working revolution and there was a seismic transition of people vacating the office and opting for a desk at home instead. This brought about a ‘new normal’ and employers were expected to continue with this trend, even after covid had subsided. we had candidates regularly turning down roles that weren’t offering home or at least flexible working and since then we’ve seen several companies opt for a fully remote model with zero office space.
However, with the rising cost of energy bills it seems like the office environment might not be so bad after all. Some reports are suggesting that the average home worker will be using 25% more electricity and 75% more gas per day during the winter months and with the average energy bill increasing by £693 per month this is bound to add up.
It’s also not uncommon for businesses to make cuts during a crisis and one of the biggest savings to be made is on salaries. The looming recession in the UK seems to be encouraging employees back to the office in a bid to save their jobs. It’s likely that the buoyant employment market that we’ve seen over recent years will start to change direction and we will start to see a decline in the number of vacancies.
Considering all this we continue to advise our clients to prioritise flexible arrangements in their workforce wherever possible. Flexibility is still very much a priority for candidates and not offering this is likely to put you at a disadvantage in the bid for talent. In a recent study we conducted we found that 75% of senior finance vacancies were offering hybrid working, yet 64% of business support vacancies require full-time office work. It’s clear to see that there is still a divide in the extent of flexibility that certain business areas can offer but candidates are still very much looking for this in their job search.
We encourage our clients to continually review their offering of flexible working, particularly in this competitive market and the challenging times that we're all experiencing. This type of benefit will help you to stand out in a crowded market and allow you to attract a wider talent pool.
In conclusion there has been a significant amount of change in the last couple of years and the pandemic and other events have accelerated our move toward a transformed business model. One that embraces flexible working practices, puts employees first and encourages a purpose-driven outlook. Although there is still much uncertainty around the economy and how it will impact businesses and employment, now is the time to reassess your offering and processes to make improvements that are recession-proof. If you’re not willing to adapt and change then you may struggle to recruit and retain into the future.
Here at Four Recruitment we’re not only your recruiter but also your trusted business partner, providing valuable insight and knowledge into the employment market. You can rely on us to find top talent for your business across HR, finance, business support, supply chain and at executive level. To learn more about how we can help you, get in touch with one of our friendly consultants.