Winning the war for talent
01 March 2019
This article was featured in the March 2019 issue of the magazine.
Jerome Smail, freelance journalist, reveals the ways to recruit and retain talented employees as demand for increases
Organisations depend on talent. It is their lifeblood. Regardless of business plan, strategy, market proposition or investment, if a company lacks the right people to put it all into practice, it will be doomed to failure.
So, every company is faced with a dual challenge – not only to find the best talent available but to retain it too. And if that wasn’t hard enough, every business worth its salt in the same arena is trying to do the same thing.
What’s more, other factors are making those challenges harder. According to last November’s quarterly Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD) and The Adecco Group, based on a survey of 1,002 organisations, employer plans to take on more staff are being hit by worsening skills and labour shortages. According to the study, this is partly as a result of a sudden reversal in the growth in the number of both EU and non-EU migrants in employment in the UK.
Alex Fleming, country head and president of staffing and solutions for The Adecco Group UK and Ireland, sums up the situation: “The labour market in the UK is tight and this research is reporting increasingly high levels of recruitment and retention difficulties. While the data is not showing wages rising across the board, we are regularly seeing this pressure being exerted in the recruitment space.
“Our clients are often surprised at the market rates when they are making talent-attraction decisions. This ‘supply shock’ and other pressures will only serve to increase these difficulties, which could easily flow out into the rest of the workforce. In turn, this could cause a wider upward movement on wages.”
Gerwyn Davies, senior labour market analyst for the CIPD, says: “It’s vital that businesses understand the workforce challenges they face, and make the relevant investment in skills and adopt the right people management practices to boost productivity in their organisation.”
It’s fair to say many businesses are aware of the task they face. According to a survey of human resources (HR) managers by best-practice organisation AXELOS in August 2018, recruiting and retaining talent is the biggest challenge for business right now. But the same study showed that the stakes are high: getting the hiring process wrong now costs organisations an average of £16,843 in each case.
So, it seems an increasingly small pool of the right candidates is the battleground. How can employers win the war for talent?
Just because there is a skills shortage across the board doesn’t mean you should lower your expectations. Richard Bradley, managing director UK and Ireland of staffing business Kelly says: “It can be really tough to attract the talent you need. But that should never mean you choose the best of the worst. It will only cause a bigger headache down the line. If you’re struggling to fill a key role, take a step back. Think about how you could reorganise your search. Or reach out to talent partners and suppliers to help you cast your net a little further.”
Many recruiters will assume money is the decisive factor. Obviously, offering a competitive salary is essential. And in terms of added extras, the power of pound sterling cannot be completely discounted. According to a survey of 1,096 UK employees carried out by incentives provider One4allRewards, HR bosses who give out bonuses are less likely to see staff being poached or looking elsewhere. Some 58% of workers in the sector said having received a bonus or gift from their boss recently would prevent them from looking for a new job.
...money alone is not the silver bullet that many employers believe it to be
However, money alone is not the silver bullet that many employers believe it to be.
Fleming says: “Employers should be aware that wages are not the only answer – as for in-demand employees, marginal salary gains may not be what they most desire. We’ve seen wider benefits packages, which include flexible working and a good culture often win over a simple increase in salary.”
Adding weight to this view, having the chance to develop and ‘put my talents to good use’ was among the top five things that employees in the UK value most in life in a study by personal development and soft skills e-learning organisation GoodHabitz. “Life is a learning adventure and talented people love learning” says Stephen Humphreys, country director, UK & Ireland at GoodHabitz. He adds: “Given that the UK’s workforce is one of the most highly educated in Europe, it’s not surprising that people place such a premium on being given the chance to develop themselves over money,”
The chance of career progression is also a key factor, especially among the graduate workforce looking to put learning and hard work at university into practice. Chris Parnham, managing director at Absolute Corporate Events, says: “Creating a culture of training and opportunity has, in my experience, encouraged our young hires to stay. Young people are not ignorant to the fact that they need training. University certainly develops social skills and perhaps even public speaking, but the academic subject matter learnt is rarely applicable to the demands of their ‘adult job’.
“Therefore, having a clearly defined and invigorated training and promotion scheme can be a valuable asset to employers of young people. Exercise training to develop your staff, offer promotions to incentivise this training and sustain the access to further promotions as a form of intrinsic motivation.”
Reaffirming that money is not the be-all and end-all, Parnham adds: “Promotions don’t have to be based on an increased salary either. Far too often this is seen as the only means of keeping young people.”
Regardless of the opportunities of a certain role, Bradley emphasises the importance of setting realistic expectations among candidates. “It’s easy to ‘sell’ the best parts of a job during the recruitment process and overlook the reality and challenges of a role,” he says, adding that “Any candidate needs to have a clear understanding of what a new role entails and the expectations that will be placed on them before they make a decision. There is nothing more disappointing than walking in on your first day to find a job that bears little resemblance to the role you expected. It can see highly skilled talent disappear, fast.”
The onboarding process is also key to retaining talent once it’s been identified and hired. Bradley says: “You have found an amazing candidate, someone who has the skills and values to be a great asset to your business. And they have accepted your offer. Make sure you don’t pat yourself on the back at this point and walk away.
“To retain talent in the long-term you need to create a clear and welcoming onboarding process that helps new starters feel like part of the team. Never throw a new hire into the fray without support and guidance. It can leave them isolated and highly susceptible to looking elsewhere.”
Rewarding workers and showing your appreciation for their endeavours is also essential to retaining talent. Robert Ordever, managing director of workplace culture organisation OC Tanner Europe, says: “By recognising staff for ongoing effort, rewarding their results and celebrating their careers in ways that are genuine and meaningful are vital for creating happy and engaging working environments.”
While a competitive benefits package is instrumental when it comes to making workers feel valued, the landscape is changing. Hazel Leighfield, head of solutions for technology consultancy Sopra Steria, explains: “A short time ago there was a real trend towards ‘novelty perks’ such as office slides and pool tables, but there’s now widespread realisation that, in order to engage workers long-term, employers must offer an environment that nurtures wellbeing and recognises capability.”
Employee engagement is key. Workers should feel as though they are true stakeholders in the business. To this end, it is conducive to link their performance and reward directly with the success of the organisation. An effective method for this is the introduction of share schemes (see case study).
The organisation’s culture and ethics are also significant factors in breeding employee engagement and retaining talent. “Employees need to know that the organisation has a clear and meaningful purpose that resonates with staff and is clearly communicated, says Ordever.
Alexander Zeitelhack, associate dean at Berlin School of Business and Innovation at (BSBI), believes all companies should publish their mission and vision, and even have an ethics committee. He says: “The changing environment will demand companies let go of their ethos-driven old-world management style and develop ethical thinking at the core of the employee base. This means there has to be an open dialogue of all stakeholders.” If this can be achieved, Zeitelhack concludes that “your future employees will come towards you”.
...culture and ethics are also significant factors in breeding employee engagement and retaining talent...
Case study – retaining employees through share ownership
Employee share ownership has been a key feature of employee benefits company Reward Gateway since 2008, when the first employee share plan was launched. Since that date, 5% of the company’s share value has been held among employees.
The first plan was the vision of Helen Craik, the company’s founding HR director.
Rob Hicks, Reward Gateway’s group HR director, says: “Helen believed that for us to be successful, we needed every single member of staff to be connected to the company’s performance. Share ownership is a core foundation of our employee engagement strategy at Reward Gateway.”
From 2008 to 2010, the Season One employee share scheme ran until the company was acquired by Inflexion Private Equity, which bought a majority share in Reward Gateway for £25 million. At that point, around ninety staff members owned five per cent of the business between them and shared just over £1,000,000.
For those who had just joined the business and fell outside of the bi-annual share allocation, Reward Gateway ensured they received a bonus, calculated on how many quarters they had been with the company.
“We needed to make sure everyone felt a part of the success that came with the acquisition,” says Hicks.
The second employee shares scheme followed, from 2011 to 2015, and again held five per cent of the company’s value. As with the previous scheme, all staff were in the scheme with different levels of shares depending on seniority and responsibility. Additional shares were allocated depending on performance and the individual’s contribution to the business.
“The importance of this cannot be understated,” says Hicks, “as while we firmly believe that all employees should be a part of the share scheme, there has to be an incentive for employees that go above and beyond. We delivered a very successful investment for Inflexion and achieved nearly three times our target.”
The Season Two share programme ended in 2015 when Reward Gateway was acquired by Great Hill Partners on an equity valuation of £140m.
Some 269 employees, below board level, were members of the programme on that date and they shared between them £6,500,000. Employees were eligible whether they were based in the UK, Australia, USA or Bulgaria. Reward Gateway staff in Macedonia, who cannot legally be members of the programme, instead benefited from a bonus equal to the amount they would have received from the share programme had they been in it.
“The third employees share scheme is the one we’re in right now, and naturally we’ve made a few improvements to it based on what we’ve learned since 2008,” says Hicks. “One of these improvements is the vesting of shares. Shares are vested (or earned) over a period of four years following the date of the share award.
“This is important because if an employee leaves Reward Gateway before an exit event, they get to keep shares that have vested as of the date they leave. We want to reward our employees for the contribution they’ve made to the business, and also make sure that the people in the business are here for the right reasons, and not because they’re waiting for a share pay-out.”
Hicks summaries: “When integrated with wider reward and recognition programmes, a share scheme can be a powerful tool in building employee stakeholders, and we’d strongly recommend it to others.”