Change and Opportunities: Building Back Growth in 2022
by Steve Preston
As well as the very real human suffering over the past two years, I’m sure we would all agree that the Covid-19 pandemic has created huge chaos and uncertainty. Yet, for all that uncertainty, there are now green shoots emerging across businesses.
When considering the impact of the coronavirus pandemic on business and hiring, it’s important to remember that before the pandemic hit, companies were not necessarily in a bad place. In fact, many were already planning on growing their businesses, and we are now back in the position where we need to push forward. Because of this, we have seen many companies adopt somewhat of a catch-up mentality in their approach to recruitment.
But as well as changes to approaching recruitment, there have also been important changes to how we work and the lessons we’ve learned from the pandemic. Most notably, the widespread adoption of hybrid working, along with the use of online tools and apps for meetings and remote conferencing. Both of these changes have generally been seen as beneficial for everyone, as many of us are grateful for no longer having to travel two hours on a train in order to attend a meeting that is only an hour long.
That said, remote working has its downsides too: a common theme emerging which companies have been highlighting to us is a growing training and skills shortage. These days, when we speak to a company, they are far more likely to be looking to hire rather than not; this is largely the result of the period of approximately 8 months where ‘in office’ training has been impossible. I call it the ‘osmosis learning mentality’, where people sit amongst more experienced or senior colleagues and learn through watching and listening and often subliminally adopt their working practices and in-house procedures. We have noticed a void of this type of adaptive training and skill sets as a result of this missed time in the office environment that we believe will unfold over the next year or so. Identifying shortages in adaptive training is key for companies, and those who are working to avoid a growing skills gap should be looking to implement corrective moves quickly.
Impact on staffing costs, salaries, and a developing skills shortage
Across all of our sectors we have noted a shortage of candidates to fill vacant positions. Consequently, candidates have more options open to them than ever before, with many receiving two or three offers after going through the interview process. Equally, we are seeing companies making counteroffers far more regularly to secure top talent. This may seem surprising, but it is not only due to the cost of the recruitment fees involved, but often because companies are aware that there is a down-the-line impact of not hiring- and therefore not filling- those vacancies. For example, if a business doesn’t succeed in getting its service to the level that is required it might result in the loss of custom or customers; or it might be that they simply haven’t got the time that would be needed to train somebody up into the role internally without it having an impact on sales or services.
We have found that companies are both pragmatic and resigned to the need to incur the costs of salary increases, whether for new talent joining the business or in order to retain existing staff, some of whom may not have received a pay rise for a few years. In fact, we have seen marked salary increases across the board, although it should be said that many salaries had been static for some time and it was inevitable that these would move upwards, with companies having to absorb the additional costs.
We believe that companies having to address salary differentials should be viewed positively, and reports such as this one create transparency and provide benchmark indicators that everyone can apply to create a level playing field. Employers need to have a clear understanding of what’s happening in the market, and they need to compare what they are offering against others to understand whether they are being realistic. Salary surveys provide a useful indicator, although we need to remain mindful that they are not set in stone and that different companies offer different benefits packages. So yes, we must look at all the different elements, but salaries must fall within a range of what’s being offered elsewhere. Those firms offering lower salaries are unlikely to be able to attract or retain the best talent.
Importance of training and development
There has been a lot of press this year on the government’s priorities and funding into R&D in industry and universities, especially around the STEM subjects and innovations. Some might ask how long this will take to make an impact in the industries that we serve or even if it might be too little, too late. My view is that all funding and investment that happens at university level or through R&D is great, but this additional investment will take many years to have an impact across all of our sectors.
If we look at the here and now, we do know that we have a shortfall in overall levels of training and development and uptake of CPD. But we also need to recognise the pressure that companies have been under trying to maintain everything while running furlough schemes and with staff and teams mostly working in isolation. If we take the legal sector, for example, the pandemic has meant that training contracts haven’t been offered out at the same level as they were previously. This is significant, as these contracts are an entry point for graduates leaving university, and these individuals would be on a training contract for a couple of years as they gain the professional skills required.
Given the disjointed nature of many working practices it is up to all companies to constantly consider their training offerings and review how these can be delivered within the parameters of the new hybrid working environment. Most training and development can be done online now, and the best companies will find innovative ways to continue to train their people to bring them up to the best level that they can be. At Heat, we invest heavily in our training. We have our own L&D Director, we use LinkedIn Learning, and we’ve got a continued rising star programme, along with continuation training. Whilst money from the government is always welcome, companies have a duty of care to make sure that they are investing in their own staff and the staff of the future to ensure we do not end up with a complete skills shortage.
Importance of social responsibility, diversity, and inclusion
An important step change we have noticed is the interest candidates are showing in advance of interviews in the culture of a company and what it stands for. Individuals are far more open now about their wish to be part of a company that has good corporate social responsibility in place. They look at what they are doing regarding giving back locally, for example supporting a local community or taking part in local charity work.
This has become fundamental, and we are seeing an increasing emphasis on it. People want to know that they are working for a good employer, not just someone who is paying them well. Along with this, they want to know that companies are tackling important issues like gender imbalance, diversity and inclusion. There is now a much greater level of awareness and, speaking as an employer myself, we have been reviewing all our maternity and paternity cover and related pay so that it’s increasingly competitive within the marketplace.
It is crucial for companies to be clear about such benefits at the outset, as this allows individuals to consider their options and means that those looking to build a meaningful career path can see their progression much more clearly. They know that they can conduct their life without having to sacrifice a job or feel any pressure when they become parents and want to have a family life. Hybrid working, or as we call it ‘work from anywhere’, has been very effective and for many companies it has become a natural extension of existing working practices. It does, however, bring with it a completely different style of management. We’re having to adapt to new ways of conducting ourselves in meetings, perhaps with five people in the same room and five others online. It’s an evolution, albeit a rapid one, but it’s something that’s here to stay.
People are also enjoying the flexibility that hybrid working allows, in many respects giving them more control of their outputs and more importantly their working life. While we don’t yet have the statistical analysis to support a resulting increase in productivity, the feedback that we receive is that they are more effective and focused when they are in their own work zone. Obviously employers need to make sure that staff are set up correctly and have access to software and the right technology but if that’s done properly it impacts in a positive way; let’s be clear that flexibility promotes genuine loyalty amongst employees.
Longer term impact post-Brexit, post-IR35 and post-pandemic
Another knock-on effect is levels of job security, and statistically we are seeing incredibly high rates of employment now. There is some notable sector rotation too, which is likely to have been caused by the Brexit factor and we have noted a transition between countries. In some cases, we have seen people move back to the continent, especially in digital and tech, and we’ve found that we are often working with companies in the EU such as Poland and Belgium, because that’s where the talent is now. As far as job security is concerned, I believe it is fair to say that if you have a strong skillset in your industry, and your outputs are delivered as expected, your job is secure.
If we look at patterns and trends emerging across all of our sectors in the longer term it’s clear we will continue to see rises in salaries. The transition of people into Europe has inevitably meant that companies are accepting more contractors working in Europe, and there has been a gradual settling down while everyone adapted to this. We are fortunate that we have the in-house expertise to advise individuals and companies on IR35 matters and we help ensure that they are compliant and that everything has been assessed correctly.
As we look forward to the coming year it is clear that hybrid and fully remote working means that geography or location is no longer likely to impede applications for positions. Here at Heat we have consultants based all over the UK and in various European Countries, as advances in technology and our processes mean there is no necessity for them to physically be in the office.
We have seen more growth within the private sector than the public sector, with the private sector continuing to increase at a quicker rate. One major concern to highlight is that if you have people working predominantly from home, companies need to work hard to ensure that all employees have an association to the business they are working for. They need to understand how to create loyalty and engage people even if they’re not attending an office 9 to 5.
Change and opportunities: building back economic growth
Despite all that has happened over the last few years there are lots of positive signs emerging that we should consider as we look forward to 2022. Despite the summer of 2021 being termed ‘the summer of resignations’ by various press and ONS reports, we are now looking at the highest job count that we’ve had for business since the 1970s. A multitude of companies are looking for talent and there are a huge number of opportunities. We are also seeing obvious growth areas, a good example of which is in cyber security and cyber insurance. Cyber security is classed as Digital and Tech, but cyber insurance is a key product in the Insurance market which is rapidly becoming a must-have in business. Another good example is the Financial Services industry, which is now widely recognised as one of the most innovative sectors and is adept at reinventing itself to deal with whatever challenges it faces, whether that be legislative or regulatory.
We are always looking to the future and helping with the priorities of people wanting to push their businesses forward, and that includes the increasing use of artificial intelligence, robotics and machine learning. This can be slightly daunting, but we need to remember that this offers opportunities for those that want to get on board and upskill into these fields because there will always be a need for human intervention behind it. At the moment, many firms are still trying to backfill roles where they had genuine gaps prior to the pandemic, and improvements in technology offer scope to fill these in a wider geographical sense. As I’ve highlighted throughout this, it is crucial for growth to focus on training and retraining, upskilling and providing new development opportunities. Unlike my parents’ time, the days of people staying in a job for 30 years are rare and if you want to recruit or retain excellent staff, then you must invest in them.
A question that remains to consider is how far salaries will continue to rise and what impact that will have more generally. Will it eliminate certain companies from being able to bid for a certain person? If we reach a point where some cannot attract top talent will they need to consider not just competitive salaries but a working environment that offers more of a ‘lifestyle’ option to attract and retain a new workforce? All of this remains to be seen.
Using benchmark indicators through a transparent salary survey
It is worth reflecting on why Heat Recruitment is producing this Salary Survey Report and more importantly who should be reading it. Heat has been in business for 16 years now, and our production of salary surveys has evolved over time thanks to the data that we have gathered and the software systems we have in-house.
We have designed this report to add value for clients, candidates and hiring managers alike. If you work within one of our specialist sectors, you should read this report because it will give you the hard facts you need. For candidates looking for a new role, our survey will help you work out what your current market value is. For both customers and clients, this report will provide you with all of the data and insights you need to help you make informed decisions around salary levels.
We hope you enjoy the report and wish you every success in 2022.