Unemployment is climbing. What does this mean for recruitment and retention, and how should Human Resources professionals react? Steve Herbert, Head of Benefits Strategy at Howden Employee Benefits & Wellbeing, considers the options.
We are not quite half-way through 2020, and already it’s been a hell of a year for us all.
At the time of writing it feels like the worst of the coronavirus pandemic may be behind us, and it’s time for employers to take a long hard look at the aftermath of the crisis, and what happens next. In this article I want to focus on how the lockdown period has impacted employment, and what this might mean for the recruitment and retention plans of employers across the nation.
Then & Now
In February 2020 the Office for National Statistics (ONS) indicated that the UK employment rate stood at a record high of 76.5%, and correspondingly the unemployment rate was just 3.8%. Understandably there was much positive messaging from the government about this good news at the time.
Yet just a few months later and the above statics are effectively meaningless. In May it was reported that unemployment had climbed by around 70%. That too was a record figure, but not one that anyone is likely to be promoting. And the truth is that the unemployment rate could already have been very much worse had the government not rapidly introduced the concept of “Furlough” alongside the Coronavirus Job Retention Scheme (CJRS). These key measures provided employers with a valuable breathing-space to make some considered decisions re staffing levels.
Yet now that the Chancellor has announced the timetable for withdrawing CJRS, many employers will finally have to face financial reality. It’s almost certain that at least some will find that they can no longer afford to sustain their pre-crisis employment levels. Sadly some further redundancies and even business closures appear inevitable, and we can all only speculate on what the final economic and employment costs to the nation will be.
Such a marked change in fortunes in such a short a period of time is difficult for any of us to accept. Yet life – and business – goes on for most organisations. And with lockdown now easing, now is the time for Human Resources professionals to consider what this will all mean for their employer’s recruitment plans in the months and years immediately ahead.
Supply & Demand
Of course such a rapid expansion of the available talent-pool has the potential to dramatically change the dynamics of recruitment and retention* in the UK. This is because the law of supply and demand applies as much to the commodity of workforce as any other commercial transaction.
Or does it?
Whilst it’s undeniable that a larger talent-pool will move the balance of negotiation in the employer’s favour, it should be remembered that effective recruitment is so much more than a numbers game alone.
Of course the employer still needs to employ the right people at the right price for their business to operate effectively and profitably. But that is meaningless without the goodwill, engagement, and maximum productivity of each and every new hire too. These are essential ingredients to any successful business, and never more so than in the uncertainty of post-lockdown Britain.
And then there are other fiscal, time, and business costs to be considered. For a new employee this can include costs of interviews, job offers, referencing, and training requirements. Employers should also accept that there is often a significant time-lag until a new employee achieves optimum productivity. How long that takes will vary in every case, but research undertaken by Oxford Economics in 2014 suggests that it can take up to a year for full productivity to be achieved in some cases.
It’s also worth remembering that existing employees are rarely disposable either – even if they could now potentially be replaced with lower-cost new recruits. In the case of a departing employee factors to be considered include the loss of professional contacts, inherent experience, and damage to the morale of other workers too.
So whilst the advantages of an increased talent supply may help employers, it still needs to be used with both caution and discretion to achieve the right outcome for both the business and its workforce.
Finally, and not least, it would be remiss of me not to mention the role Employee Benefits can play here.
Most such benefits are only a relatively minor cost consideration for the sponsoring employer, yet if well promoted they can and do play a vital role in the recruitment and retention process. And given the understandable national nervousness on health issues right now, it’s likely that both existing employees and potential recruits will really welcome the support and reassurance represented by important benefits such as Group Income Protection, Private Medical Insurance, and of course Group Life Assurance.
It’s also worth reminding HR professionals that many Employee Benefits are also designed to help the employer achieve other business objectives too. The employer’s Return on Investment (ROI) might be fiscal, practical, or moral (and often all three). Any or all of these are likely to be extremely welcome in the months and years immediately ahead.
Can NOT Should
In conclusion I would say just this.
The significant changes in the availability of talent provide some welcome latitude for employers as they seek to navigate their way through the post-COVID-19 business landscape.
But the attraction of a greater number of potentially lower-cost workers shouldn’t in itself change the candidate qualities that your organisation is ideally looking for. Employing the right people for the right reasons – and maintaining the goodwill of both new and existing workers – is still key-critical for any organisation which wants to continue to offer a quality service, retain existing clients, and attract new ones.
The bottom line is that getting the recruitment and retention mix right may never have been more important for employers.
Steve Herbert is Head of Benefits Strategy at Howden Employee Benefits & Wellbeing
*For the latest UK Jobs Outlook please see this research from The Recruitment & Employment Confederation (REC)