The findings of a business report from the University of Strathclyde’s Fraser of Allander Institute (FOA) recently revealed the impact of the crisis may be further reaching than initially feared, with employee shortages continuing to hold back Scotland’s businesses.
The FOA’s latest Scottish Business Monitor report revealed that 80 per cent of Scottish firms are struggling to recruit new team members, and about 25 per cent are finding it difficult to retain existing employees.
The report, which is based on the responses of 400 Scottish businesses, covers Q4 of 2021 and examines leaders’ expectations for the coming months. While business outlook is generally positive as pandemic restrictions are eased, recruitment and retention remains a challenge to growth.
However, many businesses continue to use ineffective ‘quick fix’ recruitment strategies which are often reliant on simply offering more money to qualified candidates. I see this all the time, particularly in sectors such as science and technology.
They may be effective at getting somebody in the door, but it won’t always retain them for long.
Some businesses are engaged in a labour market price war. To be able to compete and attract workers, these businesses are offering increasingly higher salaries almost as though they are at an auction bidding on an expensive piece of artwork.
This price war may be unavoidable for some, but it is a short-term fix and will not solve ongoing recruitment problems and crucially, employee retention. Many businesses simply cannot afford to keep offering more money, especially in light of other rising costs.
With so much short-term focus on salary, workers are easily tempted by opportunities elsewhere that continue to offer more. Sometimes highly skilled team members are leaving senior positions after just six months because they’ve been offered more money by a competitor, or other benefits such as flexible or hybrid working arrangements, greater holiday allowances, and higher pension contributions.
While this would seem to indicate that negotiating power is firmly within the worker’s court – which isn’t necessarily a bad thing – it also shows that employers are focusing on short-term benefits rather than a more strategic evaluation of their culture and People Plan.
It is always better to secure the right person, but you really need someone who will commit and grow with you. Employees need reasons to stay as well as reasons to start – and that is the crux of the issue.
Longer term recruitment, development and succession planning is unfortunately far too often overlooked. Focusing on developing ‘home-grown’ talent – by which I mean team members you have trained, nurtured and promoted – is likely to be a better long-term solution as it will encourage employees to remain with a business if they feel they can develop their skills, gain promotions and progress their careers.
As an example, there are so many businesses who undervalue their apprentices and entry-level employees. Good leaders, at all levels, need to be able to spot natural talent and interest, cultivate personal development and encourage their team to go for promotions and take on more responsibility.
The takeaway here is that by hyper-focusing on the immediate recruitment challenges companies are under developing their internal work culture, leadership potential and existing talent pool.
This way of working is not sustainable and won’t help your business overcome recruitment challenges in the long term. I would argue you probably need to invest in both strategies at this time.
Unfortunately, we don’t foresee recruitment getting any easier for Scottish businesses in the near future.
With an ageing workforce, fewer economically active people, and ever-improving technology we need to invest in our workforce of today for tomorrow. Here are six simple steps to get you started:
1. Invest time in strategic workforce planning and align your recruitment activity accordingly
2. Explore ways to attract diversity and create entry-level opportunities that offer alternative progression routes
3. Evaluate the employee experience and make some improvement based on team feedback
4. Remunerate your existing teams appropriately for their work alongside non-monetary gestures to recognise and reward them
5. Put career development opportunities at the forefront and make sure that your people have access to fulfilling work
6. Instead of viewing recruitment as the process of identifying the ‘right individual’, reframe recruitment around building a team of people that complement each other and will makes them feel valued and respected
It is worth remembering that some degree of staff movement is healthy. Whilst losing a valued team member can be tough in the short-term, if your culture is strong then former employees will often be your brand’s greatest ambassadors.
Finally, don’t forget the all-important exit interview – they offer a great opportunity to review the organisational structure and existing ways of doing things.
Colin Lamb, founder of Connect Three