Talent recruitment and retention: How the cost-of-living is influencing candidates
This insights article looks at whether candidates are expecting more from employers due to rising economic costs and what employers can do to solve this issue
It’s no secret that times are tight for both businesses and candidates alike. The cost-of-living crisis has impacted public and private finances across almost every major Western economy, with inflation in the UK rising by 7.9% in the 12 months to June 2023. Food prices have seen perhaps the largest rise, however, across the board costs have increased and homeowners and renters have seen major spikes in the amounts they pay for their homes. While announcements in recent weeks suggest the rises are slowing down, the impact is still being felt.
Understandably, to meet the demands of these challenging conditions, professionals are seeking better pay rates from their employers. However, for all but the wealthiest of businesses this isn’t a viable option, leaving many struggling to attract and retain the talent they need to thrive. But what can be done to tackle this ongoing cycle and ensure that talent recruitment and retention isn’t negatively impacted?
The cost-of-living hikes have been a particularly severe issue in major cities that, until recently, have been a popular destination for employees. Property prices have been steep in London, for example, for some time, but in recent months a growing number of professionals have been forced to move further away from the capital purely because of rising rental costs. And with commuting prices also increasing, the impact on recruitment in the city has certainly been noticeable.
However, this isn’t just a UK issue. In Seattle, Washington, firms that have historically capitalised on the desire to work in the city are finding that professionals can’t afford to live or commute to the destination. The cost of living in the city is now a whopping 52.8% higher than the national average for the US and it’s not only housing driving the rises. Average prices for food and basic purchases like haircuts, dry-cleaning, fuel, and more are continuing to increase and, combined, this is leading to firms struggling to recruit the professionals they need, particularly at the younger end of the age demographics. Other previously attractive cities, like Los Angeles and New York, have also seen problems, and organisations based here have reported growing hiring difficulties as a result of their employees’ ability to set down roots, secure homes and forward plan effectively due to rising costs.
Skills short market
This would be a challenging enough situation for employers in a steady, healthy talent market – however, in the current skills short climate, it’s a particularly problematic one. Firms – particularly in certain countries like the UK – are facing increased competition for talent, and financial incentives are becoming a greater motivator for job moves.
As stated earlier, few firms can realistically afford to increase pay across the board, at least not to the extent that many workers are seeking, as they too are suffering from rising property and energy bills. However, salary isn’t the be-all and end-all for candidates. Firms can be creative in order to secure talent and research has shown that for many individuals, particularly younger generations, other factors can attract them to a role and encourage them to stay.
Talent recruitment and retention methods
Flexible and hybrid working opportunities are one key factor that many employers are leveraging in their favour. In fact, according to the Returning for Good study led by global workplace creation experts, Unispace, more than half of professionals are reluctant to work from the office and it’s clear from delving in the data that this is a long-term shift in preferred ways of working. Offering people the chance to work from home on a least a part-time basis can go a long way to encouraging them to join and stay with an organisation. Mandating returns to the office will only serve to further exacerbate talent attraction and retention difficulties. In fact, the study revealed that almost half of firms that forced their staff to return to the office have experienced higher than normal levels of employee attrition.
Equally, providing clear signs that career progression is possible at your organisation can go a long way to tackle hiring woes. Nobody wants to join a firm that doesn’t allow staff to develop and progress, and showcasing role models or case studies of employees who have risen through the ranks and, then highlighting that this is a realistic option for those joining them may negate the impact of rising costs.
There’s no single measure that will enable firms to tackle the issue of rising costs. However, highlighting your firm’s ability to provide what candidates are looking for in a modern role, namely progression and the potential for flexible working opportunities, will offset at least some of the demands for overly-inflated salaries.
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