Businesses must have a pay strategy in place if they are to successfully compete for candidates

We are seeing one of the most extensive periods of employee turnover, caused by numerous interruptions that all seem to have come at once. Emerging, as we have, from a pandemic and the current economic instability, an ever-increasing cost of living and the war in Ukraine are major factors. The once-required swing to hybrid, or working from home, has remained with us, seeing office location no longer being a barrier, and workers accepting the resultant large reduction in the social aspect of work.

One of the most obvious consequences sees businesses now competing to entice, and subsequently keep, the best talent for their needs. While job postings may have increased by almost two-thirds this year, some one-third of job candidates can be considering up to three choices from competing businesses looking to employ them.  

This is all well and good for those businesses with the financial stability to make competitive candidate offers. Smaller businesses that have been affected by the downturn simply cannot compete financially to attract the talent they need.

So, how does the smaller employer with strict hiring budgets compete?

Time can be a key factor

The days of employers treating their employees as a time-tracked business resource have gone. COVID-19 taught us, in particular, the value of a quality work-life balance had a pronounced positive effect on productivity, work quality, and even worker morale. So much so, that a good work-life balance has become such a major aspect of employment that it can no longer be ignored.

Therefore, time has now become a prized, two-way employment commodity. Finding new ways of freeing up employee time can be a way of attracting new talent. Trials of four-day weeks and reducing working hours have proven successful. However, innovation has to go further than that – initiatives such as a pay reduction with a proportional reduction in hours or a predetermined workload to enable employees to manage their time effectively are just two work practices gaining traction.

Incentivising staff

Time is just one element. Businesses also need to find other innovative ways to recognise and reward staff that goes beyond the pay increase, while at the same time maintaining the vital business bottom line.

Yes, a financial reward is naturally the employee's premier, feel-good factor. An on-the-spot bonus, perhaps related to the completion of a particular business initiative, will always be welcome, and can certainly be less impactful on the business. And the issuing of shares in the business, or a retention bonus, are other key financial incentives valued by employees.

But incentives don’t have to be just financial. Supporting employees and their outside interests, such as a sport, leisure or charitable endeavour, can have a significant positive impact and prove the employer’s personal interest in their employees.

It’s all about businesses finding new ways to counter the downtown in the economy while at the same time affordably rewarding their employees in not only a genuine and personal way, but one that is cost-effective for the business itself.

Developing skills

Therefore, it's not just about rewards and benefits. Businesses still have to invest in their staff in the long term. Gaining new knowledge and skills is now more of a priority than it has been in the past.

The management consultancy Gartner found that in the European, Middle Eastern and African region (EMEA), only 37% of employees expressed interest in internal positions, while 79% looked to external ones, with some 65% re-evaluating their own role in work. Any business that recognises this head-on and proactively provides opportunities for training, development, mentoring, and potentially providing alternative career paths that could potentially be more rewarding will increase their staff retention.

Similarly, skills development is a key aspect of the actual recruitment procedure. Businesses that add this to the traditional education and existing skills recruitment filters, can bring in talent that can not only fill a vacant position, but may, with proactive internal upskilling, prove to be of immense value to the business. 

Demonstrating this recruitment agility leads not only to filling those talent gaps and providing a healthy response to the ever-changing skills needs of the business, but helps to keep staff interested, motivated and engaged in the business. It can even lead to increased levels of loyalty.

Other factors

Businesses must recognise that current staff turnover rates have not been caused by economic or geopolitical factors, just worsened by them. Flexible and hybrid working has caused a substantial change in employment that is here to stay for the moment and has a direct influence on attracting talent to the business.

Many, if not most businesses seem unprepared for coping with this instability in the labour market, seeing some 53% of HR seniors recognising a talent shortage as a primary factor, but only 19% ready and able to do something about it.

The pay packet will no longer be sufficient to attract new talent, and employers who don’t recognise this will continue to struggle. They need to recognise that while it is a vital part of employment, talent seeks much more than just that pay packet. It’s about work-life balance, well-being, flexibility, training, development and more, something the financially-delicate business should be well-able to cope with.