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Hybrid workingCIPDLatest NewsInflationLearning & development

Inflating pay to attract talent ‘not enough’ warns CIPD

by Rob Moss 27 Sep 2022
by Rob Moss 27 Sep 2022 Andrey Popov / Shutterstock
Andrey Popov / Shutterstock

An increasing number of employers are increasing pay to help attract the right talent, but a new report from the CIPD suggests that this approach is unsustainable for most employers in the face of rising costs. 

The 2022 Resourcing and Talent Planning survey by the HR body, together with recruitment outsourcer Omni, warns that using pay to attract talent simply isn’t enough to tackle on-going skills shortages.

While an increasing number of organisations (54%) are inflating pay to retain talent, organisations need to highlight other components of good working practices when recruiting, such as offering flexible working and promoting career development opportunities.

The report found that organisations are increasingly offering better pay and/or benefits to address recruitment difficulties (36%, up from 29% last year) and this is now the most common response to retention difficulties (2022: 54%; 2021: 32%). Private sector organisations were far more likely to increase pay than in the public sector.

The research showed that 68% of employers that offer hybrid or remote working say it has allowed them to attract and retain more talent. The report surveyed over 1,000 UK-based HR professionals and found that:

  • 30% of employers who had recruited in the past 12 months say that advertising roles as ‘open to flexible working’ is amongst their most effective recruitment methods
  • 54% of organisations who have had recruitment difficulties are offering greater work flexibility to address recruitment difficulties
  • 49% of employers say their use of hybrid/remote working has greatly or somewhat increased, and almost a quarter expect this to increase further in the next 12 months.

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Claire McCartney, the CIPD’s senior resourcing and inclusion adviser, said that businesses are facing some of the “most challenging times imaginable” in the coming year, as the cost-of-living crisis and a recession looms.

“It is now more important than ever to be proactive with workforce planning and to develop compelling offerings to attract and retain a diverse group of employees,” she said.

“Employers won’t be able to afford continued pay increases, but they have an array of other options available to them to continue attracting and retaining staff.”

The research notes that, even in the challenging economic context, there are steps businesses can take to entice employees to their organisation, such as offering greater flexible working and career development and emphasising the job security their organisation can provide in difficult times.

“The pandemic showed the positive impact flexible working can have for both employees and organisations and our research continues to show that candidates increasingly look for flexible working during their job hunt,” said McCartney. “Greater availability of flexible working is usually a low-cost option for employers looking to improve their benefits package, and businesses can also reap the rewards through improved job satisfaction, loyalty and business flexibility.

“Employers shouldn’t simply focus on pay but look to advertise roles as flexible and offer options for hybrid and remote working, where possible, to strengthen their attraction and retention offering.”

More than two thirds of employers surveyed (69%) advertise at least some jobs as open to flexible working. Among those who’ve recruited in the past 12 months, an increasing proportion believe that advertising roles as open to flexible working is one of their most effective methods for attracting candidates (2022: 30%; 2021: 24%).

Nearly two-fifths of organisations (38%) are increasing efforts to meet talent requirements by developing more staff in-house. Upskilling existing employees was the most common response to recruitment difficulties (60%) among participants.

Louise Shaw, managing director, Omni RMS said: “Unrealistic salary inflation is not only unsustainable for employers, but will also have limited success long term, with retention rates likely to drop as financially-driven individuals jump ship to gain further pay increases.

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“Candidates want more than just good pay and are seeking meaningful jobs that are culturally and personally rewarding. Less forward-thinking organisations find themselves at the mercy of a labour market, the likes of which we haven’t seen before, with competition for skills creating retention pressures that recruitment cannot contend with.”

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Rob Moss

Rob Moss is a business journalist with more than 25 years' experience. He has been editor of Personnel Today since 2010. He joined the publication in 2006 as online editor of the award-winning website. Rob specialises in labour market economics, gender diversity and family-friendly working. He has hosted hundreds of webinar and podcasts. Before writing about HR and employment he ran news and feature desks on publications serving the global optical and eyewear market, the UK electrical industry, and energy markets in Asia and the Middle East.

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