For employers, all costs are going up. From the price of rent, gas and electricity, to competing with salary inflation for both existing employees and new hires – we’re anticipating that many businesses will be affected by the cost of living crisis and may struggle to retain talent if a reasonable, long-term solution isn’t put in place.
Read on for our advice on how to best prepare your business, from conversations with our Head of Operations, Ryan Jaiswal. We’ll also discuss ways that as your recruitment partner, we can help to support you sustainably.
What’s happening right now?
Salary bands have continued to expand as the number of jobs on the market has boomed, but applicants for them have dwindled. This demand for talent has led to average pay increasing by 4.7% – however, even with this rise, the UK cost of living crisis means that the real value of workers’ pay has dropped by 3%, and candidates are looking for more money to protect themselves from a potential economic recession on the horizon.
As businesses compete to retain and attract new talent, across the Midlands we’ve observed a rise in salary offer amounts and counteroffers – some ranging anywhere up to circa £10k, in order to keep an employee in their current position and prevent them from leaving for a higher paying role elsewhere.
Why increasing salaries to compete doesn’t work.
Continuously bumping up the salaries that your company offers can ironically contribute to this cycle of job market inflation, and it isn’t a sustainable solution to the UK workers’ needs in the cost of living crisis.
“Some can’t afford to keep up with salary increases, which means they lose their staff to higher paying opportunities in the market. They may struggle to re-recruit because they can’t pay the inflated salaries that new candidates are seeking. It’s going to get to a point where bumping salaries up further isn’t sustainable. They’ll feel they’re doing all they can, but they can’t keep up – and that’s where they can find themselves in real trouble. That’s the challenge for businesses.”– Ryan Jaiswal, Director of Operations.
The short-term solution of increasing salaries can put pressure on your company budget, carrying with it the risk of job loss across the business once the cost becomes too great and cutbacks are needed. Similarly, a one-off payment may help workers initially, but this isn’t a long-term fix and there’s a chance more could be needed in the coming months as the economic situation changes.
So, what’s the alternative for businesses?
Be open with your staff, and hold meetings (whether company-wide or one-on-one) to explain to them that you’re searching for sustainable, long-term solutions. You may not have all the answers, but it’s likely they will appreciate your transparency.
Ryan continues: “During covid, companies just cut staffing levels as they couldn’t afford to keep their people. Now, it’s all about businesses doing what they can to protect and retain their staff – and their careers.”
From conversations with candidates over recent years, one insight we’ve gained is that many workers would prefer for their employer to be ethically responsible for long-term job stability, than for them to throw money at a currently evolving problem and assume all is solved.
“It doesn’t have to be about money – even if you don’t have a big L&D budget, just treat your people well. Sit with them internally and talk to them, begin a conversation on how they’re feeling about the cost of living, what they’re thinking or any concerns they have.”
Ask the question: What else can we do? How will you market your business in the hiring process? How will you retain the staff you have?
Free and low-cost solutions.
Benefits which consider work-life balance and well-being are great to retain existing talent and attract candidates – without ballooning your salary costs. Flexible working hours, four-day work weeks, hybrid work-from-home schemes, and other ‘free’ benefits may help your employees to navigate rising costs – and are also a huge draw for candidates as more and more people focus on the value of “time over money”.
Learning & Development.
Ryan continues: “Candidates are interested in a Learning & Development point of view. If a company offers training, good flexibility, and can show they’re investing in development and support – Investing in people, that’s what’s going to retain their talent and attract more.”
L&D itself can be a deciding factor in attracting new hires – some candidates will happily accept a lower salary with the prospect of gaining qualifications or achieving personal development. In the second part of this series, Investing in people: alternative solutions to combat inflation, we’ll discuss potential learning and development routes that may help your business to compete with inflation sustainably.
How we can support your business during the cost of living crisis.
At Distinct, we are responsible in our hiring process, not only considering the present but the long term. We’ll be honest with candidates, managing their expectations and encouraging them to consider elements beyond salary – your company culture, your mission and ethos, and your plans for future growth.
If you’d like to learn more about our services – or how we can help you to attract candidates, contact us today. Our recruitment teams have years of experience across a range of industries, and the knowledge to help support you during this difficult hiring climate.