What a difference a few months can make.
Politics shift, economic forecasts waiver, trade wars come and go, even the sunshine looks to have returned for the time being at least.
One thing, however, remains certain, change is constant.
A game of two halves...
H1 has been very much a period of change; a ‘game of two halves’ if you will. The first 4 months of the year witnessed robust business confidence levels with demand across permanent and interim markets significantly higher than 2018 like-for-likes. Very much continuing the trend of the last 9-12 months. "Brexit? What Brexit?", I hear you say.
However, whilst 2018 finished strongly and 2019 started well, a general cautiousness has crept back into a market dogged by on-going Brexit uncertainty and Chino-American trade wars. Against such a backdrop, it is only natural for businesses to postpone any large-scale CAPEX projects, investment plans, headcount changes, protecting the balance sheet in the process, until certainty returns. As such, businesses have shied away from more senior appointments, preferring instead to invest in more junior roles which carry significantly less risk, or opportunity cost, comparatively.
These factors together with consistent levels of demand from all business, SMEs to PLCs, have resulted in some skill shortages and gaps emerging. Specifically, for more task-orientated and responsibility-led roles – Part-Qualified, Newly Qualified and 1-3 years Post-Qualified Experience. This is now starting to impact wage expectations.
The interim market has also been a casuality of this cautious investment approach with large scale change/transformation projects on the wane, relatively, and day rates slipping, accordingly. On a permanent basis, we have experienced a noted slowdown in high risk/opportunity cost sub-executive and executive recruitment (£70k plus market), with the ‘slack’ being taken up by increased demand at lower levels in the Finance function.
The extent of the contraction at the senior end of the market has been partially offset by this uplift in demand for junior candidates. Consistent demand for tactical level, task-orientated candidates has been a major cause of the resulting wage inflation across PQ and newly qualified markets:
- Part-qualified studiers – we have witnessed real wage inflation with CIMA PQs commanding salaries from £28k-£37k;
- Newly qualified candidates – be they first time movers out of Practice (ACA, ACCA) or CIMA qualified, salary expectations have changed. This trend has been consistent over the last 3 years with newly qualified Big4 ACAs hitting the market at £40k plus with CIMA candidates often carrying similar expectations.
The slow growth of supply at these levels has forced businesses to look at more experienced options and this has put pressure on supply at the:
- 1-3-year post-qualified experience level – typically salaries can now range from £40k-£55k compared to £35k-45k several years ago. For exceptional talent, you must pay above market rate.
Changing expectations of candidates
Given demand levels and slow growth in supply, our clients are experiencing protracted recruitment cycles with Time To Hire increasing often beyond 8 weeks. In one instance, I recently heard of a client who has been struggling to fill a role at £40k for over 5 months. An exception, no doubt, but something to be mindful of. No longer a buyer's market, clients need to be aware of and fully understand the changing expectations of candidates and how they are impacting labour markets:
- Studiers, who have historically been expected to repay their fees, if leaving prior to qualification, are less willing to accept such clauses and expect future employers to offset their losses on moving.
- A fun work environment, people-centric culture and flexible benefits are now the accepted norm, not the exception. Businesses that can not accommodate flexible working, part-time working and a modern approach to employment risk being left behind in the race for talent and missing out on the strongest talent on the market.
- Candidate salary expectations and how they view their ‘worth’ to a business are changing. Whether the role you are recruiting is worth the salary a candidate wants is no longer the point. Supply shortages mean if you do not pay market rate you will not attract the best talent.
- Newly qualified and 1-5-year PQE candidates want to be developed and mentored. They wish to join a business that can facilitate personal and professional growth, allowing them to build a wide arsenal of skills and experience. Mentoring, career and personal development plans are essential.
- Business Partnering, Data Analytics and Business Intelligence are all very de rigueur as we speak. Businesses looking to recruit traditional Balance Sheet focused, financial reporting, group accounting, consolidation and technically-orientated roles may find it exceptionally challenging to recruit and retain talent.
Blame it on Teresa May. Blame it on Boris. Why not blame it on Trump’s populist agenda, everyone else does.
Whoever you blame, it is clear that confidence levels have been slipping throughout Q2 despite robust demand for junior level candidates. Without any positive, exogenous stimuli, politically or economically, it would appear that these trends will continue into Q3. As KPMG Chief Economist, Yael Selfin, recently commented:
“The hangover that’s followed the UK’s original exit date (from the EU) is proving stronger than anticipated….the UK economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.”
As confirmed by KPMG’s June ‘UK Report on Jobs’, tight labour market conditions and Brexit uncertainty has hit job seeker confidence; people fearing being LIFO. Compounding the challenges businesses already face when recruiting. If you are looking to recruit, especially in the £30k-£60k market you face multiple challenges:
- Slow growth in supply of candidates
- Cautious candidate populace only willing to consider ‘the right’ move
- Changing expectations of junior candidates
- Increasing salary expectations
- Protracted recruitment cycles and time to hire resulting in increased opportunity cost
The art is no longer in finding talent. It is in engaging with it.
Against such a backdrop, hiring businesses must seek to be different and to change the way they approach, identify, attract and retain talent. Below are some of our key thoughts on how best to ensure your business can increase the efficacy of your recruitment processes in the current market:
- Be pragmatic and realistic – you can no longer hire a qualified accountant very easily for £35k and if you do, you are the exception to the norm and need to worry about losing said talent to a competitor paying market rate. If you currently pay your qualified team members below £40k, stop the self-congratulatory patting on the back and give them a pay rise. If you don't someone else will.
- Be flexible – there is an entire pool of fantastic talent looking for more flexible work arrangements; reduced hours, flexible working, part-time. By ignoring them, you are limiting your chances of finding the best talent on the market and worse still losing out to a competitor.
- Be forward looking – how successful are football clubs that have a wage cap? Not very. Do the most talented players get paid market average? No. So do not hide behind internal wage structures that are very often years out of date and kilter with the market. Is there any shock the most successful football teams have the highest wage bill? Accountancy isn't football, and no business wants to build a culture based on hiring mercenary employees out for the highest pay check. That said, there is a lesson here to be mindful of.
- Be decisive – good talent (sub-£60k) is not on the market long. Have your recruitment process finely tuned and move quickly. Time kills recruitment.
- Learn to sell – where demand outstrips supply, you need to sell the reasons why a candidate should join your team and business. Yes, you still get to interview people and follow your internal processes, but be mindful; people like to work for people they like and respect and for businesses that will support their personal and career growth. They want to work in a fun environment, not be grilled by an ogre out to try and prove how little they know as opposed to finding our what they do.
- Be consistent – communicate a consistent message about the brand, team and role. Uncertainty or contradictory messages can kill recruitment. How often has a candidate told me ‘I don’t think they know what they want’?
- Build relationships with trusted recruitment partners – LinkedIn headhunting, advertising response, internal talent teams can not usurp the value that tenured recruitment consultants create. Advertising is REACTIVE. LinkedIn and social media headhunting is REACTIVE – you proactively target but you wait for a response. Relationship-driven, trust-focused consultants such as Resourcery Group have access to the best talent on the market as we have been building relationships and mapping the market for decades - two to be precise.
- Do not panic and dilute processes – briefing 5 agencies very rarely benefited anyone. Multi-agency briefing is effectively a race to the finishing line at all costs. Such approaches encourage bad practice and process and poor levels of professionalism and integrity, as agencies race to be first come first served regarding CVs. Such an approach damages your own brand and only guarantees volume of CVs not quality of candidate. Invest in a trusted recruiter who understands your brand (and culture) who is capable of acting as a custodian of your brand in the external market.
- Engagement is everything – recruiters add value through not only identifying talent but being capable of engaging with it. The birth of social media means everyone thinks they have access to the same talent pool. This is incorrect. The art is no longer in finding talent. It is in engaging with it. You thus need credible, trustworthy and professional recruiters to represent your brand in the external market.
- Understand the long-term cost of recruitment - You are investing in talent for now, tomorrow and the next 5 years. You need to make your investment decision on less superficial bases than simply the cost of using a recruitment consultant today. Interim costs, opportunity costs, impact of poor recruitment, impact on team, impact on attrition and retention amongst other things need to be considered.
This is by no means an exhaustive list but it is a flavour of just some the steps businesses should consider taking in the current market to increase the efficacy of recruitment campaigns.
H1 is now behind us and we look forward to H2 and all it has to offer. Further change however will be constant:
- the outcome of the Tory leadership race will have an impact on confidence levels;
- and, as Halloween approaches, Brexit may well become a reality impacting the economy;
- further protectionist trade sanctions by the US on China could well weaken global confidence levels further.
How UK PLC and talent markets respond is yet to be decided, but one things is for certain, businesses will need the continued support and expertise of trusted recruitment experts more than ever to help them find, attract and retain market-leading talent.
Resourcery Group are an independent finance recruiter, recruiting talent across the North West on an interim and permanent basis. From newly qualified to executive recruitment. If you are struggling to attract and retain talent perhaps it is time to give us a call on 0151 345 9040 or visit www.resourcerygroup.com