In the UK, many businesses are facing unique challenges caused by the rapid rise of inflation seen over the last year.
Prices have risen by over 10% in less than 12 months, and although some experts are predicting inflation to slow, prices of many things are likely to stay at higher levels than we’ve previously paid.
The impact of this rapid rise is that many UK businesses are trying to juggle tighter margins, along with pressure from employees and unions to increase salaries to help with a higher cost of living.
As a result, companies face intense pressure to find the best way to counter inflation while retaining and attracting the right talent to drive profitable outcomes.
In this blog post, we cover the following:
We’re currently experiencing high inflation, low unemployment, stretched budgets and a looming recession. All of which are affecting the way businesses attract and retain employees.
But without understanding the root cause of why employees leave in the first place, it’s difficult for organisations to address retention rate problems.
We recently surveyed over 160 large organisations from various industries to understand the problems they’re experiencing and how they’re navigating current challenges caused by rising inflation levels.
We asked them to tell us and rank the reasons why employees are leaving.
Given the current economic environment, it’s not surprising that pay is the main driver for staff turnover.
In the current environment, it’s obvious that organisations need to focus on reducing their spending. That’s why there’s never been a more critical time to focus on employee retention.
The reasons for this are simple:
The costs of recruiting talent start from the moment you post the job ad to the day a new employee is fully onboarded.
Test Candidates has calculated that the overall estimated expense most organisations can expect to spend per hire, per vacancy, ranges between £7,275 and £22,515. And if you hire the wrong person, that cost could add another £18,500.
Besides the expense of recruitment, it’s also time-consuming.
According to a GlassDoor survey, hiring can take anywhere from 15 to 35 days, depending on your industry, recruitment processes and company size.
For instance, the average days it takes to fill a role in organisations with 50 or fewer employees is below 20.3, compared to 36 days in organisations employing over 100,000 people.
The paradox? The more you hire (and need to hire), the longer the process takes and, therefore, the more resources it requires.
Onboarding staff is an essential part of the employee's experience as it’s all about sharing knowledge and experience for new hires to be confident and productive as soon as possible.
In fact, a recent study by Gallup Analytics shows it takes new employees around 12 months to reach their peak performance potential, making retention essential for long-term productivity and business goals.
In addition, a good onboarding process helps employees understand what success looks like in your organisation. A first step to ensuring they sense a feeling of belonging, which in turn can lead to:
When there’s uncertainty and volatility in the economic climate, stability is paramount.
When employees feel stable and supported by their employer, it can help to reduce employee stress and tension and drive higher levels of employee engagement. In other words, the interconnection between employee engagement and retention can help businesses succeed.
Businesses in the UK are currently addressing inflation issues in several ways. We can group them into three categories.
17% of organisations have implemented one-off payments to address inflation pressures to help keep employees, with another 39% considering implementing them.
It’s also interesting to note that a majority of organisations already giving out bonuses are not considering enhancing them (70 %).
15% of organisations surveyed are currently implementing a full pay review, with another 16% considering implementation.
22% of organisations have introduced new core employee benefits, with another 45% considering implementing new benefits.
As the data above suggests, organisations are yet to find the magic formula to address inflation and keep their employees happy.
Of course, the complexity of the work market means there cannot be a one-size-fits-all approach. However, organisations might be able to find the right formula if they could get their hands on accurate data.
One-off reports can only tell so much.
If the entire market is under pressure, each industry and location have its own specificities. So, it’s essential to determine the right approach for your organisation to beat inflation and discover how to reduce staff turnover rates.
Good to know
While pay is a significant factor, there are often also other cultural factors that may inherently affect retention levels.
The way you manage your exit interview process can provide you with insights into the key triggers of why people are leaving, and what you need to address first, such as your diversity and inclusion strategy.
To explore the topic, read: 10 Tips to Measure Diversity and Inclusion in the Workplace.
During an inflation crisis, visibility is more critical than ever.
Having up-to-date visibility of current market conditions can help you make timely decisions to retain and attract the right staff for your business.
That’s why we created Pay Tracker Live.
Pay Tracker Live is an easy-to-use tool that makes live and in-the-moment pay market data accessible to everyone, in a few clicks.
Unlike traditional annual salary surveys, our live pay tracker allows HR professionals, hiring managers and recruiters to navigate recruitment markets in real time, using up-to-date data from job boards.
We created Pay Tracker Live to help businesses run a competitive pay strategy so they can:
Pay Tracker Live helps all organisations offer the right pay and benefits to attract, hire and retain top talent. With Pay Tracker Live, you can access the following: