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Survey: lack of skills the main cause of recruitment difficulties

Recruitment difficulties hit over four out of five organisations (85%) across the UK in the last year, according to the Recruitment, retention and turnover survey 2004, carried out by the Chartered Institute of Personnel and Development.

Lack of specialist skills (69%) and experience (66%) are the two factors most commonly reported as reasons for these recruitment difficulties in the UK. In response, organisations are increasingly employing people without all the necessary skills or experience, but who they judge have the capacity to grow into the role. This is the most popular initiative taken in response to recruitment difficulties, adopted by 43% all employers surveyed in the last year.

Despite this growing willingness to seek out potential and invest in development, another consequence of the tight labour market is the growing difficulty organisations are having in retaining the talent they have attracted and developed. Over three-quarters (77%) of UK respondents experienced difficulties retaining staff in the last year, up from 72% in the 2003 survey.

Responses and specific challenges:

• Increasing starting salaries or benefits packages is the second most popular response to recruitment difficulties, adopted by 37% of all survey respondents in the last year.
• Upwards pressure on wages looks set to continue in the future. When asked, in an open question, to identify the main challenges in recruiting and retaining in the year ahead, over a third of all respondents (34%) highlighted keeping up with inflation and salaries as their greatest concern.
• Rising house prices are making the balance between recruitment needs and affordable wage bills more difficult for public sector employers. A quarter of UK public sector employers have seen applicants turn down a job offer because they could not afford to live in the area. This problem was encountered by half as many employers in other sectors.
• Recruiting in foreign countries to fill vacancies is a new strategy adopted by 11% of all employers during 2003, on top of the 12% of employers who had already looked overseas in previous years - highlighting the ongoing need for migrant workers.
• Whilst still a minority, 4.1% of all employers say they have responded to recruitment difficulties by relocating part of the business overseas.

Rebecca Clake, CIPD Organisation and Resourcing Adviser, said, "Labour shortages are having a significant impact on employers. Recruitment of ‘nearly but not quite' candidates, accompanied by investment in training, is to be welcomed as an intelligent medium-term response. However, the survey also shows some employers turning to the recruitment of overseas workers to cover short-term recruitment difficulties.

"With nearly two out of five organisations increasing starting salaries or benefits packages in response to recruitment difficulties, wage inflation looks set to be a continued feature of the tight labour market. Employers need to continue to employ a variety of tactics to attract and retain staff, but government must also play its part by encouraging some of the record numbers of economically inactive people back to work. This will help widen the talent pool, retain staff and open the door to disadvantaged groups creating a more diverse and engaged workforce."

Costs and consequences of vacancies:

• It takes, on average, nine weeks to fill a vacancy
• Unfilled vacancies are most commonly covered by redistributing work amongst existing staff
• Whilst 30% of all survey respondents always or usually use temporary staff to cover for non-management roles, only 20% do so for management roles
• The average direct cost of recruiting a replacement member of staff is estimated at £2,500; when the wider costs of turnover are factored in this cost almost doubles to £4,800 per leaver

Categories of vacancy - a public sector / private sector split:

• More public service employers (69%) had difficulties recruiting managers and professionals than respondents working in the private service sector (52%)

Methods of recruitment:

• All vacancies are advertised internally by 87% of UK employers
• Adverts in local newspapers remain by far the most popular method of attracting candidates - used by 87% of employers in the UK
• Commercial recruitment web sites have leapt in popularity over the last year, used by two in five employers (39%) in the last year, compared to just one in seven (15%) in the previous year

About the survey

Survey responses were received from 976 employers (868 from the UK and 108 from Ireland) and relate to the period 1 January 2003 to 31 December 2003. The survey results, and the challenges they identify, will form the basis for discussions at the CIPD's Recruitment and Retention conference 2004, held at London Olympia on 23 and 24 June 2004. For more information about the conference, visit www.cipd.co.uk/recruitmentconference/

Copies of the survey can be downloaded from the CIPD website at www.cipd.co.uk/surveys

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