[Covid’s] Impact on staffing costs, salaries, and a developing skills shortage

by | Feb 15, 2022

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In the second of a four part series, Heat Recruitment’s Managing Director Steve Preston takes us through his overview of a tumultuous year, but one from which common themes have emerged as we build back to our pre-pandemic economic levels.

Across all of our sectors we have noted a shortage of candidates to fill vacant positions. Consequently, candidates have more options open to them than ever before, with many receiving two or three offers after going through the interview process. Equally, we are seeing companies making counteroffers far more regularly to secure top talent. This may seem surprising, but it is not only due to the cost of the recruitment fees involved, but often because companies are aware that there is a down-the-line impact of not hiring- and therefore not filling- those vacancies. For example, if a business doesn’t succeed in getting its service to the level that is required it might result in the loss of custom or customers; or it might be that they simply haven’t got the time that would be needed to train somebody up into the role internally without it having an impact on sales or services.

We have found that companies are both pragmatic and resigned to the need to incur the costs of salary increases, whether for new talent joining the business or in order to retain existing staff, some of whom may not have received a pay raise for a few years. In fact, we have seen marked salary increases across the board, although it should be said that many salaries had been static for some time and it was inevitable that these would move upwards, with companies having to absorb the additional costs.


We believe that companies having to address salary differentials should be viewed positively, and reports such as this one create transparency and provide benchmark indicators that everyone can apply to create a level playing field. Employers need to have a clear understanding of what’s happening in the market, and they need to compare what they are offering against others to understand whether they are being realistic. Salary surveys provide a useful indicator, although we need to remain mindful that they are not set in stone and that different companies offer different benefits packages. So yes, we must look at all the different elements, but salaries must fall within a range of what’s being offered elsewhere. Those firms offering lower salaries are unlikely to be able to attract or retain the best talent.

Importance of social responsibility, diversity, and inclusion

An important step change we have noticed is the interest candidates are showing in advance of interviews in the culture of a company and what it stands for. Individuals are far more open now about their wish to be part of a company that has good corporate social responsibility in place. They look at what they are doing regarding giving back locally, for example supporting a local community or taking part in local charity work.


This has become fundamental, and we are seeing an increasing emphasis on it. People want to know that they are working for a good employer, not just someone who is paying them well. Along with this, they want to know that companies are tackling important issues like gender imbalance, diversity and inclusion. There is now a much greater level of awareness and, speaking as an employer myself, we have been reviewing all our maternity and paternity cover and related pay so that it’s increasingly competitive within the marketplace.

It is crucial for companies to be clear about such benefits at the outset, as this allows individuals to consider their options and means that those looking to build a meaningful career path can see their progression much more clearly. They know that they can conduct their life without having to sacrifice a job or feel any pressure when they become parents and want to have a family life. Hybrid working, or as we call it ‘work from anywhere’, has been very effective and for many companies it has become a natural extension of existing working practices. It does, however, bring with it a completely different style of management. We’re having to adapt to new ways of conducting ourselves in meetings, perhaps with five people in the same room and five others online. It’s an evolution, albeit a rapid one, but it’s something that’s here to stay.

People are also enjoying the flexibility that hybrid working allows, in many respects giving them more control of their outputs and more importantly their working life. While we don’t yet have the statistical analysis to support a resulting increase in productivity, the feedback that we receive is that they are more effective and focused when they are in their own work zone. Obviously, employers need to make sure that staff are set up correctly and have access to software and the right technology but if that’s done properly it impacts in a positive way; let’s be clear that flexibility promotes genuine loyalty amongst employees.


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