Talent wars: How to use reward effectively

As the UK economic recovery continues to pick up pace, so too are organisations’ hiring intentions.

The art of seduction

If you read nothing else, read this…

  • Skills shortages are back on the agenda, with engineering and technology among those in demand.
  • Businesses are again looking at how they can attract top talent, tailoring their offerings to suit their target employee base.
  • Organisations are increasingly looking to benchmark how their total reward proposition compares with those of their competitors.

The Towers Watson Global talent management and rewards survey published in September found 60% of employers said hiring activity had increased on a year ago, while September’s Manpower Employment outlook survey found job creation had increased at the fastest rate since 1971 during 2014, although this is expected to tail off slightly in the final quarter.

With growing demand, however, is likely to come skills shortages, at least in some sectors. The report, Skills shortage in the capital published in September 2014 by the Confederation of British Industry (CBI) and KPMG found two-thirds of London businesses are already reporting difficulty in hiring highly skilled people, particularly in the IT/technology, creative, finance and engineering sectors.

The August Report on jobs , produced by the Recruitment and Employment Confederation, meanwhile, reported a rise in starting salaries on the back of skills shortages, with construction and engineering particularly affected.

Stuart Hyland, business leader, UK reward solutions consulting, at Hay Group, says: “No sector is immune to talent shortages and we are seeing them in all of the usual places, with specialist and professional skillsets once again being at a premium.

“Many of these shortages represent the continuation of a longer-term trend but, with organisational growth and ambition returning, these are being exacerbated. We are about to enter a challenging new phase in the ongoing war for talent.”

Mid-level talent is in particularly short supply across all sectors, adds Emma-Claire Kavannagh, executive director at BIE Executive. “A lot of that is likely to be because we have had some difficult years and perhaps didn’t take on enough graduates, so there are fewer people coming through,” she says. “Those people that would now be four or five years qualified in a business environment are just not there in sufficient numbers.”

Employers must take a close look at their benefits packages

Organisations looking to attract top talent will have to look closely at the overall package they offer prospective employees . Pay is an obvious starting point, especially after years of below-inflation rises or pay freezes . Duncan Brown, principal at Aon Hewitt, says: “Lots of corporate reward people will say they have a great package; what they won’t say is that they have been cutting their employees’ real standard of living for the past five years.” 

So far there is little evidence of businesses increasing salary levels, although some organisations are targeting their resources towards those posts where there is greatest demand. “Our pay surveys are showing an average award of about 3% but that is being increasingly unevenly distributed across the workforce,” says Brown. “Those in highest demand, such as digital posts, are seeing salary increases of around 7%,” he adds.

Training benefits are a significant plus for many employees

Yet there are other aspects of reward which can help to attract people into organisations. According to the Kelly global workforce index published in September, 59% of employees rank the opportunity to learn new skills higher than a pay rise. “This is particularly the case for those earlier on in their careers,” says Carole Hathaway, global leader in Towers Watson’s reward practice.

“Pay has got to be there or thereabouts but training and development and career development opportunities are absolutely key, because employees are not just thinking about the here-and-now but the future,” she says. “An organisation that can offer an opportunity to learn and grow, and develop in their career, is going to be seen to be more attractive than one that can’t.”

This is a central part of the overall proposition for Bournemouth-based web design agency Adido. Andy Headington, chief executive, says: “We work in quite a technical world, and we have developers who want to play around on databases all day. The biggest driver is often knowledge and the opportunity to test and play around with things.”

Each month the company hosts an ‘Adido day’, where people have the opportunity to do just that, or to undertake more formal training. Linked into this is giving people responsibility to take ownership of projects and come forward with suggestions on how to improve processes or the company environment. “People get quite excited by that, because often in companies it’s a closed door, and whatever the MD says goes,” says Headington.

Company culture and flexible working all play their part

The overall culture and creating a good place to work is also significant. London online marketing firm atom42 has actively sought to develop a strong social element, and recently invested in a table tennis table, which company founder and director Andy Atalla believes brings people together over lunch and helps to build a fun environment where people want to work.

“We hire people who we like as well as who can do the job, and as a result of that people tend to like, respect and care for each other,” he says. “We have a lot of very close friendships in the organisation, and have people who will go to each other’s weddings and run marathons together.”

The agency has even hired people who have taken a lower salary because they wanted to work there, although Atalla concedes that most employees are in their twenties and that such a strategy might be less effective for older workers or those with a family.

The broader benefits package and working practices also come into play when individuals are determining where to work. Jade Gange, an employee benefits specialist at Capita Specialist Resourcing, says: “Professionals want more than just financial compensation, and this has been reflected across the market. In particular, increasing numbers are looking to work flexibly to balance their home and work lives, and many businesses are offering this as an attraction tool.

“Other high-value benefits such as a company car and private healthcare can also sway the balance,” she adds.

Segmented packages are key for forward-thinking employers

What works best, however, will depend in part on the type of employee organisations are looking to attract, both in terms of their age and the sector in which they work. “The best organisations will segment their employee populations, either by demographics, or by thinking about critical skills and high-potential employees,” says Hathaway. “It may mean they also have very segmented packages, but certainly from a communication perspective they will emphasise the things that are going to be motivating.”

Yet as well as ensuring they are able to compete, organisations also need to make sure they do not end up offering more than they need to in the way of benefits. Hyland, at Hay Group, says that many businesses are turning to benchmarking exercises, comparing an organisation’s pay and reward strategies with others in its sector. “Organisations are now looking to benchmark more than just base pay, looking at variable pay and benefits as well,” he says. “This will enable them to appreciate the strengths and weaknesses of their own package, and understand their USPs [unique selling points] when it comes to selling the business to potential recruits.”

BGL Group

BGL group

With 3,200 employees and locations across the country, insurance firm BGL Group, owner of the comparethemarket brand, is constantly looking to attract new talent.

Much of its focus revolves around the overall employee experience, with a strong emphasis on wellness , the office environment and enabling staff to get involved in charitable initiatives.

Claire Whieldon, head of reward, says: “We have a huge amount of fundraising events, from dragon boat racing to employees going off to Zambia and Laos to partner with Build It International.”

In the office, employees have access to free fruit, a gym and free at-desk massages for call centre agents, while there is also an annual employee fun day for staff and their friends and families.

The business has even sought to make it more attractive for people from London to work at its head office in Peterborough, by laying on free transport from the station to the office. “A lot of the talent pool is in London but it is only 45 minutes away on the train,” she says.

Whieldon says the company culture, coupled with career development opportunities, has helped it attract the staff it needs to grow. “People want to come to BGL because it’s an amazing place to work and we have fun here,” she says. “They come for interview and are blown away.”

Sector comparison

Thomsons Online Benefits recently conducted two Employee watch studies in June and August, examining the use of benefits in the financial services and technology sectors.

Matthew Gregson, consulting director, says: “The financial services sector is very mature in terms of how it rewards its staff. You tend to find generous non-contributory pension plans and the provision of higher-level risk and health benefits.”

These are very much seen as the norm, however, so there is little opportunity for organisations to stand out when it comes to recruiting talent.

Without such a background, the technology sector is better able to innovate and give employees choice. “Technology firms are much more willing to put money into Isas [individual savings accounts], a saving fund for a first home or paying off student debt,” says Gregson.

There is also a stronger emphasis on workplace culture and the office environment, as well as flexibility around time off work and charitable undertakings.