UK employers will waste £9bn on recruitment this year as the skill shortage and the resulting “war for applicants” intensifies, according to a talent acquisition platform.
TalentTrack says that employers in the UK are relying on outmoded and ineffective methods to hire new workers, despite facing a hiring frenzy brought on by the pandemic bounce-back, the Great Resignation, and Brexit.
A record number of Britons are in work as company payrolls have surged over the course of the last twelve months. Early estimates for September 2021 indicate that there were a record 29.2 million payrolled employees, a rise of 3.6% compared with the same period of the previous year – and a rise of 1,008,000 people over the 12-month period.
While over a million people have found work, TalentTrack estimates that 11 per cent of people in work twelve months ago will also have changed jobs – comparable to some of the highest percentages ever recorded. This means that over the 12 months to September 2021, organisations have made approximately 4,100,000 job hires.
The average recruitment cost of filling a vacancy, using internal or external recruitment methods is reckoned to be around £4,500, meaning organisations will have spent almost £18.5bn on recruitment in the 12 months to September.
THE GREAT RESIGNATION
The problem is set to intensify. Recently, recruiter Randstad UK suggested almost one in four workers are planning a job change in the next few months – and that 69 per cent of workers are now confident about finding another role.
Mark Taylor, chief executive of TalentTrack said: “Britain’s permanent jobs market is the hottest it has been since the credit crunch and the global financial crisis with job vacancies reaching a 20-year high. Due to the intense competition for skilled workers, candidates in some sectors are being offered pay increases of up to 20 per cent to switch jobs. To add insult to injury, that is driving up the cost of hiring recruitment consultancies, who typically charge 15 to 25 per cent of salary. Employers have been caught out by the speed and the acceleration in the economic recovery and it has been much stronger than expected.”
September was Hays’ best month since the pandemic started, helping its first quarter fees grow 36 per cent compared to the same three-month period last year as a 69 per cent surge in permanent fees drove its UK growth.
Mark Taylor said: “Employers are desperate to find people – and are spending desperately as a result. But you can’t win the war for applicants with outdated systems at your disposal – it’s like trying to win a game of tennis playing with a frying pan. That has implications for employers and the country – the economy is suffering because of UK plc’s outdated approach to recruitment.
“Employers need to look at building and optimising job sites and posting job vacancies on numerous job boards simultaneously. But most of all they need to analyse the source of every recent hire, combining payroll data with other internal records to identify the best and worst employees in terms of ability and retention, in order to better target media spend – and thereby save their organisation money. AI is now perfectly capable of doing this. Our most conservative estimate is that an employer can halve the cost of finding new hires as a result. ”
REDUCING THE COST PER HIRE OF NURSES
Tony Woollett, the recruitment director at care provider Barchester Healthcare said: “Until recently, we didn’t know the return on investment we were getting when we advertised to hire new nurses. Now that we’ve invested in IT we use to recruit – including the AI behind it – we know exactly what return we will get from our spend. That has helped us to increase our applications, and reduce our cost per hire for nurses. Hiring a nurse from an agency would cost us up to £5,000. We’ve now lowered our online nurse hire cost to £750. And we have increased our hire ratio from online applications to 10%.”