Narrowing the expectation gap in a candidate-led market
The challenges in recruiting and retaining talent in the current professional and financial services jobs market are analysed by Cassandra Reen. She outlines the changing strategies and approaches being taken by employees, job candidates and employers as increased demand for skills and a tight labour market has created a candidate-led market.
2020 witnessed huge efforts by companies to get used to a ‘new way of working life’ as a result of COVID-19. With successful implementations to accommodate a ‘working from home hybrid culture’ and a new strategic focus, recruitment once again became forefront of the agenda for most in 2021 with companies and candidates all ready to raise their heads simultaneously following on from a period of recruitment dormancy in the main.

However, the buoyancy of the recruitment market in 2021 quickly became affected by the unique challenges which 2022 brought to the labour market in the form of the ongoing war in Ukraine, increased oil prices and rising interest rates to name a few. These economic factors have in turn led to increased concern for many candidates across accountancy and the broader financial services industry resulting in a tighter labour supply and the resultant ‘war for talent’. This has given rise to a candidate led market, one which we have never before witnessed.

Whilst companies have made moves to facilitate the new norm of the working landscape, there are desired efforts in play by companies to encourage a return to the office on a hybrid basis for 2/3 days per week. As a result of increased price pressures on candidates as well as having had the benefit of reflection, it has tipped the balance with candidates now more than ever looking for increased salary, benefits, flexibility and terms of employment. This mis-match is set to continue for the foreseeable future with upward pressure placed on companies to flex on their expectations to attract staff or flex on their requirements to retain staff.
Cassandra Reen:
Cassandra Reen: "Tight labour supply and growing demand has created a candidate led market".

Cost of living and demand for higher salaries
Candidates are becoming increasingly concerned about the cost of living in this inflationary environment. Economic factors have led to price hikes in basic living – housing, food, transport, childcare, healthcare, taxes etc. This acceleration in the cost of living has in turn directly impacted the demand for higher wages with candidates sometimes moving solely based on their need to get a higher base salary. This leaves companies vulnerable resulting in a loss in knowledge, a skill gap in the business and the cost associated with rehiring.

This trend is unfortunately still gathering pace currently but should taper off in the next 6 to 12 months as Governmental plans are put in place to ease the financial burden on individuals and families. Even though early measures are set for September, the impact is still uncertain.

In the meanwhile, it is critical that companies look at their internal human resources to see if measures can be taken to ameliorate retention. Key to this is understanding the market rate but with companies also facing the financial burden of higher costs, it is also important to impact other monetary and non-monetary elements to encourage staff to stay, for example, company days, corporate days, sabbatical offerings, job sharing, condensed hours, 4-day weeks, 9-day fortnights, inclusive and connected work community, caring and supportive leaders, sports and social events, lunch and learn, health and wellness initiatives, educational assistance, employee empowerment / recognition, employee mentorship programmes, scope for progress, learning and promotion. These are some of the elements that contribute to both retaining staff but also attracting staff if they are promoted in the right way.

Counter offers
Counter offers are on the rise so this needs to be controlled from the initial stages of the recruitment process instead of wasting time and resources on candidates who are not really willing to leave their current employer in the first instance. This is important both in terms of the intended and unintended candidate - some candidates may go to the market to be countered but with the intention of staying with their current employer, others may go to the market without the intention of staying with their current company but when faced with a counter that they hadn’t previously thought through, they might decide to stay with their current company – so both scenarios result in wasted resources for the hiring company and sometimes the potential opportunity cost of losing another candidate to the process. An experienced recruitment consultant will pay close attention to this and discourage candidates from going to market before exploring these elements with their existing employers or have the experience behind them to really decipher genuine candidate motivations.

Hybrid working
Companies are sharing their plans to encourage employees back into the work place on a hybrid basis. However, this for some is proving difficult with the desired balance for many employers to get employees committing to 2-3 days office presence. The trend currently by candidates is to have the flex and choice to work remotely 3-4 days a week. This is exacerbated by the rise in the cost of living and transport. Whilst this could change, for the foreseeable 6-12 months considering the competition for talent, it is a trend set to remain with the candidate more often winning out.

Job security
Job security is particularly high on the agenda right now. Whilst some candidates are on the move for the sole purpose of increasing their base wage leaving a skills gap within their existing company, others are reluctant to make a move. For companies trying to attract female staff into senior roles in general, the female gender tends to be more risk adverse than their male counterparts and often decide to remain with their existing company until things stabilise. Companies are targeting and protecting this demographic to encourage retention by offering increased flexibility to facilitate childcare for example.

Skills shortage
Talent shortages have also been pronounced in certain sectors as a result of evolving career choices. With industries such as tech and pharma on the rise, people are making different career choices which has led to skills shortages in our once considered traditional routes e.g. Accounting Practices, Law Firms, Banking. Candidates over the past while have seen quicker and easier avenues to make money and rather than waiting a number of years to become professionally qualified as in the case of accountancy for example, they are embarking in faster and more lucrative tracks that have the capacity to offer the frills, benefits and increased flexibility. COVID-19-elicited reflection has brought a renewed focus and a quest for balance, a step away from long hours and associated burnout. With the evolving recruitment landscape of an aging workforce and increased millennial participation, it is critical to plan strategically and gear towards the needs and habits of this new surge of employees which has influenced change in expectations across all levels of seniority. With accounting practices in particular facing talent shortages and fewer applicants applying to live positions, they must embrace this new wave and adjust their monetary and non-monetary offerings to attract talent and retain their existing people. To foster growth, it is no longer enough to do more of the same, change has to be encompassed across a number of different offerings.

Passive candidates
With increased competition for a shorter supply of skills and a greater prevalence of passive candidates in the marketplace, it is paramount that companies put parameters in place to attract the right talent and retain their existing talent. Corporate branding and marketing are extremely important in this digital age. It is also critical to partner with experienced and networked recruitment consultants who can add value by sharing market insights and controlling the recruitment process to save valuable resources in the longer term. It is important that companies have the right partnerships in place so recruitment consultants can share their story and control the recruitment process by attracting the right candidates based on the merits of the company as well as the financials. Making a hire based on skills or financials alone can be detrimental to companies and cost them culturally and financially in the longer run.

Equipped with the right techniques and knowledge, an experienced recruitment consultant will be extremely effective in successfully targeting and persuading passive candidates. Passive candidates are particularly attractive as they are contented in their work, they are regarded as valuable assets considering the associated benefits of high performance. 80% of passive candidates are said to be contented in their current roles versus 50% of active candidates. They are also more likely to give an honest account of their skills as they are not setting out with the intention to impress. Although the main motivator for a passive candidate is money, it does not mean they will not move for a better opportunity when approached. Considering they are not actively interviewing on the market, less competition means they are often a less expensive hire with companies ending up getting more for less. Hence, to access quality and tap into this skilled talent pool, it is paramount to grab their attention and adjust expectations towards meeting their requirements.

Recruitment process management
Companies are embarking on efforts to make the recruitment process as straightforward as possible with improved efficiencies around decision making. The recruitment pace is set to change in the next 6-12 months with companies and leaders becoming more aware of the competition for talent. Hiring managers will need to be readily available to conduct interviews in closer succession and talent teams will have to engage collaboratively with recruitment consultants to keep the momentum going and conclude processes to prevent losing candidates to competitors. Recruitment efficiencies and candidate engagement are of utmost importance. Leadership strategies around candidate engagement must also be a focus for companies and efforts exerted to connect, attract and entice the candidate at interview stage. The interviewee is assessing fit as much as the interviewer in today’s climate of greater career options. Regardless of success, the candidate should also be given interview feedback to maintain corporate image and brand reputation in this digital age of sharing. Even in the unfortunate event of a controlled counter offer situation whereby a candidate does reject a job offer, research indicates, those who accept a counteroffer are very likely to be on the move again in 6 months’ time – in which case, they might be right for future roles with an organisation. So regardless, it is of benefit to companies to stay networked and maintain a positive candidate experience throughout.

Expectation gap
In conclusion, we are experiencing a candidate-led market right now with a number of difficult factors leading to increased demand for a tighter labour supply. We are witnessing a high supply across a number of Senior and Managerial positions currently to include Audit, Finance, Regulatory, Change, Alternatives, Funds, Investments, Risk, Compliance, Analytics, Asset Management, Tech, Product and Project Management. Despite the high demand and considered ‘war for talent’, candidates should still ensure they are extending their knowledge and worth by investing in education and learning to stay relevant within their industries, this is something that companies can also focus on to be more attractive. The challenges will remain largely in force until economic factors ease over the next 6 to 12 months and in the intervening period, companies will need to flex their boundaries somewhat to retain and attract staff whilst talent teams and recruitment partners will have to work hard to manage candidates’ expectations to narrow the gap between employer and employee expectations.
Cassandra Reen is director, Banking and Finance at Executive Connections.
This article appeared in the September 2022 edition.