By Ross Crook
Senior Vice President, Client Services
Employment is rising (76.1%) while unemployment is the lowest it’s been in nearly 45 years (3.9%). Economic inactivity is also near record lows (20.7%), and inflation is 2%. These figures indicate that all is well with the UK economy, but we must be careful not to let complacency set in. Given the current political turmoil, there remains a very high risk of recession, and the economy may yet begin to shrink during the course of this year.
UK businesses are already feeling the pressure of political and economic uncertainty, with major international corporations pulling headcount in the UK to invest their business elsewhere. The British economy could be being held back by Brexit uncertainty, and barring any disaster, it could bounce upwards once the issue is resolved. Many companies are managing costs more scrupulously, with some businesses in the financial services sector taking a stronger stance on headcount. Attrition is being deemed by some as a positive factor as companies tighten their financial belts and existing employees are being asked to take on more responsibilities. Departing colleagues are not being replaced, and the remainder may have to do more work for less reward.
Sceptics emphasise the current unemployment rate of 3.9%, but could this be a lagging indicator for economic turning points to come? Historically, the employment rate only starts to rise several months after a recession begins, so looking at more up-to-date unemployment benefit claims can offer a more reliable gauge. Market analysis suggests that the number of people claiming unemployment benefits dropped between 2012 and 2016, but that claims have increased steadily since 2017 to a current 1,085,200. Despite some clouding of the data by the introduction of Universal Credit and raising the pension age for women, it may be that we will see the lag in employment rates becoming a reality in the second half of 2019.
It is important that in any time of economic uncertainty that organisations review and create robust talent acquisition strategies and solutions that allow for better planning for the future. Businesses must understand which solutions they can deliver themselves and which potentially need to be outsourced. It is the perfect time for organisations to be bucking the trend in the advance of a potential downturn — making bold statements about headcount and sustaining organisational and financial growth whilst making tough decisions around organisational development and change. "Outsourcing" may be a dirty word in some circles, but the increased knowledge, flexibility, and cost reductions that an RPO partnership can bring can really help a business to thrive in uncertain times.
Some practical steps that organisations should be taking include:
- Strategic workforce planning: Planning ahead for the staff capabilities that will be required in the future ensures that the right person is available for the right job at the right time. Factors to take into account include the demographic changes inherent in an ageing workforce, such as outdated skills and retraining challenges, and the approach of large-scale retirement. Older personnel may not be cost-effective and could be phased out in favour of those with more technological expertise and learning capacity.
- Exploring different skill sets: The business landscape today is so competitive that it requires much more disruptive and rapid innovation to succeed. Technology has changed revenue streams to products that are entirely different and constantly changing, and new expertise is needed to design, produce, and market them.
- Talent pooling: A Recruitment Process Outsourcing (RPO) partner can help companies build a talent pool of qualified personnel, on whom they can make first call when any suitable positions arise. A talent pool database offers an instant selection of pre-screened candidates who may have submitted details at a talent fair, applied for a previous position, or been directed by diversity initiatives.
- Internal mobility: Hiring from within will save both time and money, as candidates are already company approved. With technology allowing more business operations to be multinational and global, the internal talent pool can be worldwide.
- Apprenticeships and learning & development: The internal mobility strategy should go hand-in-hand with talent management initiatives such as apprenticeships and L&D. Lifelong learning will be a key skill for all pivotal hires in the sector as advancements continue apace.
- Non-industry–specific hires: It's also worth considering experienced personnel with transferable skills, especially in IT and related fields, as their skill set may embrace all sorts of industries.
So, the uncertainty that Brexit has given to the economy may well continue for some time and the likelihood of other political shocks in the world is quite high. Organisations can adapt and remain profitable in these interesting and challenging times. The rapid changes in technology and certainly in AI means that the financial services sector too needs to adapt and change with the global technological trends. As such, businesses need to take a fresh approach to their hiring strategies to compete in the current economy. This often means outsourcing HR with an experienced RPO provider, such as Cielo, to explore more diverse and effective talent acquisition strategies.
Connect with Ross Crook on LinkedIn.