UK Employers Desperate to Retain Staff, Wage Increases, Counter-Offers: Survey

Desperate UK employers have resorted to bidding wars, wage increases and various incentives to retain staff. This suggests that employees and job seekers are taking control. 

According to a recent survey by the Chartered Institute of Personnel and Development (CIPD), 40 percent of employers in the past year have made counter-offers to try to keep an employee who has received a job offer elsewhere. More than half had used counter offers more frequently than in the past year, and a quarter expected to use this tactic more often in the year ahead. 

The survey suggests that UK employers are struggling to fill posts, despite the weak economic backdrop and that wages are still growing rapidly. The CIPD said its net employment balance, which measures the difference between employers expecting to increase staff headcount in the next three months and those expecting to cut staffing, remained steady at 28, while the share of employers planning redundancies remained low. It stated that more than two-fifths of employers had vacancies they were struggling to fill, with acute problems in education, transport and storage across the public sector. 

Jon Boys, senior labor market economist at the CIPD, believes the growing use of counter-offers was reflective of the tight labor market. He said it’s potentially problematic as it could exacerbate pay gaps, cause equal pay challenges, or result in a drop in employee engagement. Boys pointed out that counter-offers are most common in London. But employers also think it only has a short-term impact and are less effective at persuading staff over a longer period. 

Employees prefer working for a respected and caring employer. A study published in MIT Sloan Management Review highlighted that three of the top five reasons for resignations were related to empathy or lack of it. Researchers established that a toxic corporate culture is 10.4 times more powerful than compensation in predicting a company’s attrition rate compared with its industry. The report said failure to recognize employee performance is nearly three times more useful as an indicator of turnover than pay.

This means that while compensation may help to attract great talent, it is not the only factor that will retain great people.