A recent report shows that talent retention is top of mind for UK employers, but economic worries have many doubtful that they can offer pay increases.
UK employers are making counteroffers at a greater rate than before to keep skilled workers from leaving, according to the latest Labour Market Outlook from the Chartered Institute of Personnel and Development (CIPD). That retention technique is more pronounced in large private sector companies than small- and medium-size entities (SMEs).
Forty-four per cent of employers surveyed have hard-to-fill vacancies, the report said. As talent and retention problems continue to plague UK companies beyond the COVID-19 pandemic, employers are looking to keep skilled workers by making counteroffers to avoid losing staff. Employers are using counteroffers at a greater rate than before, the report said – 40% of employers overall have made a counteroffer in the past 12 months.
The CIPD surveyed about 2,000 senior HR professionals and decision-makers in the UK.
“The private sector has used this as a mechanism to retain employees (43%) more than the public (34%) and voluntary (20%) sectors,” the report said. “Just 24% of SMEs have granted a counteroffer in the last 12 months, compared with 58% of large private sector organisations.”
Large private sector companies are also more likely to offer a salary above the offer of other employers (43%) than SMEs (34%).
While many companies continue to invest in talent, employers are more uncertain about increasing pay than they were in the spring. Three months ago, 45% of employers planning a pay review in the coming year expected to offer rises in salary. Now, that number is at 38%, with more taking a wait-and-see approach.
“Employers who say it is hard to tell and will depend on their organisational performance has increased from 31% last quarter to 41% this quarter,” the report said. “This reflects uncertainty among employers’ confidence in economic prospects and the effects of previous larger wage increases.”
Despite many employers believing counteroffers to be an effective solution for talent shortages, that strategy may offer a short reprieve, the report said. Employees may still change jobs if other aspects of the job fail to meet their needs.
The CIPD recommends that employers consider several steps when evaluating their attraction and retention models. Related specifically to counteroffers, the report said that strategy can include more than simply a pay rise. “While the focus of counteroffers is typically on pay, it can also involve non-pay elements, such as additional paid holiday or additional pension contributions,” the report said. “However, care must always be taken when making any kind of counteroffer as it will have implications for the rest of your reward approach, such as the size of your pay gaps.”
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