Understaffed SMEs must avoid making promises they can’t keep during skills shortage, expert warns

Businesses must avoid adding “sweeteners” to attract new staff during a skills shortage or they will face a backlash and possibly end up with more employees leaving them in the lurch, a recruitment expert warns.

The warning comes as a new Hudson survey reveals 84% of employers feel they reduced their headcount by too many in the downturn, and that 23% of those losses were “high performers”. About 34% believe their employee teams are weakened as a result.

Hudson chief executive Mark Steyn says businesses will now be looking for more staff to fill those roles left blank during the financial crisis. But he warns one of the “biggest challenges” employers face is over-promising for salaries and benefits.

“You have to be very careful about this, because this is a big challenge. If you go out there and promise a potential employee all of these nice things, and you don’t deliver, you’ll face a backlash.”

“You will have this disconnect between what you’ve promised and the actual work environment, and finding that out is hugely demotivating. You have to be careful when you’re out there making promises that you’re able to execute that.”

Steyn says employers should avoid excessive salary offers and benefits if they cannot provide them, instead saying more companies should give out opportunities for career advancement.

The Hudson survey reveals a number of key issues set to challenge employers over the next year or so, as staff prepare to leave after being locked in a position for two years, while businesses are also keen to hire to make up for lost talent.

The survey shows about 59% of employers believe their teams are understaffed and many are now seeking out new employees with 56% saying they are “cautiously optimistic” about the future.

But Steyn points out the survey shows 40% of employees also have a personal goal to be in a new role in the next six months, as they were locked into their position during the downturn.

Many are feeling unmotivated and burned by their current employers, with 20% having said they reduced or cancelled bonuses for staff, while 11% implemented pay cuts for some or all staff.

“Organisations are positioning themselves for growth, to drive innovation. But at the same time, their employees have been stuck for 18 months, and with plenty of opportunities they are looking around for new work.”

“The market is now filled with passive job seekers, people moving around and so on. It’s not having a big impact on unemployment, but there is a lot of movement between organisations.”

As a result, businesses are now preparing for some serious skills shortages, with companies now hiring to fulfil those roles lost in the downturn, combined with the positions that will be left vacant when long-term employees head for greener pastures.

These movements are likely to happen, with the survey showing 51% of employers believe their staff are now looking for jobs because they feel they have more choice. About 24% of employers believe their staff are less satisfied with their jobs.

Steyn says businesses are facing an extremely difficult challenge to retain existing staff, as well as attracting wandering employees looking for a deal. He warns not to overcommit in either case.

“For existing staff, organisations need to be on the front foot. They need to communicate where they are taking the business, the role they are going to play, offering career development and so on. That doesn’t mean promotion, it means opportunities.”

“The second point for actually recruiting people, is that you have to offer a key value proposition. Clarify what your business is about, clarify their role, and then make sure you give them the right motivation. These job seekers are moving because they want something better, not side stepping.”

The survey shows 23% of employers are now attempting to demonstrate to candidates why they should work for them. They are also worried about hiring the wrong people before a skills shortage sets in, with 51% concerned about the subsequent impact on productivity.

Steyn points to the survey, which reveals 53% of employees are having to “raise the bar” in their hiring. While he says employers are keen for new talent, he says they shouldn’t overcommit.

“Do I see counter offers occurring, or people paying bonuses to move across? Yes, I see those things coming back into the market. But there is also a need to break out of this cycle, and businesses need to face up to this challenge.”