The Hudson Update Q2 2011

THE HUDSON UPDATEEMPLOYEE TRENDS – England’s North, Midlands, Home Counties & South West

QUARTER 2 - 2011

INTRODUCTION

Welcome to The Hudson Update. In this edition, for the first time, we include hiring expectations and employee trends in England’s Home Counties and South West alongside the Midlands, North West and North East. The findings in this report relate to expectations for Q2 2011 and are based on in-depth research of the region, conducted by interviewing clients across a broad spectrum of industries and job sectors.

The Hudson Update is issued quarterly and provides periodical research and interpretation of employer trends and expectations. References to historical data will be made so that comparisons, trends and predictions may be identified across the industry.

The survey was completed by nearly 1,000 employers. The

top three highest respondent groups were the Professional Services (16.9%), Financial Services/Insurance (12.2%) and Retail (8.7%) sectors. There was also significant representation from the IT, Manufacturing and Public sectors with an even spread amongst the remainder. The vast majority of respondents (70.7%) were from companies of 200 people or more.

The industry sectors surveyed across the North, Midlands, Home Counties and South West of England were:

∟ Advertising/Marketing/Media

∟ Construction/Property/Engineering

∟ Education

∟ Financial Services/Insurance

∟ FMCG

∟ Healthcare (Public Sector)

∟ Information Technology

∟ Manufacturing

∟ Non-Profit

∟ Pharmaceutical

∟ Professional Services

∟ Public Sector

∟ Resources

∟ Retail

∟ Telecommunications

∟ Tourism & Hospitality

∟ Transport

∟ Utilities

∟ Wholesale/Distribution

ABOUT HUDSON

Hudson is one of the world’s leading providers of permanent recruitment, contract professionals, outsourced solutions and talent management services. With over 2,000 employees in approximately 20 countries, we help our clients achieve greater organisational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses.

From single placements to outsourced solutions, we translate human capital strategies into practical actions and measurable results. Beyond placing candidates into contract, interim, and permanent roles, we help clients implement effective long-term recruiting and retention strategies. Our underlying goal is to improve performance at every level.

Hudson UK & Ireland operates across 11 offices in the region, all providing localised specialist services to each market. In the English Regions, we specialise in the following functions; Accounting & Finance, HR, IT, Legal, Marketing & Communications, Public Sector, Sales and Supply Chain & Procurement. Our client list is varied, ranging from privately owned businesses and SMEs through to FTSE 100 and household Blue Chip companies.

HIRING TRENDS IN THE MIDLANDS & NORTH OF ENGLAND

Since the inception of The Hudson Update in early 2010, we recorded four consecutive quarters where hiring expectations have grown. Now into its fifth quarter, it is the first time we are seeing a tempering of hiring expectations, as growth in recruitment is now declining. Permanent hiring expectations have declined only slightly compared to Q1 2011 (net increase of 27%) however contract/temporary hiring expectations fell more sharply (net increase of 6.7%).

While expectations have somewhat eased, these findings still represent strong growth when comparing data to 2010 – particularly in the permanent hiring sector. The first edition in 2010 recorded a net increase of 11% (permanent) and a net decrease of 6% (contract/temporary) in hiring expectations.

The reasons we are seeing these results could be due to a number of factors. Earlier in the year, there were reports of a “double-dip” recession in the UK and this may have sparked caution amongst employers in the Midlands and North. In addition, it is clear from our previous reports that companies have been hiring permanent staff meaning many may have fulfilled their requirements. Further to this, many employers may be focusing on recruiting permanent employees resulting in the decline in contract/temporary hiring expectations we have witnessed.

NET INCREASE OF 26.6% IN PERMANENT HIRING EXPECTATIONS FOR Q2 2011. NET INCREASE OF 0.7% IN CONTRACT/TEMPORARY HIRES EXPECTED.

DOES YOUR TEAM/BUSINESS UNIT EXPECT TO INCREASE/DECREASE ITS PERMANENT STAFF LEVELS IN YOUR COUNTY DURING THE APRIL TO JUNE 2011 PERIOD?

DOES YOUR TEAM/BUSINESS UNIT EXPECT TO INCREASE/DECREASE ITS CONTRACTING/TEMPORARY WORKFORCE OVER THE APRIL TO JUNE 2011 PERIOD?

No change

No change

Decrease

Decrease

Increase

Increase

50%

11.7%

38.3%

67.7%

16.5%15.8%

HIRING TRENDS IN THE HOME COUNTIES & SOUTH

WEST OF ENGLAND

As this is the region’s first appearance in the Hudson Update, there is no historical data to make comparisons with. There are some indications of slight differences in hiring expectations between Northern and Southern respondents however. Expectations for permanent hiring are slightly lower in the South (by around 2%) but significantly higher (by 7%) for temporary/contract recruitment.

It can be concluded that Southern managers are more focused on short term hiring for the coming months which could be due to a number of factors. With the public sector being more prevalent in the surveyed

regions, this may have an effect as these organisations are still concerned by headcount – a solution for which is often an increase in temporary staff. In addition, as may be the case with the North, media reports of a “double-dip” recession may have encouraged managers to focus more heavily on lower risk contract staff. Either way, it is encouraging to see that more Southern businesses are aiming to recruit in one way or another.

NET INCREASE OF 24.4% IN PERMANENT HIRING EXPECTATIONS FOR Q2 2011. NET INCREASE OF 7.7% IN CONTRACT/TEMPORARY HIRES EXPECTED.



No change

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47.8%

13.9%

38.3%

55.8%

26%18.2%

EMPLOYEE TRENDS IN THE NORTH, MIDLANDS, HOME COUNTIES & SOUTH WEST

The majority of employers in the Midlands, North and South of England provide a competitive remuneration package to their staff according to over 70% of our respondents. Just 17% said they did not, meaning employees in these regions are generally being paid well.

Considering that the country is emerging from a deep and costly recession, this is encouraging news. Many organisations had to cut costs and it was salaries that became a prime target. It is possible then that many businesses have now reinstated these cuts and salaries are beginning to rise again.

In all regions, the salary review process most used by managers was overwhelmingly in favour of the annual performance review. Over 60% of respondents chose this method which certainly has many benefits including a system to monitor performance and an ability to set motivating targets with tangible rewards.

ENGLAND’S EMPLOYERS PAY THEIR STAFF WELL. OVER 70% OF NORTHERN AND MIDLANDS RESPONDENTS SAID THEY FEEL THEIR COMPANY OFFERS A COMPETITIVE REMUNERATION PACKAGE. OVER 73% OF SOUTHERN RESPONDENTS ANSWERED THE SAME.

IN YOUR OPINION, DOES YOUR COMPANY OFFER A COMPETITIVE REMUNERATION PACKAGE?

No

Unsure

Yes

17%

11%

72%

With around 27% of respondents failing to offer bonuses and up to 23% only offering them to certain staff, mainly fee earners, it appears that support staff in these regions only have a 50/50 chance of receiving a bonus.

From an employer’s perspective, bonuses can be a distinctive advantage when attracting top quality candidates, leaving those who don’t offer bonuses with a significant challenge. While it can be argued that this particular benefit may not be a key motivator when a person is in their role, it certainly impacts the decision making process when candidates are deciding between job offers.

In addition, while it is reasonable and generally accepted that fee earners gain bonuses for their work, those companies who pay them only to these employees should consider the impact of this on non-fee earners. Businesses need to ensure they engage these staff members in other ways such as separate benefits or investment in their development.

OVER A QUARTER OF RESPONDENTS - 27% IN THE NORTH & MIDLANDS AND 26% IN THE SOUTH - DON’T OFFER BONUSES TO STAFF AT ALL WHILE AROUND 23% (NORTH & MIDLANDS) AND 18% (SOUTH) ONLY OFFER BONUSES TO CERTAIN STAFF MEMBERS.

DOES YOUR COMPANY OFFER BONUSES TO STAFF?

No

Only to certain employees

Yes

25.6%

21%

53.4%

Many of the “traditional” benefits that companies offer are still seen as a staple of the remuneration package by the vast majority of our respondents. Annual salary reviews (87%) and pension contributions (83%) are two benefits receiving a lot of support from businesses. Of those benefits with statutory requirements attached to them, it would seem that employers will consider enhancing these benefits for staff members. Ninety one per cent of our respondents held this view with regards to maternity/paternity leave while 76% feel that additional paid holidays should be added over statutory.

It is interesting to note that 67% of our respondents indicated that they see bonuses as a perk. When you look back at our earlier analysis on this subject, this may be an indication that a large number of employers feel that they are exceeding

expectations by offering this as a benefit. Furthermore, 62% of respondents felt that health/medical insurance is a perk leaving a significant 38% seeing it as a minimum expectation. It is likely that this benefit will increase in importance as more and more employers offer it. Candidates will begin to expect this in their package and employers will have to offer it to remain competitive.

SOME BENEFITS (LIFE ASSURANCE, CHILDCARE AND TRAINING) SPLIT OPINION WHEN ASKED IF THEY CAN BE EXPECTED AS PART OF THE MINIMUM PACKAGE OR IF THEY ARE A PERK. ANNUAL SALARY REVIEWS, PENSION, MATERNITY LEAVE AND PAID HOLIDAYS ARE SEEN BY THE VAST MAJORITY AS A “MUST-HAVE” BENEFIT.

PLEASE INDICATE WHETHER YOU FEEL THE FOLLOWING SHOULD BE EXPECTED AS A MINIMUM BY YOUR EMPLOYEES IN A REMUNERATION PACKAGE OR IF YOU CONSIDER IT TO BE A PERK.

Some benefits split opinion amongst our respondents. Life assurance (53%) and subsidised training (52%) were only slightly considered as an expectation. While life assurance may be seen as a tactic that may or may not be used to attract candidates, it is somewhat surprising that more businesses don’t place more value on subsidised training – especially as this can have a direct, beneficial impact on the business. Further to this, child care facilities/vouchers were seen by a slight majority (57%) as a perk. This is likely to be due to the cost of providing such a benefit, however it may also raise the question in an ongoing debate, of whether women receive enough support in the modern workplace.

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With most employers across the regions surveyed saying that they benchmark their salaries using competitor analysis, it is interesting to note that this information is available within industry circles. It is a valuable source of information as it enables businesses to remain competitive when in the market for highly sought after candidates.

There were some slight differences between Northern and Southern businesses when looking at other methods in benchmarking. In the Midlands and North of England, managers also used agency salary surveys (34%) and professional industry guidelines

(32%), both of which provide a valuable service in this area across multiple industries and job types.

A large number of managers in the Home Counties and South West also used professional

COMPETITOR ANALYSIS IS THE MOST POPULAR METHOD OF BENCHMARKING SALARIES - 43% IN THE MIDLANDS & NORTH AND 41% IN THE HOME COUNTIES & SOUTH WEST.

industry body guidelines (33%) however this is used significantly more than agency salary surveys (23%). Further to this, advertised salaries are also a popular benchmarking tool with 24% selecting this option.

HOW ARE SALARIES BENCHMARKED BY YOU IN YOUR ORGANISATION (CHOOSE AS MANY AS IS APPROPRIATE)?

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Although the market across the English regions as a whole is showing signs that growth in recruitment is generally declining, there is in fact a wide variation in sentiment across industry sectors. Some industries actually expected to increase their permanent headcount significantly, whilst others were much more likely to keep their headcount stagnant, or even reduce it. A similar representation was seen in the expectations of temp and interim trends.

More than half (54.4%) of the financial services/insurance organisations surveyed

expected to increase their permanent headcount in Q2 2011. A significant proportion (57.4%) of professional services organisations and 60% for resources organisations also foresaw growth in their organisation, demonstrating a return of confidence to these markets. This was compared with just 15% of pharmaceutical companies planning to make permanent hires. Unsurprisingly, public sector, health care and not for profit organisations also loitered low in this respect, all of which hovered around the 16-18% mark.

INDUSTRIES EXPECTING AN INCREASE IN HIRING

When looking at the temp/interim market by industry, the biggest expected increase in temporary staff hires mimicked permanent hiring trends, as once again it was the resources industry forecasting the greatest increase (40% of these organisations) in temporary staff numbers. Similarly, pharmaceutical organisations were again the least likely to recruit, with just 10% of pharmaceutical companies saying that they would be increasing their temporary staff numbers in the following period.

EMPLOYMENT EXPECTATIONS BY

INDUSTRY

When looking at the industries expecting to decrease their permanent headcount, it was naturally public sector organisations that fared badly, with up to 35% of respondents from the industry saying they expected cuts. In contrast,

resourcing organisations, once again holding strong, expected absolutely no decreases in staff.

When looking at reducing the number of temporary employees, professional

INDUSTRIES EXPECTING A DECREASE IN HIRING

services fared best with only 7.1% of organisations expecting to reduce their temporary employee numbers next quarter. In contrast, 40% of public sector organisations envisaged a reduction in their temporary workforce.

The majority (50%+) of organisations within advertising/marketing/media, construction/property/engineering, education, FMCG,

health care, manufacturing, non – profit, pharmaceutical, retail, tourism & hospitality, transport and utilities all predicted that there would be no change

INDUSTRIES EXPECTING NO CHANGE IN HIRING

to permanent staff levels in Q2 2011. This was similarly reflected in temporary staff expectations.


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Our survey indicated that the majority of organisations believe they offer a competitive remuneration package (averaged out across all industries to nearly 70%).

But what of specific industries? According to employers’ beliefs, manufacturing is the industry to

work for – with huge proportion (81.7%) of manufacturing employers saying that their organisation offers a competitive remuneration package. Pharmaceutical was not far behind, with 80% of organisations saying the same. In contrast, only 50% of public

REMUNERATION BY INDUSTRY

sector health care organisation felt their employee package was competitive, which may be reflective of the pessimism occurring in the current employment market in public sector.

IN YOUR OPINION, DOES YOUR COMPANY OFFER A COMPETITIVE REMUNERATION PACKAGE?

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Many companies make the mistake of using salary as a motivator, or at least their primary motivator. Research in the UK and the US has shown that an employee’s salary, in isolation, does not in itself motivate staff to perform better. The only time that a remuneration package becomes an issue is if the employee feels that they are not being paid enough. In this case the employee may become de-motivated and this is probably down to their feeling a sense of self-worth and value to the company. So it is important to get the salary package right, so that your employees know they are valued by the organisation, however it should not be used as a reward.

The true motivation of staff comes from cognitive sources, and companies can implement a variety of techniques to get

the most out of their workforce. Some of the most powerful forms of motivation don’t come from monetary rewards, but from focusing on the key points that affect an individual’s drive to succeed. Some examples:

∟ RECOGNITION – People are always buoyed when their achievements are recognised. This can be applied to staff by ensuring, when appropriate, that their work is praised and acknowledged by senior figures in the organisation. Make sure to share a colleague’s success with team mates and reward staff with career development opportunities.

∟ TRUST – Even in everyday life, people are happy when they gain another’s trust. The same can be said in the workplace. This can be done by assigning

THE HUDSON RECOMMENDATION:

extra responsibility, or more important responsibility, to staff members. If they see they have been trusted to carry out these tasks, they will be motivated to ensure that your trust is not misplaced.

∟ EMPOWERMENT – Nothing says “I believe in you” like empowering your employees. It can yield excellent results if you allow your staff to make important decisions then to see these decisions carried out. In addition, make your people feel heard. Actively encourage your team to come up with ideas and make sure you commit to seeing the best ideas implemented. This can be highly beneficial for both employee and employer.

ENSURE YOUR FOCUS ON STAFF MOTIVATION REACHES BEYOND JUST THEIR PAY PACKET

Much of what motivates a person at work stems from the PSYCHOLOGICAL CONTRACT. There are many factors beyond the written contract that influence the level of engagement an employee demonstrates. Whilst remuneration packages may play a role in de-motivation if insufficient, it is most often factors of the psychological contract which determine employee levels of motivation and productivity. Employees come to expect certain things that are not explicitly expressed in writing from their employers, and vice versa, and without a clear view on these things a relationship can go sour and the best is not derived from both parties.

For employees, they will have certain expectations of their employers in relation to job content, career development, social atmosphere, training, financial rewards, work-life balance and security. Where an employer does not meet expectations, an employee may become disillusioned and disenchanted with their role – leading to wavering levels of motivation and productivity.

IT’S ALL HAPPENING UPSTAIRS…

As with any contract, written or otherwise, there is two or more parties involved, and thus in order for the relationship to be successful, employers will have their own expectations of employees, but this will be in terms of their performance, collegiality, flexibility, loyalty, professionalism and employability. Any mismatch between delivery and expectations will damage the relationship.

It is for these reasons that employer and employee must ensure open and clear communication about all of these factors, so that expectations are addressed and understood from the onset, to ensure both parties are satisfied and optimum success can be achieved.

YOUR POINTS OF CONTACT

Thank you for taking the time to read this update. To discuss further, please get in touch with your local Hudson contact:

JAN COLLIGAN Birmingham t: 0121 634 5176 e: [email protected]

STEVEN UNDERWOOD Bristol t: 01173 330 000 e: [email protected]

LEE BHANDAL Leeds t: 0113 297 9545 e: [email protected]

FRANK WADSWORTH Manchester t: 0161 819 7541 e: [email protected]

GARY FAY Milton Keynes t: 01908 547 817 e: [email protected]

JEMMA RAWLINS Reading t: 01189 522 466 e: jemma.rawlins

The Hudson Update Q2 2011

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Transcript of The Hudson Update Q2 2011