Annual survey report in partnership with RESOURCING AND TALENT PLANNING

Annual survey report 2011 in partnership with RESOURCING AND TALENT PLANNING 2011

2011 CONTENTS Foreword 2 Summary of key findings 4 1 Recruiting employees 7 2 Resourcing and talent management in turbulent times 20 3 Diversity 27 4 Managing labour turnover 29 Conclusions 33 Background to the survey 35 Further sources of information Acknowledgements Footnotes 38 39 40 RESOURCING AND TALENT PLANNING 2011 1

RESOURCING AND TALENT PLANNING foreword cipd.co.uk/2011resourcingandtalentplanningsurvey 2 Welcome to the fifteenth edition of our annual Resourcing and Talent Planning survey report. As in previous years, we provide useful benchmarking data for organisations on resourcing trends, costs and turnover. This year we have included new topical sections which we hope you will find useful examining the employment of younger workers, the length of the recruitment process, the nature of job vacancies, relationships with recruitment partners and the use of strengths-based approaches to recruitment. The headlines from this year s findings are that recruitment activity remains low, yet organisations are experiencing recruitment difficulties in spite of more people in the labour market. The top reason for the recruitment difficulties is a lack of necessary specialist or technical skills. Strategies employed by some to try to fill skills shortages include increasing their use of apprenticeships, interns and considering sponsoring students through universities. Employers however need to think more holistically and long term when it comes to skills shortages, such as linking up with educational establishments to ensure the curriculum is preparing students well for the world of work and developing their internal talent pipelines around skills shortage areas. We feature a case study in this report from the Association of Greater Manchester Authorities (AGMA). This real-life example helps to bring the findings to life and provide some practical evidence of how organisations are reconfiguring their resourcing and talent strategies for maximum effect in difficult times. Claire McCartney Adviser, Resourcing and Talent Planning CIPD Despite continued high unemployment, many UK organisations continue to face difficulties in attracting professionals with the right skills and experience. Hays has observed an increasing tendency for organisations, regardless of size or sector, to become more rigid with regards to the people they wish to recruit. Employers are less likely to compromise than they have been in the past and will delay recruitment until they find someone with exactly the right skills, qualifications and experience. At the same time job roles are becoming increasingly niche, which only adds to the recruitment difficulties employers face today. This research suggests these problems look set to continue and will only get worse long term due to the rising number of young people not in training, education or employment, if organisations fail to address underlying problems. Added to this many of the challenges that organisations have always faced still remain current, such as a shortage of professionals with specialist or technical skills and the poor image associated with certain professions. This highlights the need for UK organisations to invest in designing a creative resourcing and talent attraction strategy now more than ever before. Julie Waddicor Managing Director, Hays Human Resources, the leading recruiting expert

2011 ABOUT US Chartered Institute of Personnel and Development Hays The Chartered Institute of Personnel and Development (CIPD) is Europe s largest HR and development professional body. As a globally recognised brand with over 135,000 members, we pride ourselves on supporting and developing those responsible for the management and development of people within organisations. Our aim is to drive sustained organisation performance through HR, shaping thinking, leading practice and building HR capability within the profession. Our topical research and public policy activities set the vision, provide a voice for the profession and promote new and improved HR and management practices. We know what good HR looks like and what HR professionals need to know, do and deliver at different stages of their career, be they specialists or generalists, working in the UK or internationally. Hays is the world s leading recruiting expert in qualified, professional and skilled work. It employs over 7,000 staff in 257 offices across 30 countries. Last year Hays placed around 50,000 people in permanent jobs and nearly 180,000 in temporary positions. Hays works across 17 specialist areas, from healthcare to telecoms, banking to construction and education to IT. It operates across the private, public and not-forprofit sectors. Its recruiting experts deal with 150,000 CVs every month and more than 50,000 live jobs globally at any one time. The depth and breadth of their expertise ensures that Hays understand the impact the right individual can have on a business and how the right job can transform a person s life. www.hays.co.uk We offer: membership professional development including qualifications and training networking opportunities and world-class events expertise in HR capability-building and consultancy services topical insights and analysis a wealth of resources and a voice for HR. cipd.co.uk RESOURCING AND TALENT PLANNING 2011 3

RESOURCING AND TALENT PLANNING SUmmARy Of key findings The CIPD s 2011 Resourcing and Talent Planning survey report, produced in partnership with Hays, contains valuable information on current and emerging trends in people resourcing practice. This annual benchmarking survey is based on 626 respondent organisations from the UK. The survey examines organisations resourcing and talent planning strategies and practices and the key challenges and issues they face. New question areas this year examine the employment of younger workers, the length of the recruitment process, the nature of job vacancies, relationships with recruitment partners and the use of strengths-based approaches to recruitment. cipd.co.uk/2011resourcingandtalentplanningsurvey Resourcing strategies and objectives Just over half of survey participants report having a formal resourcing strategy. Larger organisations are most likely to have a resourcing strategy. The number and nature of vacancies On average the number of vacancies organisations attempted to fill in 2010 remains as low as in 2009, during the recession. The number of vacancies in very large organisations, particularly in the public sector, has dramatically reduced over the past three years. Three-quarters of permanent vacancies were filled with external candidates. Three-fifths of organisations require candidates to have specific sector experience. Twice as many public sector organisations (48%) expect they will recruit fewer people as a consequence of the abolition of the Default Retirement Age (23% overall). Graduate recruitment Two-fifths of organisations are concerned that the increase in university tuition fees will have an impact on the number of graduates in the marketplace. One in ten organisations are considering sponsoring students through university (20% of manufacturing and production), 22% increasing their use of internships and 30% increasing apprenticeship schemes (48% of manufacturing and production). Just over a quarter of organisations operate a structured graduate recruitment programme (35% of manufacturing and production). Few organisations have closed graduate recruitment programmes over the past 12 months; however, half of public sector organisations had reduced their intake (50% compared with 20% in the private and not-forprofit sectors). 4

2011 Recruitment difficulties One in three organisations report the length of their recruitment process has led to the loss of potential recruits. Three-quarters of organisations experienced recruitment difficulties in the past few months. Managers and professionals and technical positions are the most difficult vacancies to fill. As in previous years, the main reason for recruitment difficulties is a lack of necessary specialist or technical skills. Nearly three-quarters of organisations had made efforts to improve their employee brand over the last year, most commonly through employee surveys and developing online career sites. Attracting and selecting candidates While the effectiveness of methods to attract applicants varies according to organisation sector and size, the most effective method overall is reported to be through organisations own corporate websites, as was the case last year. The private sector, particularly manufacturing and production organisations, are three times more likely than public sector organisations to include recruitment agencies among their most effective methods for attracting candidates. Overall, a third of organisations report they have reduced their use of recruitment partners; however, one in five report they have formed a closer business partnership with them over the past year and one in ten that they consider them integral to attracting top talent. Competency-based interviews (70%), interviews following the contents of CVs/application forms (63%) and structured interviews (56%) are, as last year, the most common methods used to select applicants. Two-fifths of organisations report they use a strengths-based approach to recruitment, although it is less commonly used in the public sector (26%). The median recruitment cost of filling a vacancy is 7,500 for senior managers/directors and 2,500 for other employees (adjusting for accuracy), showing reductions compared with last year. Resourcing in turbulent times Half of the organisations surveyed report the economic climate has had a negative impact on their organisations resourcing budgets for 2011 12. This year, it is the public sector that is most severely hit, with four out of five (82%) reporting their resourcing budgets will be reduced (up from 59% last year). Changes in resourcing and talent practices in 2011 compared with 2010 reflect a stronger focus on costs and reductions in budgets. More organisations anticipate they will be focusing on developing talent in-house, retaining rather than recruiting talent and reducing their reliance on recruitment agencies and external consultants for resourcing and development. Nearly half of public sector organisations will be implementing a recruitment freeze in 2011, compared with one-fifth of organisations overall. Two-thirds of public sector organisations and 29% of private organisations will be reducing the number of new recruits they hire. The volume of applicants for vacancies has increased, reflecting the high unemployment rate. Three-quarters of organisations have noticed an increase in the number of unsuitable applicants and a third report that there are too many suitable candidates to choose from. Despite high unemployment over the last two years, more than half (52%) believe that competition for talent is even greater as the pool of available talent to hire has fallen sharply (2010: 41%; 2009: 20%). Most organisations remain focused on managing talent despite increased attention on reducing costs, with only 4% reporting that their focus on talent has decreased. Nevertheless, 18% of organisations (32% of the public sector) have reduced their overall talent management spend as a consequence of the economic downturn. RESOURCING AND TALENT PLANNING 2011 5

RESOURCING AND TALENT PLANNING Diversity Overall, in little change from previous years, just over half of organisations have a diversity strategy, rising to 90% of public sector organisations. Our figures indicate a reduction in the use of several methods to address diversity issues this year, particularly in the public sector, which has traditionally led the way in diversity practice. Labour turnover The median labour turnover rate has decreased over the past few years (2011: 12.5%; 2010: 13.5%; 2009: 15.7%; 2008: 17.3%). Smaller organisations are most likely to report that their labour turnover has increased and larger organisations that it has decreased. As in previous years, the majority of turnover is attributed to employees leaving voluntarily. The rate of voluntary leavers has increased slightly in the private sector compared with last year but decreased in the voluntary and public services sector, reflecting the growth/cuts in the respective sectors. The proportion of organisations making ten or more redundancies over the past year has reduced from 33% in 2009 to 12% in 2010. Employee retention Only two-fifths (42%) of organisations experienced no difficulties in retaining staff during 2010, a similar figure to the previous year. Managers and professionals/specialists and technical employees remain the most difficult categories of staff to retain. Most organisations have taken one or more steps to address staff retention; however, nearly one in four organisations (a similar proportion to the previous year) report that no specific retention initiatives were undertaken in 2010. The most frequently cited actions taken by employers to address retention improving the people management skills of line managers and increased learning and development opportunities are the methods most commonly rated most effective. Improving the induction process is also commonly used to address retention but views on its effectiveness are more mixed. cipd.co.uk/2011resourcingandtalentplanningsurvey 6

2011 1 RECRUITING EmPLOyEES This section explores trends and developments in recruitment strategies and activity within UK organisations during 2010. It examines the adoption of formal resourcing strategies, changes in the number of job vacancies organisations attempted to fill, the extent and nature of recruitment difficulties over the past year and the strategies employers use to overcome these challenges. It also includes developments in graduate recruitment, the most effective approaches for attracting applicants and the methods used for selection. For the first time we explore the nature of job vacancies, the length of the recruitment process, the employment of younger workers, changing relationships with recruitment partners and efforts to improve the employer brand. Finally, the costs associated with recruitment are discussed. Resourcing strategies Just over half of respondents surveyed report their organisation has a formal resourcing strategy in place, a similar proportion to last year (2011: 54%; 2010: 56%; 2009: 58%). The likelihood of organisations having a formal strategy in place increases with organisational size, as was the case last year (Table 1). 1 There are no significant sector differences. Table 1: Organisations with formal resourcing strategies in place, by size (%) Size number of employees in UK % Fewer than 10 26 10 49 38 50 249 46 250 999 55 1,000 4,999 68 More than 5,000 85 Base: 604 RESOURCING AND TALENT PLANNING 2011 7

RESOURCING AND TALENT PLANNING The number and nature of job vacancies There is considerable variation in the number of vacancies respondents organisations tried to fill in 2010, partly because the number of vacancies is strongly related to organisation size (Table 2). 2 Overall, the median number of vacancies has fallen from 30 in 2008 to 20 over the past two years as the recession affected increasing numbers of organisations (Table 2). While there is no overall change from last year in the median number of vacancies organisations tried to fill, there has been a substantial fall in the proportion of vacancies very large organisations (5,000+ UK employees) attempted to fill, from a median of 550 in 2009 to 200 in 2010 (800 in 2008). The reduction in vacancies in very large organisations is striking in the private and public sectors, but particularly in the latter, where the median number of vacancies organisations attempted to fill in 2010 was less than a third than in 2009. This reflects the sluggish growth in the private sector and, in particular, the significant cuts in public sector budgets. Table 2: Median number of vacancies respondents tried to fill, by size of organisation and sector cipd.co.uk/2011resourcingandtalentplanningsurvey No. of permanent staff employed in UK All 2011 survey 2010 survey 2009 survey Private sector Public services All Private sector Public services All Private sector Public services Median Median Median Median Median Median Median Median Median 1 49 3 3 1 3 3 2 50 249 12 12 10 12 10 14 10 10 8* 250 999* 45 50 30 46 45 50 60 52 70 1,000 4,999 110 150 55 100 100 100 300 300 300 More than 5,000 200 500 150 550 850 500 800 800 550 All organisations 20 20 30 20 20 80 30 20 100 Base: 577 (2011); 442 (2010); 683 (2009) *The categories for number of permanent staff employed in the UK differed slightly in the 2009 survey (250 or fewer; 251 500, 501 1,000, 1,001 5,000, 5,001 10,000, 10,001+). 2009 categories have been combined where appropriate and otherwise matched with the best corresponding category of 2011/2010. 8

2011 Overall, nearly three-quarters (73%) of permanent vacancies were filled with external candidates. Larger organisations, with a wide range of talent to choose from, are more likely to recruit internally than smaller organisations. 3 Public sector organisations, particularly those with more than 1,000 UK employees, are more likely to recruit internally than the private sector (Table 3). 4 Organisations are divided in their use of temporary contracts. More than a quarter (28%) have employed more people on temporary contracts in 2010 compared with the previous year, while a similar proportion (27%) have employed fewer people on temporary contracts (45% remain the same). Manufacturing and production organisations are most likely to have increased their use of temporary contracts and the public services the least, perhaps reflecting their reduced recruitment generally (Figure 1). 5 Table 3: Average percentage of job vacancies filled internally Voluntary, No. of permanent staff community and notemployed in UK Private sector Public services for-profit All Mean Mean Mean Mean 1 49 15 17 7 13 50 249 20 28 23 21 250 999* 24 29 24 24 1,000 4,999 35 58 12 39 More than 5,000 47 62 33 53 All organisations 25 45 19 27 Base: 533 figure 1: Use of temporary contracts, by sector in 2010, compared with the previous year (%) Manufacturing and production Private sector services Public services Voluntary, community and not-for-profit 37 23 31 28 More Same Less Base: 610 32 50 38 50 25 27 37 22 RESOURCING AND TALENT PLANNING 2011 9

RESOURCING AND TALENT PLANNING Sector-specific experience is an essential requirement of candidates in three-fifths (60%) of organisations overall. While our figures suggest it is less commonly required in the public sector (48% compared with 59% of the voluntary, community and not-for-profit sector and 63% of the private sector), 6 there are also substantial differences within sectors. For example, specific sector experience is essential for the majority of organisations operating in the chemical, construction or mining industries and professional services, but not for those in general manufacturing or retail and wholesale. Similarly, within the public sector it is deemed particularly essential for health and education organisations but less so for those in central or local government. Employing younger workers Figures from the Office for National Statistics show that while total unemployment fell during the three months to February 2011, youth unemployment rose to a record level of almost 1 million, equating to one in five economically active 16 24-year-olds out of work. Moreover, concerns have been raised as to whether high youth unemployment will be further compounded by the abolition of the Default Retirement Age later this year and the increase in university tuition fees. This year we included new questions in the survey to explore these issues. One in six organisations (17%) report they are employing more 16 24-year-olds compared with one year ago; this compares with less than one in eight (12%) who are employing fewer young people (72% are employing the same number). The employment of younger workers has reduced most in the public sector, where one in four reports a decrease compared with one in ten who reports an increase (Table 4). 7 This is likely to reflect a general reduction in recruitment in this sector. Overall, one-quarter of organisations expect the abolition of the Default Retirement Age will mean they recruit fewer people; however, the figure rises to nearly half of public sector organisations. It does not appear, however, that the abolition of the Default Retirement Age will have a particular impact on the recruitment of young people, with only one in ten organisations reporting it will result in fewer 16 24-year-olds being recruited (Table 4). cipd.co.uk/2011resourcingandtalentplanningsurvey Table 4: The employment of younger workers (%) Voluntary, Manufacturing community All and Private sector and respondents production services Public services not-for-profit Percentage employing fewer 16 24-year-olds than one year ago 12 10 9 25 10 Percentage agreeing the abolition of the Default Retirement Age means they will recruit fewer 16 24-year-olds Percentage agreeing the abolition of the Default Retirement Age means they will recruit fewer people Base: 605 11 18 6 17 9 23 25 15 48 22 10

2011 Graduate recruitment Two-fifths of organisations (39%) are concerned that the increase in university tuition fees will have an impact on the number of graduates in the marketplace. Public sector organisations are particularly concerned (49% compared with 34% of private sector services, 42% of not-for-profits and 43% of manufacturing and production organisations). 8 Perhaps in order to address this deficit, or in response to additional government support to boost apprenticeship schemes, a third of public sector organisations, nearly half of manufacturing and production and about a quarter of private sector services and not-for-profit organisations are considering increasing apprenticeship schemes (Table 5). About a quarter of organisations overall are considering increasing their use of internships, although the proportion is markedly lower in the public sector. Overall, one in ten organisations are considering sponsoring students through university, but the proportion doubles in manufacturing and production, where the lack of appropriate skills is a common cause of recruitment difficulties (Table 5; see also Tables 8 and 9). Larger organisations are also more likely to consider sponsoring students through university (19% of those with more than 5,000 employees). 9 Overall, just over a quarter of organisations operate a structured graduate recruitment programme (Table 6). The operation of these programmes is significantly related to organisation size (Figure 2). 10 They also appear to be most common in the manufacturing and production sector, as last year when a step increase in their use was noted (Table 6). It appears that this sector is investing in the development of skills to address their deficit in the workforce generally. As in previous years voluntary, community and not-for-profit organisations are least likely to operate a structured graduate recruitment programme. 11 Table 5: Activities organisations are considering (%) Voluntary, Manufacturing community All and Private sector and respondents production services Public services not-for-profit Increasing apprenticeship schemes 30 48 24 33 27 Increasing your use of internships Sponsoring students through university Base: 615 22 27 23 12 27 10 20 8 12 1 Table 6: Organisations operating a structured graduate recruitment programme, by sector (%) 2011 2010 2009 2008 All 27 34 22 23 Sector Manufacturing and production 35 35 23 24 Private sector services 29 37 24 27 Voluntary, community and not-for-profit 6 18 5 7 Public services 26 33 23 24 Base: 614 (2011); 472 (2010); 752 (2009) RESOURCING AND TALENT PLANNING 2011 11

RESOURCING AND TALENT PLANNING The majority of respondents from organisations without a recruitment programme for graduates report that their organisation has never had such a programme or not had one for some time (97%). Even in the cash-strapped public sector, only 3% report they have closed their graduate recruitment programme in the last 12 months. Nearly a third (31%) of organisations who have a graduate recruitment programme have increased their intake over the past year, while a quarter have reduced their intake (24%). This shows an improvement on the previous year at the height of the recession, when 43% had reduced their intake. The impact of the budget cuts in the public sector are, however, clearly apparent as more than twice as many organisations in this sector (50% compared with 20% in the private and not-for-profit sectors) have reduced their graduate intake. Length of recruitment process One in three (31%) organisations report that the length of their recruitment process has led to the loss of potential recruits. This issue appears to be exacerbated by organisation size. Nearly half of organisations with more than 5,000 employees report that the length of their recruitment process has led to the loss of potential recruits, compared with 38% of those in organisations of 250 999 employees and just 15% of organisations with fewer than 50 employees. 12 There are no significant sector differences. Recruitment difficulties Three-quarters of organisations with vacancies report difficulties in filling at least some over the past few months (75%). This is an increase on last year (2010: 68%) and may reflect the decrease in unemployment in the first few months of 2011. It is less, however, than in previous years, perhaps because organisations were attempting to fill fewer vacancies (2009: 81%; 2008: 86%). figure 2: Organisations operating a structured graduate recruitment programme, by size (%) Number of UK employees cipd.co.uk/2011resourcingandtalentplanningsurvey Fewer than 50 9 17 50 249 16 21 250 999 29 39 1,000 4,999 42 47 More than 5,000 61 62 0 10 20 30 40 50 60 70 80 Percentage 2011 2010 Base: 609 (2011); 466 (2010) 12

2011 The private sector, particularly manufacturing and production organisations, are most likely to have difficulties filling vacancies (Table 7). 13 Table 8 shows that over half of organisations in this sector have difficulty filling technical vacancies and this may reflect specific skills shortages in the UK. The most difficult category of staff to recruit in other sectors is managers and professionals/specialists, as was the case last year. In general, there is little change in the categories of vacancies that are most difficult to recruit for compared with last year. As would be expected, given the cuts to public sector budgets, one in ten public sector organisations report they did not have any vacancies to fill, twice as many as last year. There is little change in this regard in the other sectors. Table 9 shows the reasons respondents cite for their recruitment difficulties. The findings are similar to previous years. Lack of necessary specialist or technical skills remains by far the most frequently cited cause of difficulties, reported by nearly three-quarters of respondents (2011: 72%; 2010: 67%; 2009: 73%; 2008: 70%). This is particularly an issue for the manufacturing and production sector and the public services sector, where there is a particularly high demand for such skills. Lack of formal qualifications is far less of an issue. These findings support arguments for greater collaboration between industry and academic institutions and more vocational training in order to meet organisations skill requirements. Higher pay expectations than the organisation could offer and lack of experience are the next most frequently cited causes of recruitment problems (46% and 40% respectively). Interestingly, these are less of an issue in the public sector, perhaps because public sector applicants have different expectations of pay or because some pay scales are set at a national level. Lack of experience may be less of an issue than the necessary skills or qualifications required in many public sector roles. The proportion reporting their recruitment problems are due to potential candidates reluctance to move in the current economic climate has decreased from just over a quarter in 2010 to 19% this year. Economic growth, albeit slow, is likely to be responsible for this reduction but the hangover of the recession is highlighted as one in five organisations still blame the economic climate for their recruitment problems. Despite high unemployment, 15% of respondents report they have experienced problems due to no applicants. In line with last year s findings, this is particularly an issue for the public sector (22%), which is also more likely to report the image of their sector/occupation is a problem (22%). Table 7: Organisations experiencing difficulties recruiting for one or more category of vacancy, by organisation size (% of those that have had vacancies to fill) Voluntary, Manufacturing community and Private sector and All 2011 production services Public services not-for-profit Difficulty filling one or more vacancies 75 88 77 66 62 No difficulties experienced 25 12 23 34 38 Base: 561 RESOURCING AND TALENT PLANNING 2011 13

RESOURCING AND TALENT PLANNING Table 8: Categories of vacancy that proved particularly difficult to fill (% of respondents) Voluntary, community Manufacturing Private and and sector Public not-for- All 2011 production services services profit All 2010 Other managers and professionals/specialists 34 41 33 27 34 37 Technical 30 53 29 20 16 28 Senior managers/ directors 14 13 16 10 16 16 Services (customer, personal, protective 7 6 8 3 5 5 and sales) Administrative, secretarial 4 3 4 4 4 3 Manual/craft workers 4 11 3 1 0 2 Other 6 5 3 10 11 4 No difficulties experienced 23 12 22 30 38 25 No vacancies to fill 6 3 7 10 1 6 Base: 597 (2011); 468 (2010) cipd.co.uk/2011resourcingandtalentplanningsurvey Table 9: Reasons for recruitment difficulties (%) Voluntary, community Manufacturing Private and All and sector Public not-for- All 2011 production services services profit 2010 Lack of necessary specialist or technical skills 72 82 69 80 59 67 Look for more pay than you could offer 46 47 48 34 52 39 Lack of experience 40 42 43 27 41 36 Reluctance to move in current economic climate 19 24 18 17 15 26 Lack of interpersonal skills 16 9 19 10 20 12 No applicants 15 9 16 22 20 15 Image of sector/ occupation/organisation 13 7 12 22 11 12 Relocation difficulties 9 19 6 10 7 8 Lack of formal qualifications The impact of the immigration cap* 7 7 7 5 7 4 3 2 4 3 4 Other 4 3 3 8 7 7 Base: 427 (2011); 330 (2010) *new item introduced in 2011 14

2011 Improving the employer brand Nearly three-quarters of organisations have made efforts to improve their employer brand over the past year (Table 10). The larger the organisation, the more likely it is to have undertaken one or more activities to improve its brand. Two-fifths of small organisations with fewer than 50 employees report they have taken no action to improve their employer brand compared with one-quarter of organisations with 250 999 employees and onesixth of those with more than 5,000 employees. There are no significant sector differences. The most popular approaches to improving employer brand are employee surveys and developing online careers sites, with larger organisations most likely to have adopted these methods. 14 The public sector is most likely to have introduced or extended flexible working/ homeworking, 15 whereas the private sector is more likely to have made efforts to improve its brand through working with charities or corporate sponsorship. 16 Voluntary, community and not-forprofit organisations are most likely to have used placement students to improve their brand. 17 Attracting candidates The effectiveness of methods to attract applicants varies according to sector and organisation size (Table 11). Overall, the most effective method is through organisations own corporate websites, as was the case last year. The effectiveness of this method increases with organisation size, probably due to the increased brand awareness and perhaps because larger organisations have more advanced websites. 18 The private sector, particularly manufacturing and production organisations, is three times more likely than public sector organisations to report recruitment agencies among their most effective methods and twice as likely as voluntary sector organisations (regardless of size). Search consultants and employee referral schemes are also notably more popular in the private sector than in the public or voluntary sectors. In contrast, the public and voluntary sectors are more likely to find the press effective for attracting applicants, including local and national newspaper advertisements and specialist journals/trade press. Secondments are also deemed to be more effective in these sectors than in the private sector. Table 10: Work undertaken over last year to improve employer brand (%) Voluntary, community All Private Public and 2011 sector services not-for-profit Employee surveys 39 39 38 43 Developing online careers site 30 33 23 29 Introducing/extending flexible working/ homeworking 24 20 39 29 Placement students 23 21 19 35 Graduate careers fairs 15 17 11 8 Working with charities 14 16 8 6 Corporate sponsorship 11 13 2 8 Introducing sabbaticals 3 4 1 5 Other 7 6 6 10 No action taken to improve employer brand 27 28 29 22 Base: 601 RESOURCING AND TALENT PLANNING 2011 15

RESOURCING AND TALENT PLANNING Table 11: Most effective methods for attracting applications, by industry sector (%) Sector 2011 Number of UK employees 2011 All 2010 All 2011 Manufacturing and production Private sector services Public services Voluntary, community and not-for-profit 1 49 50 249 250 999 1,000 4,999 More than 5,000 cipd.co.uk/2011resourcingandtalentplanningsurvey Own corporate website 63 59 44 57 77 66 42 55 57 77 79 Recruitment agencies 60 54 77 62 22 30 39 59 66 51 41 Local newspaper advertisements 36 32 38 23 41 51 28 35 35 29 29 Employee referral scheme 35 29 33 38 5 14 20 33 27 32 29 Commercial job boards 33 27 33 29 14 29 21 27 25 42 26 Specialist journals/trade press 31 27 24 23 30 43 26 23 32 32 24 Encourage speculative applications/word of mouth 24 25 30 29 9 23 27 31 23 19 19 Jobcentre Plus 23 25 24 24 22 34 16 29 21 25 32 Professional networking (such as LinkedIn) 14 16 11 23 5 9 28 13 13 18 17 Search consultants 22 15 24 17 5 4 14 11 17 18 15 Links with schools/colleges/universities 18 13 16 13 9 17 12 13 11 18 15 Apprenticeships 12 11 19 9 13 9 10 10 11 12 17 National newspaper advertisements 16 11 4 6 23 29 10 9 15 10 15 Secondments 11 11 7 8 21 12 2 9 13 11 19 Links with other local organisations making redundancies* 7 13 5 7 9 6 5 9 11 8 Alumni (previous employees) 5 5 6 7 2 1 7 2 6 11 3 Social networking sites (such as Facebook) 3 4 4 5 3 4 3 2 2 8 12 Local Employment Partnership (LEP) 6 3 1 4 2 5 1 2 3 4 9 Other 5 5 2 3 12 6 8 3 4 4 5 Base: 604 (2011); 464 (2010) *new item introduced in 2011 Despite the popularity of social networking sites such as Facebook, they are not seen to be particularly effective for attracting candidates. Professional networking sites, such as LinkedIn, are more popular, particularly in the private services sector, although there has only been a small percentage increase in their reported effectiveness compared with last year. 16

2011 Recruitment partners A new question this year asked respondents if their attitude to and relationships with recruitment partners has changed over the past 12 months. Just over a third report things have not changed (Table 12). A similar proportion report they have reduced their use of recruitment partners and 6% that they have stopped using them altogether, with one in ten considering them an unaffordable expense (one in five in the not-for-profit sector) and a similar proportion an unnecessary expense. In contrast, one in five (predominantly private sector organisations) report they have formed a closer business partnership with recruitment partners over the past year and one in ten (again predominantly private sector organisations) report they consider them integral to attracting top talent. Selecting candidates There has been little change in the methods used to select candidates over the past few years, with the exception of a drop in the use of general ability tests compared with 2009 (Table 13). Interviews remain the most common selection method with competency-based interviews being most popular overall. Interviews following the contents of CVs/application forms are also particularly popular in the private sector (70% compared with 41% in the public sector and 57% in the not-for-profit sector), whereas the public and not-for-profit sectors favour structured (panel) interviews (82% and 79% respectively compared with 45% in the private sector). Tests for specific job-related skills are more popular in the public and not-for-profit sectors (61% and 62% respectively compared with 43% in the private sector), whereas telephone interviews are more popular in the private sector (52% compared with 12% in the public sector and 26% in the not-forprofit sector). Table 12: Changes in attitudes to and relationships with recruitment partners over the past 12 months (%) Voluntary, community All Private Public and 2011 sector services not-for-profit Not changed 36 34 40 39 Reduced use of recruitment partners 32 34 32 26 Formed a closer business partnership with them 19 23 8 12 Consider them an unnecessary expense 12 11 13 16 Consider them an unaffordable expense 11 10 11 22 Consider them integral to attracting top talent 9 11 2 4 Stopped using recruitment partners 6 5 8 5 Other 3 3 3 3 Base: 604 RESOURCING AND TALENT PLANNING 2011 17

RESOURCING AND TALENT PLANNING Table 13: Methods used to select applicants (%) 2011 2010 2009 survey survey survey Competency-based interviews 70 78 69 Interviews following contents of CV/application form 63 64 68 Structured interviews (panel) 56 61 59 Tests for specific job-related skills 49 48 50 Telephone interviews 43 47 38 Literacy and/or numeracy tests 38 43 39 Personality/aptitude/psychometric questionnaires 35 44 35 Assessment centres 35 42 35 Pre-application elimination/progression question(s) 25 32 N/A General ability tests 23 27 44 Group exercises (for example role-playing) 21 30 26 Pre-interview references (academic or employment) 9 16 19 Video CVs 0 1 N/A Other 3 4 6 Base: 605 (2011); 473 (2010); 754 (2009) cipd.co.uk/2011resourcingandtalentplanningsurvey Strengths-based recruitment Two-fifths of organisations (40%) report they use a strengths-based approach to recruitment, although it is less commonly used in the public sector (26%). 19 In all sectors, smaller organisations are most likely to report they use a strengths-based approach (60% of organisations with 1 49 employees use it compared with 34% of organisations with 250 999 employees and 24% of organisations with more than 5,000 employees). 20 Most of those who use a strengths-based approach to recruitment are neutral about how easy it is to administer in practice, regardless of sector or size. Nearly a third (32%) find it easy or very easy and only one in ten (11%) find it difficult. Over three-quarters of those who use a strengthsbased approach to recruitment believe it brings benefits in terms of increased individual performance (78%). Two-thirds believe it improves retention (67%) and increases engagement (63%). Two-fifths (39%) report it results in greater diversity of skills in the workplace. Many organisations that use a strengths-based approach to recruitment also use a strengths-based approach for other people processes. More than half use it for performance management processes (59%), succession planning (55%) and learning and development (53%). Two-fifths use it for talent management (42%) and a third use it for workforce planning (32%). Just under three in ten (29%) also use it for redeployment. Recruitment costs Last year we noted an increase in the proportion of organisations that calculate their recruitment costs (2010: 65%; 2009: 53%; 2008: 51%). This year, the proportion is back in line with previous years (52%). The increase last year may have been due to sampling differences or a consequence of an increased focus on costs during the recession that has not continued. Four-fifths (79%) of organisations that calculate recruitment costs provided cost estimates per hire. There is considerable variance in the amount organisations spend (at least partly due to our 18

2011 findings that organisations include different costs in their calculations, see Table 14). In general the median figures (Table 15) are lower than last year for both senior manager/directors and other employees. In order to explore the validity of estimates, this year we also asked respondents to indicate how accurate their cost estimates were. Half (51%) of estimates for costs of recruiting senior managers/ directors were accurate to plus or minus 10% and 83% to plus or minus 20%. Two-fifths of estimates for other employees were accurate to plus or minus 10% and 74% to plus or minus 20%. Table 16 shows the median figures for estimates that were believed to be accurate to up to plus or minus 20%. Table 14: Criteria included in cost per hire calculations (%) Size number of employees in UK % Advertising costs 81 Agency/search costs 75 Employee referrals 35 Travel expenses 30 Relocation expenses 17 Fixed costs of resourcing team 24 Opportunity costs of hiring 24 managers' time Other 3 Don't know 4 Base: 299 The figures indicate, as we found last year, that organisations spend considerably more on senior appointments than on other employees. This reflects the value attached to good leadership and perhaps the additional challenges of attracting the best candidates for senior positions. This is particularly the case in the private sector, where considerably more is spent on the recruitment of senior managers/directors than in the public or notfor-profit sectors. Table 15: Estimated total costs (advertising costs, agency or search fees) per hire ( ) Median 2011 Median 2010 (no. of (no. of Occupational group respondents) Minimum Maximum respondents) Senior managers/directors 7,000 (219) 251 55,000 8,333 (234) Other employees 2,000 (246) 150 32,000 2,930 (262) Number of respondents shown in brackets Table 16: Median total costs (advertising costs, agency or search fees) per hire for estimates accurate to plus or minus 20% ( ) Voluntary, Median 2011 Manufacturing and Private Public community and not-for- Occupational group production sector services profit Senior managers/directors 7,500 8,000 9,000 5,000 3,500 Other employees 2,500 3,400 2,000 3,000 1,500 Base: 150 RESOURCING AND TALENT PLANNING 2011 19

RESOURCING AND TALENT PLANNING 2 RESOURCING AND TALENT management IN TURBULENT TImES In January 2010 the UK officially emerged from the recession; however, the economic environment remains uncertain for many organisations. The environmental disasters in Japan, the uprisings and wars in the Middle East, rising oil prices and European debt highlight the volatility of global markets. In the UK, economic growth remains sluggish and there are concerns regarding the impact of the VAT increases, high inflation and the austerity measures of the Coalition Government. This section examines the impact of the economic environment on resourcing budgets, strategies and activities in 2010. It looks at changes in views on the employment market and the implications for managing talent. cipd.co.uk/2011resourcingandtalentplanningsurvey The impact of the economic climate on resourcing Overall, half of organisations report that the economic climate has had a negative impact on their organisations resourcing budgets for 2011 12 (Table 17). This year, however, it is the public sector that is most severely hit, with four-fifths (82%) reporting their resourcing budgets will be reduced (up from 59% last year). In contrast, fewer private and not-for-profit sector organisations face reductions this year compared with last, although more are still reducing their budgets than increasing them. Changes in resourcing and talent practices in 2011 compared with 2010 reflect a stronger focus on costs and reductions in budgets (Figure 3). Two-thirds plan to develop more talent inhouse (compared with one-third in 2010) and more organisations plan to reduce reliance on recruitment agencies and external consultants for resourcing and development. The proportion of organisations planning to focus more on retaining rather than recruiting talent has increased to 51% in 2011 from 28% in 2010. 20

2011 Changes in recruitment practices are also anticipated. More organisations plan to make use of new media/technology to recruit, which may be a cost-cutting strategy but can also improve the efficiency and effectiveness of the recruitment process. On a positive note more organisations plan to invest more time and effort in the quality of candidates they hire and will be taking actions to improve ways of identifying quality candidates. Public sector organisations are more than twice as likely to be implementing a recruitment freeze in 2011 (46% compared with 22% overall). Nevertheless, this is an improvement on 2010, when 58% of public sector organisations implemented a recruitment freeze. The situation is also somewhat brighter for many private sector organisations, with 15% reporting they will be implementing a recruitment freeze in 2011 compared with 26% in 2010. Nevertheless, the economic recovery remains slow for many, with 29% of private sector organisations and 66% of public sector organisations reporting they will be reducing the number of new recruits they hire in 2011, similar proportions to 2010. Inevitably more public than private sector organisations report they will be reducing their headcount in 2011 and losing key talent (33% compared with 9% in the private sector) and redeploying people into new roles (66% compared with 37% in the private sector). Table 17: Impact of the current economic climate on organisations resourcing budgets (%) Private Public Voluntary, community All sector services and not-for-profit 2011 2010 2011 2010 2011 2010 2011 2010 Reduced 49 53 41 51 82 59 51 61 Stayed about the same 36 37 39 40 14 36 40 34 Increased 8 7 11 4 1 5 4 5 Don't know 7 3 8 5 3 5 Base: 615 (2011); 475 (2010) RESOURCING AND TALENT PLANNING 2011 21

RESOURCING AND TALENT PLANNING figure 3: Resourcing and talent practices implemented in 2011 and 2010 (% of respondents) cipd.co.uk/2011resourcingandtalentplanningsurvey Developing more talent in-house Continuing to recruit key talent/niche areas Focusing more on retaining rather than recruiting talent Reducing reliance on recruitment agencies Use of new media/technology to recruit Investing more time and effort in the quality of candidates we hire Redeploying people into new roles Reducing the number of new recruits we hire Taking actions to improve ways of identifying quality candidates Increasing the number of interim/contract staff recruited Reducing our use of external consultants for resourcing and development Increased recruitment of apprentices/interns Implementing a recruitment freeze Reducing our headcount but preserving key talent Recruiting talent discarded by competitors Reducing our headcount and losing key talent Offering sabbaticals, career breaks, additional holidays Reducing employees' working hours to avoid making people redundant 8 Reducing graduate recruitment 8 6 Suspending graduate recruitment 7 12 11 15 13 12 12 10 12 10 19 16 18 23 22 22 24 26 28 28 30 29 28 30 36 36 35 35 35 0 10 20 30 40 50 60 70 80 Percentage of respondents 2011 2010 Base: 582 46 47 46 45 44 51 59 66 22

2011 Views on the employment market In little change to last year, three-quarters of organisations report they have noticed an increase in the number of unsuitable applicants as they have fewer roles to fill (Figure 4). Far fewer (34%) report that there are too many suitable candidates to choose from and, despite high unemployment over the past two years, more than half (52%) believe that competition for talent is even greater as the pool of available talent to hire has fallen sharply (2010: 41%; 2009: 20%). For many organisations there appears a clear mismatch between the skills they require and those available in the labour market. Competition for talent appears to be particularly keen in the private sector. Two-thirds (64%) of manufacturing and production organisations and 55% of private services organisations agree that competition for talent is even greater now, compared with 39% of the public sector and 34% of not-for-profits. 21 In contrast, the public sector and not-for-profits are more likely to agree they have too many suitable candidates to choose from (61% and 47% respectively compared with 23% of manufacturing and production and 27% of private sector services). 22 Three-fifths (62%) of respondents agree that the demand for temporary and contract workers will increase as employers will be reluctant to take on permanent staff during uncertain times, while 44% agree that part-time workers will become more appealing to employers who are looking to cut costs. figure 4: Views on the employment market (% agreeing or strongly agreeing) With fewer roles to fill we have noticed an increase in the number of unsuitable applicants. 54 73 76 The demand for temporary and contract workers will increase as employers will be reluctant to take on permanent staff during uncertain times. 62 66 66 Employers will use the economic downturn as an opportunity to get rid of poor performers and bring about culture change. 55 63 72 Competition for talent is even greater now as the pool of available talent to hire has fallen sharply. 20 41 52 Part-time workers will become more appealing to employers who are looking to cut costs. Employers are acting too hastily in making people redundant and as a result they will lose too many employees with valuable knowledge and skills. With fewer roles to fill there are now too many suitable candidates to choose between.* The abolition of the Default Retirement Age will mean we recruit fewer people.* Employers will look to make older workers over the age of 65 redundant before their younger workers. 23 19 22 27 34 32 0 10 20 30 40 50 60 70 80 Percentage of respondents 2011 2010 2009 Base: 607 (2011); 475 (2010); 746 (2009) *item added 2010/2011 44 45 44 48 52 53 RESOURCING AND TALENT PLANNING 2011 23