The changing nature of work has led individuals to re-evaluate their career aspirations, work-life balance, and overall job satisfaction.
Today's employees seek more than just a paycheck. They desire purpose, growth opportunities, and supportive working environments. This shift has resulted in a significant number of individuals exploring new career paths and embracing unconventional work arrangements.
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Over the last year, we have engaged with 92 businesses in which we invest, discussing the challenges of labour shortages and poor retention in the wider economy, and how companies are responding to these risks. The scale of the challenge highlights a simple truth, that a company's most valuable asset is its people.
High turnover and labour shortages come at a significant cost to employers, highlighting the urgency for businesses to remain competitive by providing good working conditions and engaging with their employees.
Rethinking recruitment
In many companies, this battle for talent has prompted efforts to ensure that recruitment processes are delivering a long-term and high-calibre pipeline of talent.
Based on our discussions, many are using this opportunity to rethink their existing approach. For example; launching recruitment campaigns; utilising social media to widen the pool of candidates; partnering with universities; hosting open evenings to attract local staff; and using specialist recruitment agencies for specific roles.
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Adding yet another layer to the challenge of recruitment is diversity, equity and inclusion (DEI), as research frequently reiterates that employees are drawn to companies with a diverse workforce. A diverse workforce is also a critical factor to a business' success, fostering greater innovation and creativity.
Pressure on pay
Throughout our engagements, wage inflation was frequently mentioned as a prominent challenge for companies wishing to retain their workforce and attract new talent.
While some holdings expressed less concern with staff churn, others are having to take a systematic and company-wide approach. In addition to above average pay rises, a number of companies are distributing one-off payments to support employees throughout this period.
One company we engaged with, for example, made salary increases to certain workforce groups in addition to a cost-of-living award for the whole workforce at the beginning of last year.
The future of flexibility
The orthodoxy of office centric workplaces is under scrutiny, as flexible working models are no longer a temporary arrangement but are the new normal.
Although the capacity to accommodate remote working varies between sectors and individual companies, in most instances, there was a recognition that adapting to this new way of working is essential to attract and retain talent.
Further, a number of companies commented on the benefits of embracing this shift, not only for the workforce, but also for the company itself.
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One company we spoke with implemented a hybrid working policy that was reportedly well-received by employees. Not only has the option to work from home improved retention, but it has enabled the company to widen its geographical recruitment range, now that living within commuting distance of the offices is no longer a requirement.
Not all companies have seamlessly adapted to this transformation in the way that we work, and it is not a practical possibility for certain sectors (i.e. manufacturing).
Even where technically feasible, a number of our holdings expressed apprehension over maintaining effective communication, collaboration and employee engagement in virtual scenarios.
One group, for example, commented that they are a firm believer of in-person collaboration however, they are trialling a two-day work from home scheme in recognition of the widespread demand for flexibility.
Culture is ley
Investors often consider retention and turnover as important indicators of the wider company culture and workforce management.
Many companies are investing time and resources into developing a positive culture to safeguard itself against the risk of employee turnover and an inability to attract talent. Employee engagement and retention are intrinsically interlinked, and companies that value their employees will reap the rewards.
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Utilising engagement surveys to gauge employee satisfaction and collate feedback is a common method used to improve company culture, particularly where feedback is translated into meaningful action.
Looking at this in practice, one company that utilises an employee feedback model has seen a tangible outcome and introduced half price gym contracts, to create a better work-life balance.
In this ever-changing work landscape, businesses face critical challenges in recruitment and retention.
Employees seek purpose and growth, pushing for flexible work arrangements. Companies must adapt their recruitment strategies, address wage inflation, and embrace diverse and inclusive practices. Additionally, fostering a positive company culture enhances retention and attracts talent.
Ellie Walley is an assistant sustainability analyst at Castlefield