The bimonthly survey of 500 medium-sized businesses’ leaders showed recruitment and retention – including hiring costs and a shortage of talent – are a cause for concern, with almost a fifth of businesses (19 per cent) saying this is the biggest threat they face over the remainder of the year.
While 29 per cent of business leaders are actively focused on growing their workforce, almost a third (31 per cent) of businesses are struggling to find staff with the right skills.
Over a quarter (28 per cent) are raising pay in line with or above inflation amid fierce competition for talent.
Two-thirds (65 per cent) of businesses said rising energy costs, inflation and the cost-of-living crisis represent the greatest threat in the next six months.
As a result, fierce competition for talent and the rising cost of living have heightened pressure on employers, with many raising salaries. More than half of businesses (52 per cent) are raising pay by 4–8 per cent, with more than a quarter (28 per cent) increasing pay by 9 per cent or more – in line with or above current rates of inflation. In London, almost three-quarters (73 per cent) of mid-sized businesses are increasing pay by 9 per cent or more.
Almost half (44 per cent) of businesses are providing one-off bonuses to support colleagues through the cost-of-living crisis, with more than half (52 per cent) offering more flexible working-from-home policies specifically to help employees cut travel costs. Almost half (46 per cent) have offered new benefits in kind, such as childcare support, free meals at work or shopping vouchers.
As businesses struggle to find the talent they need, a quarter (24 per cent) are consciously trying to recruit from more diverse backgrounds, while 29 per cent are investing in apprenticeship schemes.
However, despite the huge demand for talent, some businesses have been forced to press pause on hiring and growth as they continue to manage the impacts of inflation and mounting costs. Almost a quarter (24 per cent) are taking on new debt, while a fifth (21 per cent) are reducing the number of goods and services they offer. A similar number are also reducing headcount (21 per cent), pausing hiring (21 per cent) and putting the brakes on all new investments (20 per cent) into their business.
Kaley Crossthwaite, partner at BDO LLP, said the challenges facing aren’t going anywhere soon: “Inflation and rising costs have placed profound pressure on business leaders. It is particularly concerning to see businesses taking on additional loans and credit to manage costs – despite rising interest rates.
“However, it is encouraging to see businesses focused on increasing the inclusivity of their recruitment strategies, with many investing in apprenticeship schemes or actively recruiting from more diverse backgrounds. With warnings that inflation could reach 11 per cent or higher by the end of the year and the ongoing competition for talent, businesses are going the extra mile to offer real support for employees grappling with the cost of living crisis.”
