The cost-of-living crisis in 2022-2023 had a huge impact on hiring and recruitment within IT and Technology, and across every area in the UK. And some IT Businesses have continued to scale back or halt their recruitment in 2024 as we enter a recession.
But this also creates an opportunity for businesses to expand their market share and attract talent when others aren’t. And means that other IT Businesses will have problems in retaining their current staff from those who are recruiting.
While statistics from the Consumer Price Index from the Office for National Statistics show inflation (4%) is significantly lower than it was at its peak during the cost-of-living crisis in 2022-2023, of 11.2% in October 2022.
So we’ll be looking at what some of the best IT businesses did to improve their hiring, what we can learn, and how we can apply it to your business during the recession we’re currently in.
10 Strategies to Attract and Retain Talent During the Recession
So, what are the 10 best ways the IT businesses we worked with attracted and retained their talent in the cost-of-living crisis, and should work during the current recession? The short of it looks like this:
- Offered competitive compensation packages
- Supporting flexible working
- Supporting with Cost-of-Living and Travel Expenses
- Mental Wellbeing Initiatives
- Offering Financial Support Programmes
- Emphasising Work-Life Balance
- Professional Development Opportunities – Career and Training
- Being Transparent About Company Performance
- Employee Recognition and Awards
- Create a Supportive Work Environment
But below, we’ll get into how exactly these are used to improve employee attraction and retention, and what you can do to implement them in your business.
1. Offered competitive compensation packages
This one requires the least amount of explanation: But when employees are feeling the squeeze, it’s essential that you offer competitive salaries as a minimum.
Because your employees will have multiple recruiters reaching out to them, telling them they are underpaid if they’re not being paid at least the market average.
When most businesses had put on hiring freezes, the businesses who could, and did hire, were able to hire better talent with much less competition.
And the businesses who were able to offer above market salaries and compensation were able to tempt away the best talent, at a time when most people weren’t looking to move jobs.
The Lesson
Some of our clients in the IT industry naturally scaled back their recruitment efforts in the economic downturn. Others however, made the most of the reduced competition to increase their market share, and snagged some of the best talent on the market at reduced cost.
2. Supporting flexible working
The best businesses offered more hybrid and flexible working to help ease living costs for their employees. Staff were able to save on travel, food, and general living costs.
But to some staff, going into the office meant they were able to spend less money on heating and energy bills: At a time when energy costs are higher than they have ever been.
The key was flexibility: Giving people the opportunity to make their own decisions.
With IT Professionals who were working on the road, we saw businesses take measures that helped them to only be out on the road when absolutely necessary. We spoke to Principal Consultant Mark Humphreys about how some of his clients provided increased flexible working for their employees:
“Some clients changed the way they operated with their Field Engineers and Technicians. They created zones that their business operated in, and made it so field guys only worked in a zone around them, that was commutable from their home.
So instead of travelling from Brighton up to north of London, they would be changed to covering only Brighton and the surrounding area.”
Mark Humphreys, Principal Consultant
The Lesson
The best way businesses retained talent was by communicating with their employees and offering them what was best for them: Increased flexibility to their employees but kept the office open.
3. Supporting with Cost-of-Living and Travel Expenses
Some businesses actively sought to support their employees with the rising cost-of-living, by paying for essential living expenses.
This could be cost-of-living expenses related to work travel, such as season ticket loans, car allowances and fuel cards, or even a company car.
“Some of the businesses we worked with gave anyone that joined the company a prepaid credit card that covered all expenses. This meant their employees didn’t have to mess around with expenses, chasing finances all the time and being out of pocket until it was paid off.
And some clients gave employees a company car, instead of a car allowance. And not all, but some of those allowed for the company car to be used for personal use as well. Which is a big draw to some people, that can save a lot of money.”
Mark Humphreys, Principal Consultant
Meanwhile we saw some businesses give bonuses during winter months, specifically to support with employee’s energy bills at a time when heating costs are higher than they have ever been. Actively aiming to subsidise employee’s living costs at times when a lot of people struggle.
The Lesson
Businesses increased their retention efforts by offering perks and benefits that were a direct benefit to themselves and their employees. They alleviated these stressors that could impact their work, and directly helped
4. Mental Wellbeing Initiatives
The recession doesn’t just affect people financially, but can have a profound effect on mental health and wellbeing. King’s College London found that 60% of the UK reporting the cost-of-living crisis negatively affects their mental health, and a quarter (23%) reporting it affecting their sleep.
And with the majority of the day being spent at work, it can be a business’s responsibility to support their employees wellbeing where they can.
These can take the form of wellbeing programmes, financial mental health support, health insurance, and even extra holiday allowance for mental health days.
The Lesson
Prioritising employee wellbeing shows that a business cares about its employees, creates a positive work culture where employees feel valued and comfortable speaking to managers about sensitive subjects, and will overall improve employee retention.
Reducing financial burdens on employees around health and wellbeing can also massively improve employee performance at work, and increase the likelihood of employee’s staying when cost-of-living is more expensive.
5. Offering Financial Support Programmes
An inexpensive benefit that your business can offer to support with cost-of-living difficulties is support with financial management.
This can be through having external coaches offering guidance on budgeting, saving, and investments, or programmes designed to support employees to manage their finances.
The Lesson
Businesses now have a greater responsibility to support their employees: This can include financial support and assistance programmes that support employees outside of the workplace.
The best clients actively work to lessen any outside-of-work stressors such as financial hardship to improve employee performance inside-the-workplace.
6. Emphasising Work-Life Balance
Cost-of-living increases can have a huge impact on mental wellbeing and stress. You can alleviate this by supporting your employees to:
- Properly use the flexible work policies you provide.
- Using all their available holiday days/ PTO.
- Finish work when they are supposed to and clock out on time.
- Accessing any existing mental wellbeing support initiatives.
- Promoting a supportive and collaborative company culture.
It can be unavoidable in some industries for employees to work extra hours at crunch times, or at the end of a big project for example. But when it becomes the norm, employees become burnt out and look for new opportunities: And this is only multiplied when employees are already stressed about any financial problems.
The Lesson
The majority of these benefits your business will have in place. But without actively communicating them, your employees may not make the most of them or even be aware of them.
7. Professional Development Opportunities – Career and Training
Of course you can’t always just throw money at a problem to solve it. And while employees were feeling the pinch with the increased cost-of-living, so too were businesses.
One of the biggest ways to retain and attract talent is through training and career development support. And while many businesses were forced to cut costs and think of alternative methods of employee retention and attraction, training and development became an even bigger focus.
Bringing in an external trainer and offering financial support with earning new certifications does cost a business money. But giving employees time to take courses or learn in their work day, and having senior members of your business run training sessions only costs time.
And while time is money, the benefits of levelling up your team will help your team to perform better, and not just help to retain staff.
The Lesson
When you can’t offer pure financial incentives, double down on areas that do matter to your employees: Training, career development, and personal progression support!
And if you can’t offer the money they want, but an amount they will accept, then give them a personal progression plan to show that they will earn what they want down the line, and how they can work to get there.
8. Being Transparent About Company Performance
Transparency with employees can be essential in retaining your best talent and stopping them from looking for new opportunities.
When employees are feeling the pinch due to cost-of-living increases it’s common for people to look for new and higher paying jobs. This can be heightened by perceived uncertainty around their employment status, being worried that they may be let go to cut costs.
All of this means it’s important to make sure your employees know that they are a valued member of the team who you don’t plan on replacing, and that they feel like part of the business and involved in the company’s future: Not just a cog in the machine.
This means being transparent with your employees about the state of the business, how the company is addressing the recession, and future goals and company growth plans.
The Lesson
Transparency is crucial in enhancing the loyalty, trust, and retention of your employees: Which are things that money can’t always buy.
9. Employee Recognition and Awards
Implementing employee recognition programmes and rewards in your own workplace are a great way to show your appreciation for your employee’s hard work.
These can be inexpensive rewards that are more focused on creating a company culture of celebrating your employees successes, than offering huge financial incentives.
Additionally, your businesses could sponsor employees for individual awards in your industry. For example, in the Audio-Visual industry there are the AV Awards that recognise individual and company excellence.
Sponsorship for awards like these can be a big benefit for an employees career and incentivise employees to stay at a business that will recognise their individual and collaborative work.
The Lesson
When you can’t financially reward employees for their hard work, it’s worth exploring other ideas for employee recognition that will promote retention and appreciation for the opportunity.
This can also improve employee attraction, as you highlight the awards your business and employees have won will make your company a more attractive place to work.
10. Create a Supportive Work Environment
Creating a work environment where your employees are supported during economic hardships, is essential in ensuring your business retains staff at difficult times.
This entails some of the above, such as cost-of-living increase support systems and financial support programmes. But it also means creating a work environment where your employees feel secure in their jobs and that they can approach someone in the team should they need to.
- Having clear and open lines of communication: So that when employees are stressed, they know they can talk to you instead of talking to a recruiter.
- Establish support groups, providing people with the support they need internally.
- Create a buddy system for new hires, to help establish relationships within teams, or across teams who may not typically work together.
- Internal awards and employee recognition to incentivise performance and show appreciation.
The Lesson
While these are just a few examples, creating a supportive and collaborative work environment is essential to creating a business where your team enjoys their work and wants to stay.
And as always, being able to showcase your positive work environment is a great way to boost recruitment and attract the kind of people you want to be a part of your business.
So, What Can We Learn From Attracting and Retaining Talent During a Recession?
Unsurprisingly, what works for hiring and retaining talent in regular times is still effective in a recession: But they often become more important for employee retention, and more effective for employee attraction. Things such as:
- Offering competitive salary packages.
- Offering flexible working arrangements.
- Having mental and physical wellbeing initiatives in place.
- Focusing on professional development training and support.
- Creating a supportive work environment.
Additionally, focusing on developing your business’ recruitment and retention efforts in new and different areas can allow you to increase your market share and hire some of the best IT talent: Without spending huge amounts or offering above industry average wages. This can be things like:
- Supporting with cost-of-living expenses related to work.
- Increasing flexible working that gives autonomy to employees.
- Offering financial support programmes.
- Being transparent about company performance.
- Recognising individual, and team, contributions and achievements.
But in a recession, these efforts become all the more important. As Mark summarises:
“It becomes more important than ever to keep staff: To reduce employee turnover, reduce lost profits, and reduce recruitment costs. Which means more offering pay rises, and offering more training. But also keeping your team enthusiastic. Don’t wait until someone hands their notice in to give them the development and pay they need.”