How will the economy affect recruitment in Professional

There has been much talk in the media about an upcoming recession. So what does this mean for hiring in 2023? Here are our predictions:

Hiring and retention will remain key priorities for firms

The outlook for 2023 is that the extremely high demand that we saw in the market in 2022 will level out and bring with it a more normalised market. As always, in professional services firms, people are key and we expect that 2023 will remain a challenging market for firms that are looking to sustainably build and retain talent.

Every professional services firm recognises the importance of having high calibre employees to ensure their firm is positioned to offer the best service to their clients. To maintain and grow your business you need to work hard to retain your talent where needed and recruit new talent to ensure you don’t end up in a situation where there are gaps in your talent pool, which ultimately impacts the level and quality of service that you can provide.

Demand for talent was unprecedented in 2022 which resulted in unnecessarily high salaries, but a positive impact was that firms had to ensure that their values and mission were clear for all and that they had policies in place to show what the firm stood for in terms of personnel development, D&I and ESG. All areas that were the key differentiators in what made the firm different and which would fully encapsulate the culture and beliefs of the firms.

Salaries will remain a key factor in hiring and retention

In our last market insights survey, we asked our candidates what the main motivators were for moving jobs; salary was stated as the primary motivator although not the core reason for people wanting to move roles.

In 2022, many professionals received an internal salary increase of between 3–5%. Yet external job movers achieved, on average, salary increases of 10% and often more.

The important point to take from this is that 60% of people surveyed said that they would consider accepting a counteroffer from their current firm. With this in mind, when considering retaining key talent, the reality of what is happening in the economy with inflation and the increase in the cost of living, 2023 will continue to see salaries at the forefront of employees’ reasons for considering moving firms.

Understandably, with the talk of a looming slowdown in the economy, many firms are considering putting a hold on salary increases for the business services teams, as has recently been announced at BCLP. This action needs to be considered very carefully as we have seen in Q4 that 3/4s of candidates who received a job offer had at least 1 other offer on the table and 41% of managers reported needing to increase base salaries by 15% to back fill their roles.

In conjunction with the increased cost of replacing a leaver’s salary at a higher rate, it costs in terms of turnover and lost productivity when you have a leaver, and it takes 6 to 9 months to onboard someone to be fully effective. Cost benefit analysis would suggest making an increase before a candidate leaves (if they are worth it) as this saves time, money and helps to retain culture and firm loyalty. If you can’t stop a candidate getting to the stage where they resign, you may consider making a counteroffer to retain talent or to buy time to enable you to build a succession plan.

However, do bear in mind that many people who stay due to a counteroffer end up leaving within 12 months.

Company culture will be of key importance

I think in 2023, we will see the importance of culture in firms emerging even more than it has done previously. Employees want clarity on what firms stand for, not for tick box exercises or to appear in glossy brochures, they want to see and feel that culture is at the forefront on what firms believe in and stand for.

More and more candidates ask Ambition what a firm’s D&I and ESG strategy is and how this is brought to life with role models and allyship groups before they want to be submitted to roles.

Employee engagement will continue to be high on the agenda, as will ensuring that firms continue to offer a hybrid method of working.

A recent survey indicated that 29% of job adverts stating that they offer remote/hybrid working in the UK, received 49% of all responses and that women are 24% more likely to apply for remote jobs than men.

Approaching diverse talent pools will help to ensure not only that you are creating a great place to work, but diverse teams appeal to clients. More clients are asking professional services firms to share details of their D&I policies and they want to work with teams that reflect their culture and team make up. To work with a firm that has a range of ideas which are brought about from having people from different backgrounds, ethnicities, cultures.

Firms should not rule out older/overqualified candidates

I anticipate that we will see a rise in an ageing workforce returning to the job market or pushing back early retirement plans due to the cost of living crisis. There is a sizeable market of experienced people with great skills that can be utilised in filling gaps within candidate short markets.

Many of these people are overqualified for the roles on offer but are happy to provide their skills albeit on a part time basis which can offer the full-time equivalent level of work and salary than a more inexperienced candidate. A great addition to a team.

On a positive note, Professional Services firms tend not to be hit by the boom and bust cycle of Financial Services institutions and as seen with the recovery post GFC and post Covid, recoveries after a market downturn come quickly.

However, in order to succeed, you need to have the right calibre people doing great things to a high standard to capitalise on good markets. Culture is key to retaining people through tight markets and growth markets.

Get your culture right, make it a great place to work and a hard place to leave and not only will you retain your talent, you will also be able to attract new talent that will enable your firm to grow throughout 2023.