News

Viewpoint: Seeing the Smaller Picture - Making Informed Resourcing Decisions

David Hopkins, Head of Strategic Research at Reed Consulting, explains how a thorough understanding of local labour markets and micro-economic conditions is an essential building block in a successful resourcing strategy.

Headline unemployment figures can be misleading, masking as they do a multitude of factors influencing resourcing for different industries, locations or specialist roles. Skilled candidates for roles in industries such as engineering and social care continue to be in short supply, while numbers of registered job seekers still vary widely from town to town.

Furthermore, the straitened economic conditions have placed an even greater emphasis on the management of existing resources, both to maximise the value of the cost base, and to maintain key skills in preparation for more favourable conditions.

For many organisations then, ensuring that existing staff members are retained and motivated is more important than ever. Although primarily an internal activity, this is also influenced by prevailing local conditions. For example, pay and benefits packages need to be at a suitable level and set against market trends, so that they enable organisations to retain their most important employees without wasting money on excessively generous and unnecessary reward packages.

Faced with choices such as where to locate a new (or relocate an existing) production facility, call centre or head office; what salary and benefits package is required to attract a new recruit in a particular role at a specific location; or what rewards packages will help retain the most important talent without wasting money, organisations need a thorough understanding of local and sector-specific salary, benefits and talent pool data in order to make the most effective decisions.

However, many organisations are impeding their resourcing success by adopting a broad-brush approach based solely on macro-economic factors. In the process they are failing properly to recognise the multitude of local market and industry factors that influence a successful resourcing strategy, and are risking incurring the very extraneous costs they need to avoid.

Making the right resourcing decisions

At a macro-economic level, rising unemployment and low levels of inflation suggest recruitment will be facilitated by a surplus of candidates, and that significant pay increases will be unnecessary for the time being.

However, organisations that rely on this broad information alone risk encountering resourcing issues as decisions are made based upon limited awareness of real market conditions, which fails to stand up against local and industry variances.

Only with a thorough, up-to-date understanding of whether there are localised skills shortages, or surpluses, and what dynamic local labour market factors - such as a major employer moving to the area – are at play, can organisations put in place the most efficient and cost-effective resourcing strategies.

Micro-economic factors may also influence reward decisions. Offer below the local market rate and organisations will not only struggle to attract new recruits, but are also likely to have employee retention issues. Offer above the geographic and sector market rate, and organisations will be wasting money on excessively high wages.

Good resourcing decisions need good local data

The full resourcing picture is much more complicated and cannot be understood simply by applying a general awareness as to how levels of pay compare. Other important factors, including the resourcing activities of sector competitors and local employers, demographics and the composition of the local jobseekers’ talent pool – its depth and skills levels, should also be considered.

While many organisations are missing the opportunity positively to inform their resourcing strategies in this way, other, more enlightened businesses are using detailed research to their advantage.

The scope and depth of labour market data and analysis can vary and can include salary benchmarking, local labour market conditions and potential candidate attraction options.  Additionally, based upon an understanding of local candidate availability it is also possible to identify the suitability of potential attraction techniques to support the filling of specific professional roles.

Resourcing Best Practice

To survive and thrive through the economic downturn and beyond, organisations need to ensure they are employing a best practice approach to resourcing and are deploying all the tools and information available to them. This approach will enable them to successfully address two fundamental resourcing concerns, namely filling key vacancies quickly, efficiently and cost-effectively with the best people available, and retaining the most valuable talent by rewarding staff as equitably as possible.

Having a detailed, research-informed picture of who potential recruits are and what is necessary to attract them is a vital element. It will inform all phases of the recruitment process, from evaluating recruitment feasibility and the development of an effective attraction campaign to defining a suitable reward package and the design and delivery of the right assessment process. And the same detailed understanding of local market data and pay rates will help minimise the unwanted attrition of valuable talent, while also protecting your organisation against unnecessary pay rises. In all cases, what may appear to be internal management decisions should be informed by a full understanding of external conditions.

In an economic climate where an optimised cost base and maximum staff performance are key, making truly informed resourcing decisions could mean the difference between success and failure. And when the upturn comes, this level of detailed insight will ensure that organisations have the best, most cost effective talent on board and are able to outmanoeuvre and outperform their competitors.