Recruitment, retention and turnover, Annual survey report 2008

Summary of key findings

The 2008 Recruitment, Retention and Turnover survey contains information on current and emerging trends in people resourcing practice. This annual benchmarking survey is based on 779 respondent organisations from the UK and relates to the period 1 January to 31 December 2007. Web 2.0 and checking candidate applications are the two areas that we've chosen to focus on in more detail this year.

Focus groups comprising members of the CIPD's Recruitment Forum contributed to the analysis of the survey findings. Some of the commentary in this survey report draws on the focus group members' thoughts and experiences.

Resourcing strategies and objectives

Only half of the survey participants report having a formal resourcing strategy.
Eight in ten respondents cite attracting and recruiting key staff to the organisation as the main objective of their resourcing activities. Enabling the achievement of the organisation's strategic goals (58%) and meeting future skills requirements (46%) are the second and third most important resourcing objectives according to survey participants.
These results are very similar to last year.

Recruitment difficulties

Employers' recruitment intentions have remained stable, with the average number of vacancies respondents sought to fill in 2007 being 270 (compared with 263 in 2006).
A high proportion of these organisations still experience recruitment difficulties (86%).
The key reasons for recruitment difficulties, similar to last year, are a lack of necessary specialist skills in candidates (70%), followed by higher pay expectations (44%) and insufficient experience of candidates (42%).
Appointing people who have the potential to grow but who currently don't have all that's required is the most frequently used initiative to overcome recruitment difficulties (75%).
Recruitment initiatives having a positive impact on tackling recruitment difficulties include: providing additional training to allow internal staff to fill posts (75%), providing a realistic job preview (72%) and using the employer brand as a recruitment tool (71%).
Just 32% of organisations say they make use of talent banks (ready candidate details saved electronically) before looking to recruit externally.

Attracting and selecting candidates

Recruitment agencies (78%) followed by using the company's own corporate website (75%) and local newspaper advertisements (74%) are the most common methods being used to attract candidates.
The most frequently used selection methods include: interviews based on the contents of the CV/application form (72%), followed by competency-based interviews (65%).
The average recruitment cost of filling a vacancy per employee is £4,667, increasing to £5,800 when organisations are also calculating the associated labour turnover costs.

Checking candidate applications

Almost nine in ten organisations take up candidate references mostly or always.
The pre-employment checks most often carried out by organisations include: most recent employment history followed by absence records, with 85% and 64% respectively mostly or always carrying these out.
A quarter of organisations report withdrawing job offers during 2007 because a candidate lied or misrepresented their application.
The quality of references and the extent to which references are seen to confirm information provided in a candidate's application was mixed. Half of organisations say references are very effective/ fairly effective, with the other half saying they are neither effective nor ineffective/fairly ineffective/very ineffective.

Web 2.0 and recruitment

More than eight out of ten respondents reported that they don't use Web 2.0 technology to attract or recruit employees. Most (71%) don't plan to start using such technology in the next year.
Of those 50 organisations who reported using Web 2.0 technology to attract or recruit employees, the social networking sites they use include LinkedIn (62%), Facebook (58%) and MySpace (10%).
Just over half the organisations that plan to start using Web 2.0 methods to attract or recruit employees will target graduates (51%), followed by managers and professionals (46%).
It is encouraging to see that 85% of organisations reported that they do not use social networking sites to vet candidates during the recruitment process.
Over half of the 100 CIPD members who answered the section on Web 2.0 believe the following about its value:
- From an employer branding perspective, they are concerned about damaging comments about the organisation being posted on social networking sites and blogs (62% agree/strongly agree).
- Social networking sites are useful for engaging potential job-seekers (56%).
- Web 2.0 offers organisations the ability to learn about how they are perceived in the labour market (52%).

Diversity

Overall, just over half of those organisations surveyed have a formal diversity strategy (55%). Public service employers seem to be much more diverse-conscious, with 84% of them adopting a strategic approach to diversity.
This year slightly more employers are monitoring recruitment and information on the diversity of their staff (83%).

Labour turnover

The 2007 labour turnover rate of 17.3% is slightly lower than last year (18.1%).
The private sector reports the highest labour turnover rates (20.4%). The hotel, catering and leisure industry remains the sector with the highest level of labour turnover, with the ‘all leavers' finding in this category being 41%. This reflects an 8.4% increase in turnover rate compared with last year, bringing the figures back to the levels of 2005 (42.5%).
Over 70% of employers believe employees' departure from the organisation has a negative effect on business performance.
Change of career is deemed to be the most common cause of voluntary turnover (55%). Other reasons include promotion outside the organisation (45%), level of pay (41%) and lack of career development opportunities (33%).
Twenty-two per cent of respondents have made ten or more redundancies, and 21% have used recruitment freezes during 2007.

Employee retention

Overall, organisations reported having the same level of employee retention difficulties as last year

80%, compared with 78% in 2006. This high level of retention difficulties is reported across all industry sectors. Senior managers/directors remain the least difficult to retain, with 7% retention difficulties reported by respondents. Across the rest of the occupations, the same level of retention difficulties were reported, ranging from 20-36%.
The most frequently cited actions taken by organisations to address retention is increasing pay (53%), increasing learning and development opportunities (46%), as well as improving selection techniques in the first place (46%).

Recruiting employees

This section explores the nature and scale of recruitment activity taking place within CIPD member UK organisations during 2007. As well as reporting on the challenges that resourcing professionals faced over the last year, it taps into employers' use of initiatives to overcome recruitment difficulties. It also includes information on the trends and changes in attraction and selection methods, diversity issues, and reports on the time and costs of recruitment and labour turnover.

Resourcing strategies and objectives Recruitment difficulties

Table 1 shows that only half of those organisations surveyed have a formal resourcing strategy in place (50%). This is not much change on the previous year (51%). These findings continue to be surprising, given that eight in ten employers rank attracting and recruiting key staff to the organisation in their top three resourcing objectives (Figure 1).

Other resourcing priorities reported include enabling the achievement of the organisation's strategic goals (58%) and planning to meet the future skills requirements of the organisation (46%).

Table 1: Organisations with formal resourcing strategies in place, by sector and size (%)

All 50

Sector Private sector services 54

Manufacturing and production 50

Public services 50

Voluntary, community and not-for-profit 31

Size - number of employees Fewer than 250 36

251-500 58

501-1,000 58

1,001-5,000 59

5,001-10,000 62

10,001 or more 70