Recruitment, Retention and Turnover 2008 - CIPD

Figure 1: Main objectives of resourcing activities (respondents were restricted to selecting a maximum of three objectives)Main objectivesAttracting and recruitingkey staff to the organisation81Enabling the achievement of theorganisation’s strategic goalsMeeting the future skills requirementsof the organisationSupporting changes in the organisationalstructure or the business environment284658Reducing recruitment costs 20Addressing skills shortages 20Supporting succession planning 15Assisting HR planning 4Other 1Base: 7680 20 40 60 80 100Percentage of respondentsRecruitment difficulties remained stable across differentsizedorganisations, remaining relatively high (Table 4).Focus group ad hoc feedback gathered from anorganisation in the voluntary, community and not-forprofitsector highlighted that it is currently very much a‘candidates’ market’. Good candidates have multipleoffers and therefore have higher expectations. As aresult organisations have to speed up the recruitmentprocess so as not to lose these good candidates as wellas review their reward offering to ensure they secure thebest candidate for the job in such competitive times.Table 2: Average number of vacancies respondents tried to fill during 2007, by industry sector (mean scores)TotalManufacturingand productionVoluntary,community andnot-for-profitPrivate sectorservicesPublic services2008 survey 270 91 94 380 3152007 survey 263 112 64 227 6712006 survey 381 77 147 479 683Base: 719 (2008 survey)Table 3: Organisations experiencing difficulties recruiting for one or more category of vacancy, by industry sector (%)TotalManufacturingand productionVoluntary,community andnot-for-profitPrivate sectorservicesPublic services2008 survey 86 89 82 86 822007 survey 84 86 81 86 802006 survey 82 80 76 81 89Base: 757 (2008 survey)Recruitment, retention and turnover 5

Table 4: Organisations experiencing difficulties recruiting for one or more category of vacancy, byorganisation size (%)Fewerthan 250employees251–500501–1,0001,001–5,0005,001–10,000More than10,001employees2008 survey 80 93 90 90 92 902007 survey 81 86 90 86 90 84Base: 757 (2008 survey)Table 5 highlights which categories of vacancyorganisations are having the most difficulty recruitingfor. Managers and professionals remain difficultcategories to recruit, with almost 50% of organisationsreporting difficulties. Difficulties in recruiting seniormanagers/directors were reported by over one-quarterof organisations.Table 5: Categories of vacancy that proved particularly difficult to fill (%)TotalManufacturingand productionVoluntary,communityand not-forprofitPrivatesectorservicesPublicservicesManagers and professionals 49 51 45 51 49Senior managers/directors 27 28 23 31 26Administrative/secretarialand technical15 13 20 14 19Manual/craft workers 14 27 11 9 14Services (customer, personal,protective and sales)13 12 12 17 4Other 14 13 15 11 22Base: 757Table 6: Reasons for recruitment difficulties (%)TotalManufacturingand productionVoluntary,communityand notfor-profitPrivatesectorservicesPublicservices2007surveyLack of necessary specialistskills70 79 58 69 68 65Looking for more pay thanyou could offer44 42 45 46 43 46Insufficient experience 42 44 41 43 34 37No applicants 27 28 34 24 41 28Image of sector/occupation 15 11 18 14 20 16Lack of interpersonal skills 11 12 10 14 5 13Lack of formal qualifications 8 10 11 5 8 8Applicants unable to acceptposition due to high cost of 7 7 6 7 9 7living in the areaOther 9 5 12 8 12 8Base: 6556Recruitment, retention and turnover

into an improved orientation and ‘on-boarding’programme internally.Redefining the job was cited by 43% of organisations asan initiative used in response to recruitment difficulties. Adhoc feedback from members in our focus groups notedthat the opportunity for job redefinition depends on howflexible an organisation is. There was also discussionaround how job redefinition can provide an opportunityto feed into an organisation’s diversity agenda. By lookingat different ways that jobs can be defined – for examplelooking at flexibility around hours and skill-set – a widercandidate group can be considered.Other ad hoc information received during our focusgroups with members suggested that golden hellos arebecoming more frequent, particularly in the graduatemarket where the expectation has been set. Goldenhellos are also being used to recruit specialist positions,for example social workers.Thirty-seven per cent of organisations reported offeringbounty payments to staff for introducing newcandidates. Ad hoc feedback from a large insurancecompany that participated in our focus group reportedthey had saved £250,000 in recruitment costs throughtheir ‘refer a friend’ scheme.Figure 2 shows that 79% of respondents have a policyof advertising all vacancies internally. This year our surveyalso considered whether employers are making use oftalent banks. Surprisingly, given the level of recruitmentdifficulties, nearly seven in ten organisations (66%) don’tmake use of ‘ready’ candidate details saved electronicallybefore embarking on external recruitment (Figure 3).Turning our attention to graduates, Table 8 reveals thatalmost a quarter of surveyed organisations runstructured graduate recruitment programmes (23%).Larger organisations are more likely to devise a separaterecruitment programme for graduates.Figure 2: Do you have a policy of advertising all vacancies internally? (%)21YesNo79Base: 778Figure 3: Does your organisation make use of a talent bank (ready candidate details savedelectronically) before looking to recruit externally? (%)26632YesNoDon’t knowBase: 7768Recruitment, retention and turnover

Table 8: Organisations operating a structured graduate recruitment programme, by sector and by size (%)AllSectorPrivate sector servicesManufacturing and productionPublic servicesVoluntary, community and not-for-profitSize – number of employeesFewer than 250251–500501–1,0001,001–5,0005,001–10,00010,001 or moreBase: 176232724247122224275163Attracting candidatesWe also enquired about the methods employers areusing to attract applicants (Table 9). Recruitmentagencies were ranked first, with 78% using them toattract applicants, followed by using the company’sown corporate website (75%) and local newspaperadvertisements (74%). Making use of specialistjournals/trade press was used by 62% of respondentsand just over half use apprenticeships, work placementsor secondments to attract applicants.When looking at the use of recruitment agencies withindifferent industry sectors, almost all manufacturing andproduction companies make use of them (90%), 82%of private sector employers do and 71% of voluntarysector organisations. However, just over half of publicsector organisations (57%) use recruitment agencies.This suggests a preference towards greater internalresourcing control.Recruitment, retention and turnover 9

Table 9: Methods used to attract applicants, by industry sector (%)TotalManufacturingand productionVoluntary,communityand not-forprofitPrivatesectorservicesPublicservices2007 surveyRecruitment agencies 78 90 71 82 57 73Own corporatewebsite 75 65 82 75 82 75Local newspaperadvertisements74 82 86 63 82 75Specialist journals/trade press62 64 60 53 82 61Employee referralscheme47 53 20 67 12 47Encouragingspeculativeapplications/word47 53 35 59 22 44of mouthJobcentre Plus 45 46 50 35 61 43National newspaperadvertisements42 35 60 31 65 42Links with schools/colleges/universities36 34 29 36 40 32Search consultants* 33 41 14 38 26 29Secondments 31 19 45 26 45 N/ACommercial jobboards25 19 22 32 21 21Apprentices 21 37 13 14 22 N/APhysical posters/billboards/vehicles10 9 11 10 9 11Radio or TVadvertisements6 7 7 5 9 6Others 7 5 14 5 12 10Base: 778* included in the recruitment agencies figure for 2007Selecting candidatesInterviews following contents of CV/application form(that is, biographical) are the most common selectionmethod (72%), followed by competency-based interviews(65%) and structured interviews (panel) (56%).10Recruitment, retention and turnover

Table 10: Methods used to select applicants (%) *2008surveyInterviews following contentsof CV/application form72(that is, biographical)Competency-based interviews 65Structured interviews (panel)56Tests for specific skills 48General ability tests 41Literacy and/or numeracy tests 40Telephone interviews 36Personality/aptitude questionnaires 35Assessment centres 34Group exercises (for example roleplaying)22Pre-interview references(academic or employment),combined employment and16academic references togetherOnline tests (selection) 15Base: 777*Note that due to a change in the questionmethodology, 2007 and 2008 results shouldnot be compared.Table 11: Average number of weeks to fill avacancy*Senior managers/directors 16.5 (723)Managers/professionals 12.3 (733)Administrative, secretarialand technical6.7 (737)Services (customer, personal,protective and sales)7.4 (670)Manual/craft workers 5.8 (642)Number of respondents shown in brackets*Time from deciding there was a vacancy to the newemployee’s actual start dateTime and cost to fill vacanciesWe also explored how long it takes organisations tofill job vacancies, and the estimated costs associatedwith recruitment and labour turnover. The findingscan be found in Tables 11 and 12.As Table 12 shows, not all organisations surveyedwere able to provide figures relating to the costs ofrecruitment and labour turnover. Although 51% ofrespondents report calculating recruitment costs, notall of them have supplied figures.The average recruitment cost of filling a vacancy peremployee is £4,667, increasing to £5,800 whenorganisations are also calculating the associatedlabour turnover costs.Table 12: Estimated total cost of recruitment* and labour turnover** per employeeOccupational group Costs of recruitment (£) Costs of labour turnover (£) Senior managers/directors 10,000 (211) 20,000 (15)Managers/professionals 6,000 (271) 10,000 (17)Administrative, secretarial and technical 2,000 (266) 6,000 (14)Services (customer, personal, protectiveand sales)2,000 (194) 4,250 (12)Manual/craft workers 553 (136) 2,750 (12)All employees 4,667 (303) 5,800 (21)Median costs shown (number of respondents shown in brackets)* Advertising costs, agency or search fees** Vacancy cover, redundancy costs, recruitment/selection, training and induction costsRecruitment, retention and turnover 11

Checking candidate applicationsThe role and quality of references continues to be a topic of interest for our members whenit comes to recruitment. As such, a section on checking candidate applications was includedin this year’s survey. This topic was last explored in 2005, so the figures from 2005 areprovided as a comparison.Almost nine in ten organisations take up candidate organisations include most recent employment historyreferences mostly/always (Table 13). The pre- followed by absence records, with 85% and 64%employment checks most often carried out by respectively mostly/always carrying them out (Table 14).Table 13: How often organisations take up candidate references (%)TotalManufacturingand productionVoluntary,communityand not-forprofitPrivatesectorservicesPublicservices2005 survey(Base 709)Always 75 58 90 71 88 77Mostly 14 22 5 15 6 13Sometimes 5 10 2 7 3 6Rarely 5 9 2 5 3 3Never 1 1 – 1 1 1Base: 777Table 14: Frequency of pre-employment checks organisations carry out on candidate applications (%)Never Rarely Sometimes Mostly AlwaysMost recent employment history 4 4 7 16 69Health screening (for example healthquestionnaire)23 7 8 5 57Absence records (no. days sick in last job) 20 8 11 14 50Academic and professional qualifications 18 10 19 15 38Full employment history 18 16 24 15 29Pre-employment Criminal Record BureaucheckBase: 77736 7 22 9 2712Recruitment, retention and turnover

A quarter of organisations reported withdrawing joboffers during 2007 because a candidate lied ormisrepresented their application (Table 15).The quality of references and the extent to whichreferences are seen to confirm information provided ina candidate’s application was mixed. Half oforganisations say references are very effective or fairlyeffective, with the other half saying they are neithereffective nor ineffective, fairly ineffective or veryineffective (Table 16).Table 15: Withdrawn job offers during 2007 because someone lied or misrepresented their application (%)Voluntary,community PrivateManufacturing and not-for­ sector Public 2005 surveyTotal and production profit services services (Base 708)Yes 25 14 28 26 31 25No 65 76 63 66 52 75Don’t know 10 10 10 8 17 –Base: 770Table 16: Extent to which references are seen to confirm information provided in candidates’ applications (%)Voluntary,community PrivateManufacturing and not-for- sector PublicTotal and production profit services servicesVery effective 7 7 10 8 8Fairly effective 43 42 45 41 43Neither effective nor ineffective 23 28 19 23 22Fairly ineffective 21 19 23 22 22Very ineffective 5 3 3 5 6Base: 771Recruitment, retention and turnover 13

Table 17: Online methods that organisations use to attract or recruit employees (%)TotalManufacturingand productionVoluntary,communityand not-forprofitPrivatesectorservicesPublicservicesWeb browsers 11 13 7 14 9Social networking sites 6 5 3 10 3Blogs 2 1 2 3 3None of these 84 84 92 79 88Base: 779Table 18: Organisations planning to start using online methods to attract or recruit employees in the next year (%)TotalManufacturingand productionVoluntary,communityand not-forprofitPrivatesectorservicesPublicservicesYes 8 4 6 11 9No 71 76 78 68 61Don’t know 21 20 16 21 30Base: 691Only a minority of organisations are using Web 2.0technologies to attract or recruit employees. Thepractice is still in its infancy in terms of organisationsunderstanding and using the technology. More thaneight out of ten respondents in the 2008 surveyreported that they don’t use Web 2.0 technology toattract or recruit employees (Table 17). Seventy-one percent don’t plan to start using such technology in thenext year (Table 18).Of those 50 organisations who reported using Web 2.0technology to attract or recruit employees, the socialnetworking sites they use include LinkedIn (62%),Facebook (58%) and MySpace (10%) (Table 19).Table 19: Social networking sites that organisationsuse to attract and recruit employees (%)TotalLinkedIn 62Facebook 58MySpace 10Second Life 2You Tube 1Others 2Base: 50* Those organisations that have used social networking sites,blogs or web browsers to attract or recruit employees.* Sample size is small, therefore treat results with caution.Recruitment, retention and turnover 15

Table 20: Categories of staff that organisationsintend to attract and recruit through socialnetworking sites or blogs (%)Total(Base 70*)Graduates 51Managers and professionals 46IT specialists 33Customer service staff 24Senior managers 16Secretarial staff 13Manual/craft workers 9* Sample size is small, therefore treat results with caution.Other focus group feedback included anacknowledgement that, as Web 2.0 technology is sonew, there is currently a lack of best practice examplesand guidelines when it comes to using the technologyfor recruitment purposes.It is encouraging to see that 85% of organisationsreported that they do not use social networking sites tovet candidates during the recruitment process (Figure 4).Ad hoc feedback from the CIPD member focus groupssuggested that ‘Googling’ potential employees wascommonplace, particularly by line managers, and wasseen as legitimate. However, checking Facebook andother personal social networking sites was viewed asnot acceptable.Just over half of the organisations that plan to start usingWeb 2.0 technology to attract or recruit employees willtarget graduates (51%), followed by managers andprofessionals (46%). Refer to the T-mobile case study atthe end of this section, which highlights their use ofFacebook to recruit and engage graduates.Ad hoc feedback from an organisation in the voluntary,community and not-for-profit sector noted that they aremaking use of Facebook to engage graduates in thecoming year. They believe that Web 2.0 is an attractive,cost-effective way of attracting candidates and increasingthe organisation’s profile generally, as well as anopportunity for small firms to punch above their weight.Over half of 100 CIPD members who answered thisquestion on Web 2.0 believe the following about itsvalue:• From an employer branding perspective they areconcerned about damaging comments about theorganisation being posted on social networkingsites and blogs (62% agree or strongly agree).• Social networking sites are useful for engagingpotential job-seekers (56%).• Web 2.0 offers organisations the ability to learnabout how they are perceived in the labour market(52%).Figure 4: Reference to social networking sites to vet candidates during the recruitment process (%)87Before shortlisting for interviewBefore offering the job85Not at allBase: 9816Recruitment, retention and turnover

Table 21: Organisations’ rating of Web 2.0’s valueFrom an employer brandingperspective we are concerned aboutdamaging comments about theorganisation being posted on socialnetworking sites or blogs.Web 2.0 offers organisations theability to learn about how they areperceived in the labour market.Social networking sites are usefulfor engaging potential job-seekers.Tracking down candidate informationonline is too time-consuming.Social networking sites are usefulfor assessing the suitability ofyounger workers rather than olderworkers.Candidate information accessedonline will influence our recruitmentdecision.We have effective mechanisms inplace to monitor commentary aboutthe organisation posted on blogsand social networking sites.Candidate information found onlinewill in the future replace references.Base: 98Averagescoreout of 5Stronglydisagree%Disagree%Neitheragree nordisagree%Agree%Stronglyagree%3.7 1 8 33 41 173.5 – 7 41 48 43.4 1 18 26 48 83.3 1 16 43 27 122.8 12 22 36 27 22.7 10 30 42 17 12.6 14 32 34 18 22.1 26 41 28 5 –When we asked respondents to share theirorganisations’ experiences with social networking,almost a third reported having a positive experiencesearching for candidates using social networking sites.(However, note that the sample size of peopleresponding to this question was very low – 36 people.)Some of the comments are below:‘[We operate in a] specialist industry, which means thatcandidates are extremely difficult to find, and so usingnetworking sites in conjunction with general websearching can lead to potential candidates being found.’‘We recently became part of the UK’s first virtual careersfair; it was very successful and opened a new avenue toexplore both candidate attraction and employer brand.’‘We have started to use Facebook and a hospitalityspecificsite similar to Facebook. This has given us theopportunity to introduce the company and itsopportunities to a wider audience.’Recruitment, retention and turnover 17

Recruitment through social networking at T-MobileT-Mobile International is one of the world’s leading companies in mobile communications. It is a whollyowned subsidiary of Deutsche Telecom, and in 2006 served over 106 million customers in 12 majormarkets. In the UK, T-Mobile is the third biggest supplier, with a growing market share, and has some17 million subscribers. Mobile communications are very much part of the knowledge economy. Themobile world is changing rapidly, with new technologies offering innovative voice and data solutions forbusinesses and individual consumers. T-Mobile currently employs 5900 people. T-Mobile’s head office isin Hatfield, Hertfordshire with other centres in Scotland, the North East and Wales. Head office roles inmarketing and finance are all based in Hatfield. Initially graduates are based at Hatfield.Against this background it is important that HR practices reflect the T-Mobile brand and its values.Graduate recruitment is important, as a number of new graduate entrants are sought each year to jointhe UK workforce. While a diverse pool of graduates is sought, it is important that they are all technicallyaware and are attracted by the innovative approach and new economy values that T-Mobile represents.A decision was taken to use a social networking dimension in the company’s 2007 graduate recruitmentround. A Facebook site was created for this purpose. Potential graduate recruits established an individualpresence on this invitation-only site. The site was used to provide information on selection procedures andprocesses, for example recruitment criteria, assessment centre timetables and to allow the potentialrecruits to communicate with each other.As well as T-Mobile’s IT department, an internal ‘brand ambassador’ was involved in design throughout. Thisensured that the look, feel and tone of the brand and messages remained consistent. Tailored communicationswere posted for graduates at every point in the recruitment journey on Facebook. For example, pressreleases were reworded to ensure graduates knew what impact T-Mobile news would have on them.This tailored communication helped imbed the values of T-Mobile and created a dialogue betweenT-Mobile and the graduates. As a result, graduates already felt part of the organisation and valued beforeeven starting their first day. To use the airline check-in process as an ‘on-boarding’ analogy, the graduateschecked in online before even getting to the airport.Debbie Cole, T-Mobile Recruitment Manager, acknowledges that the impact of innovative approach wasfar from certain at the outset. In her words: ‘We didn’t think it would take off in the way it did.’The use of social networking in the recruitment process appealed to the type of graduates that T-Mobilewished to attract. In addition the social networking dimension became just that – an easy way for peopleto communicate with each other for social purposes. Some successful candidates, for example, used thesite to assist each other in searches for shared accommodation.Debbie Cole emphasises that it is important to use a tailored approach to recruitment and selection, whichmust depend on the target audience. It is worth emphasising that at later stages in the graduaterecruitment, the selection process involved extensive face-to-face interviews, psychometric testing and otherwell-recognised selection techniques. However, providing social networking is seen as one of a range ofoptions and does not narrow the search to the detriment of organisational requirements. Debbie Colebelieves that it has an important and growing role to play.Information provided by Debbie Cole, Recruitment Manager for Technology and Graduates at T-Mobile.18Recruitment, retention and turnover

DiversityWith regard to diversity, not much has changed sincelast year. Table 22 highlights that just over half (55%) ofthe respondents possess a diversity strategy.Table 23 indicates a slight increase this year inmonitoring recruitment and/or staffing information togain data on gender, ethnic origin, disability and age(83%, up from 71% last year). However, overall thesefindings highlight that there are opportunities forimprovement, given the business advantages to begained from creating a diverse workforce.The CIPD has a considerable amount of diversityfocusedinformation available at www.cipd.co.ukWatch out for two new products this year: a majorreport, Managing Diversity and the Business Case, and anew online tool, How to Build Your Own Business Casefor Diversity and Inclusion.Table 22: Does your organisation have a formal diversity strategy? (%)Voluntary,community PrivateManufacturing and not- sector PublicAll and production for-profit services servicesYes 55 44 74 45 84No 40 48 24 52 12Don’t know 4 7 2 4 4Base: 773Table 23: Methods used to encourage diversity in organisations (%)Voluntary,community PrivateManufacturing and not- sector Public 2007Total and production for-profit services services surveyMonitoring recruitment and/or staffing information to gaindata on gender, ethnic origin,83 76 91 74 90 71disability, age, and so onTraining interviewers to understandwhat diversity is about and the 60 55 48 58 75 61impact of stereotypesAdvertising vacancies in differentsources to widen interest from 48 36 63 44 61 41under-represented groupsOperating policies that gobeyond basic legislativerequirements on gender, 48 35 55 44 66 45disability, sexual orientation,religion and beliefUsing specific images/words inyour recruitment advertising to 42 35 46 42 47 37appeal to a wider audienceChecking that any tests used arevalid, reliable and culture-free and 34 30 31 33 43 38were tested on diverse norm groupsProviding recruitment documentsin other formats (large print, 31 17 40 17 55 22disk, and so on)Setting recruitment targets tocorrect a workforce imbalance12 6 8 9 29 12Base: 410Recruitment, retention and turnover 19

Managing labour turnoverAlthough labour turnover is inevitable, where it is high organisations face a loss ofcorporate knowledge and their ability to meet business objectives comes under threat.In contrast, working environments with very low turnover can potentially become stale andnegatively affect business growth. This section of our survey investigates trends in labourturnover and employee retention.Labour turnover ratesOur survey shows a median labour turnover rate of17.3% – slightly lower than last year’s figure (Table 24).Figure 5 illustrates that survey participants reported nochange in the number of employees departing theorganisation – reporting the same figure as last year(39%). Where this information was supplied, evidencesuggests that the majority of this turnover is voluntary(Table 25).Table 24: Aggregated rate of labour turnover (%)2008survey2007survey2006 2005 2004survey survey survey17.3 18.1 18.3 15.7 16.1Base: 347 (2008 survey)Figure 5: Has labour turnover changed between 2006and 2007 in your organisation? (%)Table 25: Labour turnover rates, by reason forleaving (%)3239Redundancies 0.3 (281)Retired 0.6 (253)Fixed-/short-term contracts 0.9 (250)Dismissed 1.2 (289)29Voluntary 11.4 (313)Rate shown is median turnover, by reason, of all organisationssupplying this information (number of respondents shown inbrackets)Yes – increasedYes – decreasedNo – stayed the sameBase: 38820Recruitment, retention and turnover

Table 26 splits labour turnover for all leavers andvoluntary leavers into individual industry sectors. Samplesizes are small in some sector groups (that is, fewer thanten) so results must be interpreted with caution. Thehotel, catering and leisure industry remains the sectorwith the highest level of labour turnover, with the ‘allleavers’ finding in this category being 41%. This reflectsan 8.4% increase in turnover rate compared with lastyear, bringing the figures back to the levels of 2006(42.5%).Table 26: Labour turnover rates, by industry sector (%)All leaversVoluntary leaversManufacturing and production 15.0 (107) 9.2 (94)Agriculture and forestry 11.7 (3) 20.3 (2)Chemicals, pharmaceuticals and oil 19.2 (9) 8.9 (9)Construction 18.5 (21) 10.4 (17)Electricity, gas and water 7.9 (4) 5.3 (4)Engineering, electronics and metals 15.4 (20) 7.7 (18)Food, drink and tobacco 24.0 (9) 17.5 (8)General manufacturing 14.7 (14) 9.5 (11)Paper and printing 10.5 (4) 7.4 (4)Textiles 12.8 (4) 7.1 (3)Other manufacturing and production 13.6 (19) 9.2 (18)Private sector services 20.4 (181) 13.4 (168)Professional services 17.6 (43) 12.1 (39)Finance, insurance and real estate 17.5 (32) 12.5 (30)Hotels, catering and leisure 41.0 (17) 30.0 (15)Transport, distribution and storage 10.1 (6) 6.4 (6)Media (broadcasting, publishing, and so on) 27.2 (9) 17.2 (9)Retail and wholesale 30.5 (17) 19.9 (15)IT services 22.4 (13) 17.8 (13)Communications 37.9 (2) 13.5 (2)Call centres 30.4 (3) 16.9 (2)Other private services 19.5 (41) 11.9 (38)Voluntary, community and not-for-profit 18.4 (47) 12.0 (40)Care services 20.8 (6) 17.7 (6)Housing association 15.3 (13) 10.8 (13)Charity services 19.8 (24) 13.9 (19)Other voluntary 12.2 (5) 10.5 (3)Public services 13.5 (51) 9.4 (47)Central government 11.1 (4) 8.6 (4)Health 13.2 (16) 9.7 (13)Education 11.2 (11) 5.9 (11)Local government 15.2 (9) 11.2 (8)Other public services 18.2 (11) 10.6 (11)Median labour turnover rate shown (number of respondents shown in brackets).Recruitment, retention and turnover 21

Table 27 shows reported labour turnover rates byoccupation. To understand the distribution of theresults, further detail is shown in Table 28. (For example,53% of organisations reported 0% turnover of seniormanagers, 9% reported 1–10% turnover of seniormanagers.)Redundancies and recruitment freezesAs a proportion of aggregate turnover, almost a quarterof respondent organisations made more than tenpeople redundant in 2007 (22%). Twenty-one per centalso operated a recruitment freeze over the course ofthe year. Table 29 highlights that these results are similarto the 2007 survey.Figure 6 explains the reasons for those employersmaking ten or more redundancies. Reorganised workingmethods and reductions in expenditure remain the twokey causes.Table 27: Labour turnover rates, by occupation (%)Senior managers/directors 0 (89)Manual/craft workers12.6 (57)Administrative, secretarial and technical13.4 (83)Managers/professionals14.1 (89)Services (customer, personal, protective and sales)16.9 (58)Median labour turnover rate shown (number of respondents shown in brackets).Table 28: Labour turnover, by occupational group by categories of turnover rate (%)Turnover0% 1–10% 11–20% 21%+Senior managers/directors (n=89) 53 9 26 12Managers/professionals (n=89) 24 17 38 21Administrative, secretarial and technical (n=83) 24 19 22 35Services (customer, personal, protective andsales) (n=58)28 9 21 43Manual/craft workers (n=57) 23 19 26 32Table 29: Respondents making ten or more redundancies and/or using recruitment freezes (%)Redundancies(ten or more)Recruitment freezes2008 survey 22 212007 survey 24 22Base: 298 supplying information relating to redundancies and 774 supplying information relating to recruitment freezes(2008 survey)22Recruitment, retention and turnover

The factors influencing decisions to make ten or moreredundancies are shown in Figure 6.Figure 6: Factors influencing redundancy decisions (1= not important, 5 = very important)FactorReorganised working methodsReductions in budget/cash limits3.73.9Improvedcompetitiveness/efficiency/cost reduction3.3Plant/office closureLack of demand for products/services2.62.6Merger/acquisition2.1Automation/mechanisation/new equipmentRelocation of work overseas,for example offshoring1.71.60 1.0 2.0 3.0 4.0 5.0Base: 294 (organisations making more than ten redundancies)ImportanceLabour turnover and organisational performanceAs in previous years we sought to capture employers’views on labour turnover and its impact on organisationalperformance (Figures 7 and 8). Seventy-four per centreported a negative effect to business performance as aresult of employees leaving organisations. However, onlyhalf of employers were aiming to reduce their level ofturnover in 2007 (54%).Figure 7: Effect of labour turnover on organisational performanceSerious negative effect15Minor negative effect59No effect19Positive effect70 20 40 60Base: 755Percentage of respondentsFigure 8: During 2006, did your organisation want to... (%)341254Reduce turnover?Increase turnover?Maintain current turnover rate?Base: 752Recruitment, retention and turnover 23

Our survey also asked some more detailed questionsregarding the approaches organisations take to collectingand analysing labour turnover data (see Figure 9). Themost common method is by team/department (75%).Table 30 examines the patterns associated with leavers’length of service. Again, due to the small number ofrespondents answering this question, data in this areafluctuates every year, so this result should be treatedFigure 9: Approaches taken by organisations to collect and analyse data relating to labour turnoverTeam/department75Occupation42Job grade/level 41Division 35AgeGenderEthnicityRegionIdentifying high-performers2625222018CompanywideNone11Other 70 20 40 60 80Base: 610Percentage of respondentsWhy and when people leaveAlmost all respondents (94%) use exit interviews toexplore the reasons why people leave the organisationvoluntarily.Drilling down into the key reasons for employeeturnover in organisations (Figure 11), in line with our2007 survey findings, a change of career was the mostcommonly cited cause (55%). Promotion outside of theorganisation (45%), level of pay (39%) and a lack ofcareer development opportunities (41%) also accountfor a large majority of resignations. Twenty-seven percent of employers reported leaving to have/look afterchildren (compared with 18% last year), with 22%citing redundancy and 19% retirement.with caution. Judging by the findings there is still a highproportion of new starters leaving the organisationwithin the first six months (22%). This emphasises theimportance of the induction process, to ensure peoplejoining the organisation are able to integrate effectivelyinto the workplace early on.The CIPD’s factsheet on induction is a good startingpoint for employers that are planning to redesign anexisting or implement a new induction programme:www.cipd.co.uk/factsheets24Recruitment, retention and turnover

Figure 10: Methods used to investigate why people leaveExit interviewsExit surveys(that is, anonymous questionnaires)Information from staff attitude/satisfaction surveys353494Word of mouth26Base: 650 2040 60 80 100Percentage of respondentsFigure 11: Key reasons for employee turnoverChange of career55Promotion outside the organisation45Level of payLack of development orcareer opportunitiesLeaving to have/look after children273341Redundancy22RetirementLevel of workloadStress of job/role191919Lack of support from line managers16Number of working hoursPerception of job securityLeaving to look after familymembers (other than children)Ill health (other than stress)6141313Lack of support from colleaguesRelocation22Other90 10 20 30 40 50 60Base: 64Percentage of respondentsTable 30: Job tenure – leavers’ length of service (%)2008 survey 2007 surveyPercentage of leavers with 0–6 months’ service 22 19Percentage of leavers with 7–23 months’ service 31 28Percentage of leavers with 2–5 years’ service 27 26Percentage of leavers with over 5 years’ service 20 24Base: 203Recruitment, retention and turnover 25

Retaining employeesDeveloping an employee retention strategy is one steporganisations can take to avoid high levels of turnover.As well as keeping costs under control, best practiceretention objectives that support resourcing andbusiness goals will also strengthen the internal employerbrand and therefore contribute to the organisation’sability to attract new talent.Overall, organisations reported having the same level ofemployee retention difficulties as last year: 80% versus78% in the 2006 survey. This high level of retentiondifficulties is reported across industry sectors (Table 31).Senior managers/directors remain the least difficultoccupation type to retain, with 7% retention difficultiesreported by respondents. Across the rest of theoccupations, there is the same level of retentiondifficulties, ranging from 20–36% – with managers andprofessionals having the highest level of retentiondifficulties at 36%.In terms of the steps organisations have taken toaddress staff retention, the results are similar to last year– with the exception of pay increases. This year has seena jump in the use of pay increases to address staffretention. Improving selection techniques and increasinglearning and development opportunities were alsoreported as important staff retention strategies.Table 31: Organisations experiencing retention difficulties (%)TotalManufacturingand productionVoluntary,community andnot-for-profitPrivatesectorservicesPublicservices2008 survey80.484.176.082.073.02007 survey78.076.075.083.072.0Base: 731 (2008 survey)Table 32: Retention difficulties, by occupation (%)TotalManufacturingand productionVoluntary,communityand not-forprofitPrivate sectorservicesPublic servicesSenior managers/directors7 8 7 6 13Managers/professionals36 36 30 37 39Administrative,secretarial and 24 19 31 24 29technicalServices (customer,personal, protective 24 15 22 32 15and sales)Manual/craft workers 20 38 15 14 15Base: 73126Recruitment, retention and turnover

Figure 12: Steps taken specifically to address staff retentionIncreased payIncreased learning and development opportunitiesImproved selection techniquesImproved induction processImproved line management HR skillsImproved benefitsMade changes to improve work–life balanceImproved employee involvementRemoved age-related policies and practicesOffered coaching/mentoring/buddy systemsRevised the way staff are rewardedso their efforts are better recognisedMade changes in the way the organisationapproaches career managementOffered secondmentsBetter promotion to employees of the employer brandRedesigned jobs to make them more satisfyingBetter publicised levels of pay and conditionsImproved physical working conditionsIncreased diversity of staffUsed recruitment/induction bonusesOffered flexible bonusNo initiatives undertakenOtherN/AN/AN/A319171714171611141114101171215101010915303230302529262627222235363837364646452008 survey2007 survey53Base: 710Recruitment, retention and turnover 27

Key challenges and implicationsin recruitment, retention andturnoverGerwyn Davies Public Policy Adviser, CIPDThe media has been dominated with stories about theeconomic downturn. But the headline stories that havegrabbed most attention during the past year – the fall inhouse prices, the collapse of Northern Rock and joblosses in the City – don’t reflect a balanced picture ofwhat has taken place within UK organisations duringthe past 12 months. Such a picture is provided in theCIPD’s annual Recruitment, Retention and Turnoversurvey, a survey of UK CIPD member employers thatuniquely looks at the interrelationships betweenredundancies, recruitment and labour turnover trends.The results offer invaluable insights into the dynamics ofthe UK labour market that continue to influence thedecision-making of HR professionals and public policymakersalike. The aim of this section is to shed light onthe questions thrown up by the survey, particularlywhen these are combined with official governmentstatistics and other survey evidence.What impact has the credit crunch had onrecruitment and retention in the past year?Let’s start with the question that is on the lips of everyHR professional: what impact has the current creditcrunch had on the jobs market? One need look nofurther than the official government job statistics toshow how resilient the jobs market has been in the yearto spring 2008. Redundancy rates are at an all-time low,employment levels are at an all-time high, whileunemployment rates remain very low by any measure.This remarkably strong set of figures is reflected in thekey findings contained within the CIPD’s annualRecruitment, Retention and Turnover survey.It shows that the proportion of employers experiencingrecruitment difficulties remains high; up 2% to 86% ofemployers. As the report states, this has contributed tomaking the past year ‘a candidates’ market’. The reasonfor such difficulties becomes clearer when looking at thesurvey in the round. It shows that employers haveresponded to the largely benign economic conditions in2007 by reducing redundancies (therefore loweringinvoluntary labour turnover), operating fewerrecruitment freezes and gradually increasing overallrecruitment (in the process raising voluntary labourturnover by providing potential job-quitters with morealternative job options to choose from). The offsettingnet combination of these recruitment and redundancypatterns is thus to leave the overall labour turnover ratebroadly unchanged, although the rate is slightly lowerthan 12 months ago – a signal perhaps that candidatesmight be starting to feel more nervous about quittingtheir current roles.What impact will the credit crunch have onrecruitment and retention in the next 12 months?Given the lag between these figures and current activity,perhaps the more significant question lies in whether thejobs picture will look more tarnished in 12 months’ time.Unlike the recruitment and retention survey, the CIPD/KPMG quarterly Labour Market Outlook provides such aforward-looking snapshot, by highlighting netrecruitment intentions among UK employers. The twomost recent reports have suggested that 2008 will be amore difficult year for employers and employees alike;with the prospect of higher redundancies and lessrecruitment, particularly in the public sector and inLondon. The long era of the ‘candidates’ market’ maytherefore be coming to an end, particularly if some of thegloomier economic forecasts come to fruition. Thepredicted jobs slowdown will particularly affect youngerworkers and graduates, who stand to suffer most fromany recruitment freeze. However, the intense competition28Recruitment, retention and turnover

for both skills and talent will undoubtedly remain,particularly for sought-after skills such as engineering.Much will now depend on the Bank of England’s capacityto lower interest rates to stimulate economic growth;although this capacity looks set to be severely restrictedby concerns about inflationary pressures in 2008.How is government policy impacting onrecruitment and retention strategies, and howcan employers play their part?While much has been made of the effects of the creditcrunch on the jobs market, less has been said ofgovernment policy. This is an oversight when one looksat the range of policies that will have a direct impact onthe labour market in 2008.SkillsIf recruitment difficulties do continue, the Government’ssubstantial investment in adult skills would seem a veryappropriate and timely one. The bulk of governmentfunding is currently aimed at improving the literacy andnumeracy of lower-skilled employees through theGovernment’s flagship training initiative, Train to Gain.Train to Gain is a free and independent brokerageservice, whose funding priorities are mainly targeted atemployees with low levels of basic skills or who do nothave a level 2 qualification. Specific funding initiativesare also in place for achievement of management andleadership qualifications and some level 3 qualifications(http://www.traintogain.gov.uk).However, the CIPD argues that if the Government is torealise its ambition of raising the nation’s productivitylevels, it needs to widen its support to sectors andprofessions where recruitment difficulties are mostacute and are primarily caused by genuine skillshortages. Employers should be playing their part too.By investing in training they can add to the supply ofskilled labour, and thereby alleviate skill shortages andcombat recruitment difficulties.The news that the Government is earmarking£200 million for training in key sectors of the economy,such as construction and IT, is therefore very welcome.As the survey shows, the most effective method ofaddressing recruitment difficulties is to provideadditional training to allow internal staff to fill posts –not to recruit people who do not have the necessaryskills, which is sadly the most prevalent method used toovercome difficulties.However, it should be added that this figure stillrepresents less than a fifth of the Government’seventual annual contribution to Train to Gain. Thisfigure might look more understated if some of thepotential, and in some cases likely, changes to thelabour market take effect. These include the reversemigration of workers from and to EU accessioncountries and the Government’s ambition to get1 million Incapacity Benefit claimants into work.Migrant workers and the core joblessThe influx of migrant labour into the UK has becomeparticularly marked since 2004, when migrant workersfrom EU accession countries became eligible to work inthe UK. As the Recruitment, Retention and Turnoversurvey shows, a sizeable proportion of UK employers(14%) has taken advantage of this relatively new pool oftalent and labour during the past year. Further, almosttwo-thirds say that migrant workers have had a positiveimpact on their organisation. However, as a studypublished by the Institute for Public Policy Research(IPPR) in May 2008 indicates, a steady inflow of EUmigrants cannot be taken for granted in the long term,with large-scale reverse migration a distinct possibility.CIPD members are therefore understandably concernedabout the practical labour cost and business implicationsof the incoming points-based system, which will beintroduced in stages in 2008. Such a policy might haveramifications for the lower-skilled and lower-paid jobs inparticular, as these developments could lead to ashrinking of this pool of labour. But every cloud has asilver lining, and one HR professional’s recruitment andretention problem is another candidate’s opportunity.It will be interesting to see whether the recruitmentdifficulties and related risks to pay inflation can beovercome by people not in employment, such as thoseon long-term Incapacity Benefit.SummaryThe scenarios for 2008 thus remain finely balanced.But either way, the challenges for the year aheadaround skill shortage and recruitment and retention willpersist. To overcome such challenges, the Governmentand employers need to work together by investing inskills at all levels and ensuring that these skills are put togood use in evolving roles.Recruitment, retention and turnover 29

Background to the surveyThis survey was carried out in February and March 2008 and relates to the period 1 Januaryto 31 December 2007. The questionnaire was sent to HR professionals in the private, publicand voluntary sectors. In total 779 responses were receivedA profile of the location of survey respondents isprovided in Table 33.Table 33: Location of staff in respondents’organisations (%)Whole UK 28%11%Whole UK 28London 19South-east England 17North-west England 14Midlands 13South-west England 11Scotland 11Yorkshire/Humberside 9North-east England 8East of England 7Wales 6Northern Ireland 33%8%14%9%13%Base: 7706%7%19%11%17%30 Recruitment, retention and turnover

Table 34 provides a profile of the survey respondents, byindustry sector.Table 34: Breakdown of respondent organisations,by industry sector (%)Private sector services 49Manufacturing andproduction29Public services 21Voluntary, communityand not-for-profit12Base: 774RecruitmentA total of 773 respondents supplied information relatingto their organisation’s recruitment practices. Of these,688 were able to supply information relating to thewhole organisation and the remainder suppliedinformation relating to only one particular unit,department or region.Labour turnoverA total of 367 survey respondents were able to supplyall the information for us necessary to calculate labourturnover on a whole-organisation basis – in keepingwith the previous year’s survey.Figure 13 shows a breakdown of the survey sample byorganisation size.This report uses the standard ‘crude wastage’ methodto calculate the rate of turnover. This method iscalculated as follows:Figure 13: Breakdown of samples, by organisation size– UK employees (%)Labour turnover =Number of leavers in a set periodAverage number employed in the same periodx 10075161115Fewer than 250251–500501–1,0001,001–5,0005,001–10,00046(Please note: leavers include those leaving theorganisation by way of voluntary or involuntaryseverance, redundancies or retirements, but do notinclude internal transfers.)However, readers should be aware that this methodhas limitations. For example, it takes no account ofthe characteristics of the workforce or the length ofservice of the leaver.‘Average’ in the report is used to refer to thestatistical mean where the data is normally distributedand to the median in the cases where the distributionis significantly skewed. Note that, in cases where thegroup sample sizes are small (that is, fewer than ten),the results should be interpreted with caution.Base: 765More than 10,000With the exception of labour turnover rates, allfigures in tables have been rounded to the nearestpercentage point.Recruitment, retention and turnover 31

Further readingCIPD. (2006) Diversity in business: how much progresshave employers made? First findings. Survey report.London: Chartered Institute of Personnel andDevelopment. Also available at: http://www.cipd.co.uk/subjects/dvsequl/general/_dvrstybus.htm?IsSrchRes=1CIPD. (2007) Diversity in business: a focus for progress.Survey report. London: Chartered Institute of Personneland Development. Also available at: http://www.cipd.co.uk/subjects/dvsequl/general/_dvstybsfcs.htmCIPD. (2007) Employee turnover and retention [online].Factsheet. London: Chartered Institute of Personnel andDevelopment. Available at: http://www.cipd.co.uk/onlineinfodocuments/factsheets.htmCIPD. (2007) E-recruitment [online]. Factsheet. London:Chartered Institute of Personnel and Development.Available at: http://www.cipd.co.uk/subjects/recruitmen/onlnrcruit/onlrec.htm?IsSrchRes=1CIPD. (2008) Induction [online]. Factsheet. London:Chartered Institute of Personnel and Development.Available at: http://www.cipd.co.uk/subjects/recruitmen/induction/induction.htm?IsSrchRes=1All of the above are available for CIPD members todownload from the Information Resources section ofthe CIPD website at www.cipd.co.ukAcknowledgementsThe CIPD is very grateful to those organisations andindividuals who gave their time to take part in thisresearch. They include:• Neil Conway of Birkbeck College• members of the Recruitment Forum SteeringCommittee for their input into the survey designand assistance in piloting the questionnaire• focus group members whose thoughts andexperiences helped shape the report’s commentaryon the findings• all those who shared examples of theirorganisation’s practices.We hope that you find the research useful whenconsidering your own recruitment and retentionpractices. Please contact us if you have any questions orideas based on our findings (research@cipd.co.uk).32Recruitment, retention and turnover

We explore leading-edge people management and development issues through our research.Our aim is to share knowledge, increase learning and understanding, and help our membersmake informed decisions about improving practice in their organisations.We produce many resources on recruitment issues including guides, books, practical tools,surveys and research reports. We also organise a number of conferences, events and trainingcourses. Please visit www.cipd.co.uk to find out more.Chartered Institute of Personnel and Development151 The Broadway London SW19 1JQTel: 020 8612 6200 Fax: 020 8612 6201Email: cipd@cipd.co.uk Website: www.cipd.co.ukIncorporated by Royal Charter Registered charity no.1079797Issued: June 2008 Reference: 4435 © Chartered Institute of Personnel and Development 2008