Businesses experience skills shortage and increased competition for talent

Three quarters of companies have reported recruitment difficulties in the last year, research finds.

Many organisations are having to look externally to meet the changing skills needed in-house, according to the latest CIPD/Hays Resourcing and Talent Planning Survey.

However, the CIPD says that equal attention needs to be given to the development of internal staff, in order to build a skilled and sustainable workforce in the long term.

The survey of 520 UK-based HR professionals, which examines resourcing and talent planning strategies across private, public and voluntary sector organisations, finds that while nearly half (45 per cent) of respondents are making efforts to develop more talent in-house, almost three quarters (74 per cent) continue to recruit externally for key talent/niche areas.

Some 44 per cent of organisations anticipate an increase in headcount in 2015.

Managers, specialists and technical staff are proving to be the most difficult vacancies to fill, followed by senior managers and directors.

The most common reasons for recruitment difficulties vary by role, but a lack of specialist skills and industry or general experience are the most common.

A fifth of those who have difficulty recruiting administrative or manual workers report that pay is the key challenge.

To address the skills gap, 44 per cent of organisations anticipate an increase in headcount in 2015. This is reflected by an increase in resourcing budgets, which have risen for over a third (35 per cent) of respondents compared to just 8 per cent of organisations in 2012 and 2013.

In contrast though, the majority of organisations say that their talent management spend has remained the same (51 per cent), prompting the CIPD to recommend that, alongside resourcing strategies, organisations need to invest more in developing internal talent, with a forward-focused view on how their skill requirements may develop in coming years.

Jessica Cooper, research adviser at the CIPD says, ‘Organisations are increasingly feeling the pinch when it comes to sourcing key but scarce skills. In the ‘make or buy’ debate, the ‘buy’ decision still seems to predominate investment in talent, but hiring new talent is just part of the solution for addressing skills shortages.

‘Once people are in a role, they still require ongoing development to achieve their full potential and meet ever-changing and critical skills needs. Organisations also need to consider how they can align recruitment activity with an increased focus on internal talent development, in order to build skilled workforces that can easily flex to fulfil future skills needs.’

The survey finds that more than three quarters (77 per cent) of organisations have experienced challenges retaining staff.

Most have taken steps to address retention, through improvements to pay, benefits, learning and development opportunities and improving line managers’ people skills.

However, while ‘increased pay’ is a common tactic, it is also most commonly ranked among organisations’ least effective retention methods, highlighting how retention initiatives need to be closely aligned to employee preferences as well as meeting organisational objectives.

Further reading on skills

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.