In the wake of the Covid-19 pandemic, the job market has experienced a significant shift from the “Great Resignation” to what can now be described as the “Great Retention”. As economic uncertainty looms, employees are increasingly opting to remain in their current roles rather than seeking new opportunities elsewhere. This trend is proving particularly challenging for recruitment agencies, which rely on job-hopping to generate revenue.
Dirk Hahn, the chief executive of recruitment agency Hays, is a prime example of an employee who has chosen to stay with his company for the long haul. Having joined Hays as a sales representative in 1997, Hahn worked his way up the ranks to become CEO last year. However, his firm is now facing an unprecedented downturn, with pre-tax profits plummeting by 92% to £14.7 million in the latest financial results.
Hays is not alone in this struggle. Competitor PageGroup also reported a 50% drop in profits this month. The root cause of these woes can be attributed to a decrease in attrition rates, as employees opt to stay put in their current roles amidst economic uncertainty. Data from the Chartered Institute of Personnel and Development reveals that the percentage of employees with less than one year’s tenure fell to 16% at the start of this year, down from a peak of 18% post-Covid. While this may seem like a small decline, City bosses report that attrition is particularly low in the professional services sector.
Low attrition rates can be both beneficial and detrimental to companies. While a stable workforce reduces disruption and hiring costs, an excess of well-paid, long-tenured employees can increase wage bills and limit opportunities for fresh talent to advance. To combat this issue, some firms have resorted to hiring freezes and more selective recruitment processes. Others, such as PwC, have taken steps to reduce headcount, citing low attrition rates as a contributing factor to increased costs and hindered hiring practices.
As the economic landscape continues to evolve, recruitment agencies and employers alike will need to adapt their strategies to navigate the challenges posed by the “Great Retention”. Whether this means exploring new markets, implementing cost-cutting measures, or finding innovative ways to attract and retain talent, one thing is clear: the job market is undergoing a significant transformation, and those who fail to adapt risk being left behind.
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