British firms are throwing ever more money into recruitment as the struggle to find, recruit and retain talented workers gets tougher by the month.
Eight out of 10 British employers are now struggling to fill vacancies, with the labour market in the UK at its toughest for eight years, particularly for engineering and computing firms, research by Cranfield School of Management has found.
Its Recruitment Confidence Index has found more than eight out of ten firms anticipated trouble ahead in finding quality people to fill vacancies, with recruitment difficulties currently standing at their highest level since the index started in 1999.
Employers are responding by planning to spend more on recruitment in an effort to attract suitable candidates, the index found.
Nearly four out of ten expected to increase their recruitment expenditure over the next six months.
Dr Emma Parry, research fellow at Cranfield, said: "Employment levels have increased in the eight years we've been doing the RCI. Organisations have been recruiting more and more, but fewer high quality people have been coming into the workforce, resulting in rising recruitment difficulties for employers."
Despite the increased spending, the answer, she stressed, was not just to plough in more money.
"Too often we see organisations just throwing more money at the problem rather than assessing which recruitment methods are effective," she pointed out.
A similar Cranfield study in June found fewer than half of UK businesses implemented talent development programmes.
And while 60 per cent said talent management – the strategies and practices needed to define, identify, develop, attract and retain those deemed to have skills valuable to an organisation – was essential to a business's bottom line, only four out of 10 strategically managed their star talent.
"Changing demographics mean the need for strategic management of human capital has never been greater," says Dr Parry.
"Organisations need to look at their employer brand and differentiate themselves from their competitors. They need to take a structured approach to development and retention, enabling them to "grow their own talent" and have an edge in the tight labour market," she added.
The study follows research by the UK Chartered Institute of Personnel and Development in June that reported almost eight out of 10 British businesses found it a struggle last year to hang on to their staff, with the situation appearing to be getting worse.
It also identified a sharp increase last year in the number of organisations facing an uphill battle to retain their workers.
Among other findings from the Cranfield study, it reported that business confidence was at a near all-time high, with a net percentage of +72 organisations reporting an optimistic response, the highest level since 1999.
More than three quarters of the organisations polled expected pay increases over the next year to remain in line with inflation, it added.