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When salaries are wrong, talent crisis worsens

Mike Stirton Mike Stirton is Managing Director - Core-Asset Consulting

The UK economy has been in the grip of a perceived hiring crisis since we emerged from the last lockdown.

For many niche areas most impacted by changes to immigration laws and Brexit, this is justified – as well as industries like hospitality that have relied on transient, low-paid staff.

So how do you legislate for financial services (FS) – an industry that is perceived to be awash with cash and the sector that drives so much of the Scottish capital’s economic growth?

As recruiters to this sector we’ve observed a very clear trend. Firms in one camp bemoan the hiring crisis, talent shortfall and dearth of successors to the ageing c-suite. The other camp appear not to be blighted by these problems in the slightest. Whether they need permanent or contractor staff, they move quickly and secure the talent they need.

The biggest difference? The latter cohort is willing to stump up and pay higher salaries from the outset, most notably to junior and mid-level staff allowing them to attract individuals from other firms.

Now, I appreciate this is not a ground-breaking revelation: pay more money and you are more likely to attract – and keep – talent.

As a recruiter, it might also appear that we have a vested interest in inflating salary levels, to secure a higher fee for a placement. A matter of “of course you’d say that”.

Yet to our clients we would say failure to compete for the best talent serves nobody and can even harm the Scottish FS sector.

Firms who lag behind others end up squandering significant amounts of time hunting for staff whilst refusing to budge on salary bands. Eventually they are often forced in desperation to up the ante and pay what’s required – or risk projects squirrelling past deadlines or out of control.

By committing to higher salaries for our junior and mid-level staff we will avert their temptation to look to remote or hybrid work based out of London, stemming a brain drain.

The current global economic climate is exasperating the perceived shortage of talent too.  A combination of the offshoring of jobs and a widespread belief among workers that market turbulence means they should be grateful for any job they land has meant there is a sword of Damocles hanging over the heads of junior to mid-level staff and applicants.

For many in this bracket it’s a case of ‘keeping the head down’ at present until the storm passes – why risk moving to a new firm with everything that’s going on after all it can sometimes be the case of last in first out? There’s human consequences too – mid-level workers are very likely to be between 30 to 40 years old – and at a point in life when fixed outgoings are at their highest, all the while their actual value to the company is sky-high.

So if recruiting in this pool, employers really need to pay a salary attractive enough to mitigate these perceived risks to encourage movement.

We will also be able to move on from blaming the hiring crisis for our staffing shortfalls, equipping this sector – that is so vital to the health of Scotland’s economy – with the tools to navigate the potential choppy waters ahead.

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