The Office of National Statistics (ONS) has revealed that unemployment is at its lowest rate for over 40 years. This is of course great news for employees and employers alike, but a super tight labour market poses some specific challenges for businesses seeking to recruit and retain talent – and provides the biggest test of strength for organisational engagement strategies.


We already know that low unemployment makes the war for talent tougher. Fewer people chase the jobs that are available, and employees can be choosier – and more demanding – about the roles they go for.


This time around, though, we’re also seeing a much greater skills gap emerging which is likely to exacerbate the recruitment and retention problem. City and Guilds recently published a study showing that two-thirds of UK employers think the skills gaps in their businesses are likely to get worse or remain the same in the next three to five years.


What does this really mean in terms of HR impact for employers?


When it comes to recruitment, businesses need to evolve their Employee Value Proposition to attract talent more proactively. This means creating stronger, clearer messaging about the employee experience on offer, while relying less on better pay as the main attraction (as the BBC article on the subject points out, wage growth is not following the same positive trend as employment).


But the need to engage existing employees is also greater than ever. Businesses need to understand how they can create a strong employee experience that drives deeper, longer employee engagement.


This isn’t just about adding in a few nice ‘perks of the job’. It’s about taking a look at the entire people strategy of the business, and delivering in three key areas:

  • better leadership (transparency; authenticity; humility)
  • better communications (driving two-way dialogue; open information sharing; cohesion between different parts of the organisation)
  • better learning and development to enhance career progression (clear career paths; strong training; more opportunities to learn and share).


While this requires time, investment and focus, the challenges of today’s labour market are not going to disappear. If you don’t work hard to attract and retain the best people to drive your business forward, your competitors certainly will.


By Dr Andy Brown
CEO & ENGAGE Leadership Practice Head