Recruitment and recovery

Finding the right match between worker and vacancy has a significant impact on productivity

Hiring the wrong worker can be extremely costly. In Public First’s business poll, businesses estimated that poor hires contribute on an average around 25% less value than a good match. Previous REC research has estimated that the overall cost of a bad hire to a business can be three times higher than just a wasted salary.

But, even more important, finding the right candidate can positively create value for the employer. On average, businesses estimated that top performers can create around 50% more value for the company.

• 77% of companies say that on average the workers that they have found through a recruitment agency are a good match. 
• 62% of companies say that using an agency helped them increase the diversity of candidates they considered.
• £7.7 billion a year of increased productivity thanks to the recruitment sector by improving the quality of matching. 

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Flexible work creates a more agile economy, and helps workers find a role that suits them

Since 1980, the number of the self-employed has more than doubled in absolute terms, and increased its share of the total workforce by around a half. Similarly in the mid-1980s, there were only around 50,000 workers employed on a temporary basis through an agency. Today, on an average day in normal times, there are over one million. For businesses or public sector organisations, having access to temporary workers makes it possible for their company to be far more agile. 

In our business survey, we saw the importance of temporary employment for the economy - and how largely this was being enabled by the recruitment sector:

• 61% of businesses said that they are currently hiring staff on a temporary contract.
• 84% of businesses with temporary workers said they found some of them through an agency.
• 57% of businesses with temporary workers said that it would've been difficult to find them without an agency.
• 67% of businesses agree that the recruitment industry makes it easier for companies to hire flexibly. 

British companies are not always following best practice in recruitment or supporting their workforce over the long term.

How good a job are British companies doing at recruitment? 

• 52% of Britons think that companies do a good job at recruiting efficiently.
• 47% of Britons think that the process of recruitment is fair to job seekers like themselves. 
• 44% of Britons think that the process of recruitment is inclusive to job seekers like themselves. 

When we dived deeper into what companies did, it was clear that there was still significant room for a recruitment process that was fairer, more effective and more inclusive.

The main tools of choice in recruitment for businesses of all sizes remains the interview and the CV. However, while important, independent research has often found that the interview by itself is not enough and that the form of the interview matters, while CVs do not always give a full picture of a candidate and often embed discrimination.

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There is still a long way to go on diversity and inclusion. 

2020 highlighted the importance of prioritising diversity and inclusion. Unfortunately, all too often, recruitment processes do not do enough to reach a diverse pool of candidates, encourage them to apply and make them feel welcome when they arrive at work. Academic research has repeatedly found that CVs with white-sounding names are more likely to get a response than those from a minority. 

Many of the companies we spoke to believed that they were already doing reasonably well at ensuring diversity in their workforce - but there is also a long way to go.

• Two in three businesses (62%) said that working with a recruitment agency had helped them increase the diversity of the candidates they considered.
• A further two in three businesses (63%) said that working with a recruitment agency had helped them increase the diversity of new recruits.
• 30% of companies said that they were focusing more on increasing the diversity of their workforce. 

Remote and flexible working offer new opportunities to boost productivity and inclusion.

The pandemic looks to have accelerated wider structural changes in the labour market and the way companies recruit. The rise of hybrid and remote working has the potential to significantly expand the pool of candidates companies can access, and make it easier for candidates to access the most interesting vacancies, no matter where they live.

• 28% of large businesses said they were likely to explore or continue hiring people who do not live close to their office.
• 45% of businesses said they experimented with more flexible working hours.
• The long-term increase in remote working could boost UK productivity by £9 billion.

To help support the economy recovery and boost productivity, we're proposing a manifesto for good recruitment in 2021

• Spreading good recruitment practice should be taken as seriously as encouraging digital adoption or better management skills in companies.

• We need to help workers progress - for instance by broadening the Apprenticeship Levy so it can be used as a funding mechanism for training temps.

• We can support better diversity & inclusion - including working with employers to avoid bias in the recruitment process.

• Lets take advantage of the remote working revolution & help those who are unemployed access a wider pool of vacancies from further afield.

• And finally, we commit to working with Government to maintain our flexible labour market. In return, we want Government to work with us so that all employment laws take agency and temporary workers into account from the outset, rather than be drafted with only employees in mind.