Winter 1999 RCI Executive Summary
The Recruitment Confidence Index (RCI) is a new quarterly Index that has been developed by Cranfield School of Management, the Daily Telegraph and tmp.worldwide, a leading professional recruitment consultancy, as a way of measuring current expectations of future recruitment activity.By measuring to what extent organisations expect to change levels of recruitment activity, number of employees and other factors, the Index will forecast changes in the recruitment climate over a six month period. It will therefore provide an important new dimension to current economic forecasting as recruitment is widely regarded to be at the front end of business growth or decline.
The data was collected in December 1999 and the results are based on 383 responses from a representative sample of UK organisations. Respondents included HR directors/managers, finance directors, managing directors and recruitment specialists.
Employment trends
So, what are the key themes, trends and prospects within the employment market? And, what is the sharp-end experience of organisations in terms of labour supply and demand?
- The first RCI Index shows that:
- There is a strong expectation that trading conditions will improve over the next six months.
- Workforce expansion is envisaged over the next six months, notably in such areas as Sales, Customer Services and Computing / IT.
- The growth of service sector employment continues to outstrip manufacturing.
- Nearly 1 in 10 organisations struggle to fill most of their managerial / professional vacancies.
- Over the next six months, the most difficult areas for employers to recruit at managerial / professional levels are in Engineering, Computing/IT and Logistics.
- London and the South East are the most difficult areas in which to recruit.
- The perceived level of recruitment difficulty increases with the level of appointment.
There is a strong expectation in the business community that trading conditions will continue to improve. When respondents were asked to describe their current level of business confidence, 69% were optimistic or very optimistic over the next six months and only 8% negative or very negative. This message reinforces data from a range of recent surveys reporting a positive economic climate.
Increased customer demand and employment growth
50% of organisations reported an increase in demand for their main product / service in the last six months and only 19% reported a decrease. More importantly, looking at the next six months, 61% envisage a further increase in demand for their main product / service, whereas only 7% envisage a decrease.
The increase in demand is reflected in continued employment growth: 49% of organisations expect to increase their workforce in the next six months, whereas only 28% expect a decrease. This increase in demand is also reflected at managerial/professional levels: 26% of organisations expect to increase the number of managerial/professional staff in the next six months whereas only 12% expect a decrease.
The areas where respondents anticipated the greatest increase in the number of employees are Sales, Customer Services and Computing / IT. 31% of organisations with a sales function expect an increase in the number of employees in this function/department whereas only 7% expect a decrease. Also, fears of a Y2K employment decline in computing/IT may yet prove to be misplaced.
There is also a positive signal for engineers - employment growth in engineering occupations is set to rise. 18% of organisations expect that the engineering function will expand whereas 8% expect a decrease.
In managerial and professional occupations, the RCI shows that the strongest increase in labour demand over the next six months will be in the areas of IT, Sales and Finance/Accounting.
Shaun Tyson, Professor of Strategic HRM at Cranfield School of Management says: "If this optimistic forecast proves to be correct, we may see greater upward pressure on pay in areas of the country where the economy is overheating such as the South East of England. This may also encourage employers to be even more flexible in their policies, especially where positions are difficult to fill."
The consequences of growth
The Index indicates that the labour market can still meet employment growth at managerial/professional levels and no evidence was found to suggest that recruitment difficulties would necessarily follow this increase in employment. On average, respondents do not expect that the proportion of managerial / professional vacancies that are difficult to fill will increase.
There is a perception that the more senior the position, the more difficult it is to fill and 73% of organisations who are planning to make Board level appointments expect to have difficulties.
Recruitment difficulties at the most senior level are mirrored by a sharp pick-up for advertised demand for executives. According to Media Monitoring Services, the number of senior appointments advertised in the quality national press in December `99 had increased by 26% year on year. (@ salaries quoted of £50K+). Mark Payne, Deputy Advertisement Director at the Telegraph confirms. "Our Business File section which exclusively carries £50K+ appointments, has seen tremendous growth over the past year. The number of senior executive positions advertised is at an all time high with over 150 such vacancies carried in our first two January issues."
Reinforcing this view, Charles Austin Director of HW Group adds: "We are finding that businesses are experiencing real difficulties in attracting high calibre staff at senior management level. Those at the top no longer wait in anticipation for calls from head-hunters. Indeed, it now appears that they not only dictate the direction that their careers will take but are also specific about the companies they are prepared to work for."