Staff retention and incentives

Incentives and benefits

When asked what incentives are offered to fee earners – other than salary and commission – the recruitment respondents in our survey say the most common benefit offered is agile/flexible working. This is available at 93% of respondent firms and represents a 29% increase compared to our 2019 survey, although this is perhaps unsurprising in a world where flexible working, like working from home, has become the ‘norm’ post-pandemic and is an expected benefit when hiring.

Firms offering enhanced maternity and/or paternity benefits (not covered in our 2019 survey) is not only indicative of increasingly diverse workforces within recruitment agencies but also recognition by business leaders of the importance of balancing family life with a career.

We might perhaps have expected agencies to be making greater use of share option schemes to attract and keep hold of their talent, but our 2022 survey shows only a modest rise in the use of share options since 2019. It may be that the experience of Covid in 2020 and 2021 means many employees see cash now as a more viable incentive than share options tomorrow. This trend may continue because of the cost-of-living crisis and ongoing uncertainty in the marketplace.

Staff attrition

Pressure on recruiters to meet targets and maximise revenue is, of course, a key contributory factor in traditionally high staff attrition rates in the sector.

While our findings reveal that 7% of firms still have an attrition rate of greater than 40%, close to a third of agencies (32%) report an attrition rate of less than 10% and these rates have improved for all sizes of firm compared to the 2019 figures.

The most significant change since 2019 is a fall from 21% to 13% for firms with NFI of less than £2 million, but even among the largest recruitment agencies, which as expected, have the highest attrition rates, there has been a 4% reduction between 2019 and 2022.

Our survey does suggest, however, that smaller firms are getting the best results in terms of hanging on to recruiters – perhaps because they recruit more experienced recruiters while their larger, more ‘corporate’ competitors recruit a mix of experienced hires and graduates with the latter potentially having a higher attrition rate.

Our survey also finds that, on average, 21% of recruiters leave within the first 12 months of employment but looking at this by firm size we see once again that smaller firms appear to have made the most progress since 2019, with 5% fewer first-year exits in 2022.

Flexible working

Given that 93% of firms say they offer their recruiters agile/flexible working as a benefit, it’s no surprise to find from our survey that only 7% of respondents expect employees to be in the office five days per week.

In fact, just over half of firms only require employees to spend either three (30%) or two (22%) days a week in the office. A further 17% of firms say they have no minimum requirement.

Breaking down these results by size of firm, it seems that bigger firms generally require staff to be in the office less and it is perhaps reasonable to wonder if there might be a link between this and their higher attritions rates? Opponents of flexible working argue that being together in the office helps staff build a stronger sense of team. Staff working more often from home may perhaps feel less loyalty to a firm and be more likely to look elsewhere.

Even though almost all firms now offer some sort of agile/flexible working benefit, our survey finds the majority of respondents (75%) don't plan to decrease their property footprint. While this may seem a large percentage, at the time of our survey, many firms were still in ‘staffing up’ mode. It will certainly be interesting to see whether a 2023 slowdown, and the possibility of reduced headcounts, has a bigger impact on footprint.

Winning the war for talent

Our survey reveals that 39% of firms incorporated an average pay increase of between 2% and 5% in their last annual pay review, while 21% incorporated no increase at all – although some may have balanced this through better commission rewards.

A more generous 30% say they incorporated a pay increase of between 5% and 10%, while one tenth incorporated an increase greater than 10%.

Looking ahead, and no doubt recognising continuing inflationary pressures, 43% of our recruiters expect to incorporate an average pay increase of between 2%-5% for their next annual pay review while just 13% don’t expect to incorporate any pay increase. A further 39% predict a pay increase of between 5% and 10%.

With continuing pressure on wage bills, it will be more important than ever for firms to focus on a more supportive workplace culture that embraces staff wellbeing, learning and development, and diversity and inclusion, in order to hold on to their talent. This is a trend that many firms are increasingly in tune with as an important part of marketing the business, whether to prospective employees, clients or buyers.