UK employers must address pay to retain top talent, study says

UK employers need to renew focus on pay if they want to attract and retain top talent amid an intensifying skills shortage in the jobs market, a study suggests.

Almost one third of British employees surveyed by insurance broker Willis Towers Watson said they are likely to leave their current employer in the next two years, with salary cited as the biggest motivation for leaving.

Nearly half of employees said they are worried about their financial future, while only 48% considered what they were being paid as fair.

The UK unemployment rate is at its lowest level since records began in 1975, making it more time consuming for businesses to recruit staff as there are fewer qualified people available for those jobs.

Migrants from the European Union are also increasingly reluctant to take up new jobs in the UK amid uncertainty over Brexit negotiations and their future right to reside in the country, exacerbating a shortage of skilled workers.

Some 30% of employers surveyed said their hiring activity had increased over the past year, while a similar number said employee turnover had gone up and added that retaining top-performing employees was becoming increasingly harder.

"As churn increases in the labour market, employers need to get savvier about what makes staff tick if they are to succeed in bringing the best people into their workforce and importantly go on to keep them in the business," said Tom Hellier, GB practice lead for rewards at Willis Tower Watson.

"Increased pay transparency through websites like Glassdoor, coupled with mounting anxiety fuelled by headlines about stagnant pay growth has refocused workers' minds on their salary and whether they are getting a fair deal."

He added: "Putting more money into the salary budget is a difficult task for business leaders in the current economic climate. However, improving perceptions of fairness is still possible if companies are able to articulate how pay decisions are made and demonstrate effective differentiation through better alignment between pay and performance."