In the first quarter of 2022, there were more than 1.3 million job vacancies in the UK while unemployment plummeted to a 47-year low.
This meant that by March 2022, job openings outweighed unemployment levels for the first time since records began and it now means that organisations across the UK are facing a severe talent shortage with millions of vacancies and no candidates to fill them.
Professionals started leaving their posts in the height of the pandemic, newly accustomed to a better work-life balance and aware of the other aspects of life they once missed out on through work. While Principals realised mortality and started to succession plan, parents realised the importance of spending time with their families and young professionals particularly realised the cost of living in the cities where they once worked. They started moving to the outskirts of the city, living with family or near-by family and sought a different way of working entirely.
The disenchantment with pre-pandemic roles peaked at the end of 2021, which was aptly titled, The Great Resignation. 500,000 workers resigned in the UK while 1.2 million workers quit their jobs in the US in the month of November alone and now, with more opportunities than candidates, employed professionals can find greener grass wherever they look. Organisations are now focusing on retaining their talent by increasing their salaries but while it might be a quick fix, it will not last long.
In the three months leading up to March 2022, the average salary rose by 4.2% in the UK. While increasing compensation is certainly a place to start, this figure is being manipulated by the extraordinarily high bonuses awarded in the financial services and construction sector and could bear no weighting on the everyday professionals’ take-home salary.
Secondly, it is still behind the 7% inflation rate we are currently experiencing in the UK and so for those who do receive an uplift, it will not feel as rewarding nor will it be a reason to stay.
While compensation must be benchmarked in-line with industry standards, something we advocate with our Global Family Office Benchmark Report, it cannot sit alone. You must consider total compensation including a bonus; either discretionary or formulaic, and we cannot stress this enough, Long-Term Incentive Plans.
A Long Term Incentive Plan (LTIP) is an executive compensation structure that rewards employees for reaching a milestone of employment. These plans usually have other conditions and metrics attached.
They are an exceptional way to attract and retain talent over an extended period of time while aligning their interests with the interests of the Family Office and it is one of the main ways your Family Office will be able to retain critical staff during what is a candidate-short market.
The second thing to consider is your culture. Professionals no-longer have to exclusively think to what salary they can make and what a role might mean for their CV.
They can afford to be more selective, thinking towards the culture they want to work in, how it aligns with their own cultural beliefs, what hours they want to work and where they want to work those hours. Professionals no-longer have to compromise and it means you might have to.
Think about creating a culture that encourages, engages and motivates your employees. Also think about awarding some flexibility, upskilling and training opportunities that might otherwise not exist.
Longevity is key in a Family Office and engaging and incentivising your critical staff is key.
You can find out more about how to embed LTIPs here and access our Complete Guide to Cultural Fit here.