What Impact Does a Candidate Driven Market Have on Employers?

In part one of this three-part series, we identified that we are currently in what recruiters refer to, as a ‘Candidate Driven Market’.


We also identified this statistically from the recent survey produced by IHSMarkit on behalf of KPMG and REC that we had seen the fastest demand for staff in the UK for 23 years and the fastest fall in the supply of candidates for four years.


But what does this really mean to businesses and employers?


For some sectors it is pretty obvious. The easiest reference is hospitality where the inability to recruit suitable quantity and quality of staff can mean that a bar, or a restaurant cannot open – and this has already been seen in some sites across the UK making a sector that has had an unbelievably difficult year struggle, even more, to pull out of lockdown and into prosperity and profit.


But what about other sectors in the economy?


Other sectors that have struggled to resource their businesses pretty much from lockdown one have included certain sectors of the pharma and biotech industries, FMCG, food manufacturing/distribution, agriculture, and tech. Some due to a reduction in suitable and qualified candidates (such as agriculture which is a sector highly reliant on seasonal, Eastern European labour impacted by both Brexit and Covid related travel restrictions); others due to an increase in customer demand (IT & tech – think about how much more we have utilised and relied on tech and Zoom since 2019); and many due to a blend of the two. Also, after such a prolonged period of lockdown, job insecurity and uncertainty, candidates are generally more risk-averse in terms of moving jobs if their existing role isn’t at risk.


But what is the impact – both obvious and less so, of the shortage of candidates to businesses in the UK economy.


The Obvious


The obvious impact when a business cannot recruit to either replace staff moving on or to grow headcount is how it affects its ability to service its existing customer requirements and also its ability to grow sales. And this will naturally impact both revenue and profit.


But this is compounded by two other factors.


Firstly, if you are a business that has spent part of the last 15 months in hibernation or partial hibernation, there is no guarantee that you can even copy the employment level you had in February 2020 due to the impact of furlough, redundancies or decisions of employees to move on.


Secondly, the unexpected consequences of sudden, rapid economic growth due to demand – even if this is from a low base due to the economic impact of the first, full national lockdown. So not only have we got to ensure we have the human resource needed to satisfy the existing demand, but that demand is growing month on month, and also there are further operational challenges as a result of the pandemic such as social distancing and self-isolation.


The less obvious


The less obvious impacts are in some ways more damaging in the longer term so it is important to ensure that these don’t fall off your radar. Also because as a business owner, director or manager keeping an eye on these will improve your profile as an employer of choice and therefore deliver long-term, sustainable benefits.


Whether you are a manufacturer or a service provider, if a headcount shortage starts to impact on your ability to deliver for your clients there is the risk of increased costs (temporary labour, overtime, refunds) in the short term and even the loss of contracts and valuable revenue in the longer term.


We will often fall back and rely on our existing teams. As a short-term option, clearly analysed and explained, this is fine and can develop a really strong team spirit around a common purpose. But there is the risk of complacency and this can lead to a real risk of staff walking out of your door. If your staff are already operating at capacity and you ask more of them without a clearly articulated plan to ensure this isn’t long term it can lead to fatigue, a reduction in efficiency, and even resignation if they feel there isn’t a visible solution, a vision or empathy.


So, you hire but have to pay salaries way in advance of where you would benchmark that role in your organisation compared to the local market. This solves your immediate headache of headcount but can erode profitability, culture and teamwork particularly if your existing team feel that a new colleague is being favoured in terms of salary versus those who have shown loyalty through real adversity.


Is there anything that can be done to mitigate?


One of the key things to remember is, due to the indiscriminate nature of the pandemic and its effects, it isn’t just you and your business having to face these issues and their impacts. In one shape or form, pretty much all of your competitors, customers, and supply chain will be experiencing similar issues. And they will respect and sympathise with businesses who are honest and communicate.


There is no magic silver bullet to solve the resource issues we are all experiencing in the short term, but there are some key things we can action, keep in mind and communicate to position ourselves and our team positively in terms of this area. The backbone is a positive culture, but there is more than enough material on that topic from people who are far more qualified than I so I will focus on a couple of areas that are referred to again and again by candidates and have been throughout my 20 years of recruiting.




Keep your staff. Sounds obvious, but it’s difficult recruiting for and/or growing a team if you are losing staff.


And the best way to retain your staff is to create a culture and a vision that engages them; this begins with trust. Trust your teams – trust them to be professional and trust them to do their job. Of course, they need to understand the vision and the purpose of the business and their role but let them do their job. As Steve Jobs said, why recruit an expert who understands the role better than you and then tell them how to do it.




Engagement has long been a bit of a buzzword, particularly in the HR profession, but there is no real secret.


Engagement depends on trust as mentioned above, and the other key is communication – that means communicating and listening. Your team will often have the best answers as to how to do a job best – so use their knowledge. And keep them informed and involved. Most human beings really prosper with a sense of community, ownership and responsibility and this comes from knowledge.


And if your team are engaged, they will develop and own a positive culture – providing the vision and values of the business are communicated and shared.




If you have a great culture, retain your staff, and engage them you are in a great place to consolidate. But to grow you need to attract – people, potential clients and interest.


If you are doing some great stuff, let the people outside your organisation know about it; some will happen naturally by word of mouth, but, utilise social media so that the outside world gets a sense of what you do and how you do it. You don’t need to be an expert, it shouldn’t take over the day job (there are plenty of specialists in the field that can help) but you need to communicate with your target audience of potential employees (and customers) in a way and on a platform that they will use.


People looking for potential companies to work for will make a real assessment of your business by its values and culture and it is your responsibility to communicate that – because no one will do it for you.


Understand Expectation


Be clear on what you can offer a potential hire. That means salary, benefits, culture, and environment. And be equally clear on what the market is doing.


We are seeing salaries increasing, and that has to be taken into account. Some employers think we have come out of a recession and there will be a glut of available staff – but as we covered in the first of these blogs, we are coming out of a health crisis not an economic-led recession and therefore the outcomes are very different.


But you must also value the role – not just the applicant. You should pay a fair and competitive rate for the role but don’t chase the competition in terms of spiralling salary offers as was all too common in 2005 and 2006. Equally you shouldn’t look to undervalue the role or the applicant – as this disengages and also questions your culture and values.


Be careful not to forget the other elements of work. Benefits, flexibility, holidays, hybrid working, trust etc. Of course, salaries are important – people largely work to live – but for FIVE years plus, the generation that are progressing through their careers look at their job in a more rounded fashion. Salary is important in that, but by no means the only indicator. Great salary, long hours, inflexibility and minimum holidays will be just as difficult to resource as a poorly paying role.


Development and Succession


Plan ahead and develop your people.


The development will give you a more skilled and valuable team, the team will feel more values and you will usually be very pleasantly surprised by the skills of those around you who have not had the opportunity to shine.


By looking ahead and thinking of how people fit in, it gives you greater flexibility in your future recruitment plans by bringing in the potential that you can develop as your teams progress.


Yes – I know this sounds somewhat like an unachievable nirvana, but it does deliver benefits and really develops a positive culture and an engaged team when they feel they will have the chance to grow and develop and will be encouraged to do so.


In Summary


Yep. People are in high demand and limited supply. It is a current fact of business life and it will impact costs in many businesses.


But most of us are in the same situation and there are always positive steps you can take to make sure you, your team and your business continue to grow and hopefully thrive. Many, many businesses have already embraced many of these elements but the key is for them to become habit and embedded in your culture.


I hope you have found this blog engaging, informative and insightful. If you have not yet read part one and part three, please follow the links below.

Part One – An Introduction to the Candidate Driven Market

Part Three – Candidates and the Candidate Driven Market