What NHS staff retention struggles can teach us all about the Great Resignation

January 19, 2022 Rick Harris

The current squeeze in the labour market is affecting most industry sectors, with a British Chambers of Commerce Survey finding that two-thirds of UK companies were struggling to find recruits.

The latest December 2021 data from KPMG and Recruitment & Employment Confederation found that IT & Computing was the most in-demand category for permanent staff, whilst

Nursing/Medical/Care was at the top of the rankings for temporary staff vacancies.

The roots of this staff shortage lie in the so-called “Great Resignation” – a global trend affecting many different industry sectors, as highlighted by a 2021 McKinsey study (see graphic below), showing that upwards of 40 percent of staff are considering leaving.

So – what is the impact of having high vacancies in industry sectors like these?

And what can employers in all sectors learn from those industries struggling most with gaps in their workforce?

First – the cost of staff vacancies and recruitment efforts to fill them should be a key priority, not just for HR departments but for Executive Boards at every Board Meeting. Let’s look at healthcare provision as an example. For a typical NHS Trust, staff turnover rates are in the range of 12-14 percent per year.

Recruitment agency fees – for a mid-size Trust with a payroll of 4000 staff, they will need to find over 500 new staff each year – and can expect a bill from recruitment agencies in excess of £3m to achieve that.
Interim Agency staff costs – whilst vacant posts are being recruited, NHS has also has a reliance on agency staff to resolve shortfalls and ensure safe staffing levels. Agency staff typically cost 20 percent more than full-time salaried employees (Source: Kings Fund).
Bank staff - an alternative to agency staff is to use ‘bank staff’ – these are usually drawn from internal pools of workers who are already employees of NHS Trusts and have agreed to work additional flexible shifts. Whilst cheaper to hire than Agency staff, such arrangements can add ‘burnout’ fatigue to staff. Despite being NHS employees, many bank staff describe an experience of “being a temp” - getting the toughest shifts, not being fully accepted as part of the team and struggling to get their weekly bank timesheets paid on time. This can have a negative impact on their perception of overall NHS employment.

Across the organisation, the NHS now has nearly 100,000 vacancies, costing a staggering £6bn a year to pay temporary staff to plug these gaps (Source: NHS Providers).

Yet, these huge ‘hard’ financial costs of vacancies and recruitment only tell half the story.

The time cost of dealing with recruitment for HR departments and Managers is significant too:

HR spends considerable time sourcing replacement staff, as well as processing new individuals once in post
Management must spend time arranging for work to be covered, by adjusted rotas, balanced amongst existing staff and temporary cover.
There’s also the time spent setting up recruitment drives, shortlisting candidates, preparing for and conducting interviews.
The workload of existing colleagues increases as they train new staff in systems and procedures, resulting in a short-term reduction in productivity

Given these significant hard and soft cost of staff shortages and recruitment, the biggest learning for all organisations is to maintain an ongoing dialogue with their staff about what matters most to them from their employer - their needs and concerns, especially during periods of challenge in a tight labour market.

Such a focus on employee needs can help reduce staff turnover, and so directly lower the costs and disruption caused by recruitment efforts and staff vacancies.

Thinking harder about the employee value proposition (EVP) for staff is a long-term commitment to providing the workforce with a great place to work.

Right now, it may feel like the simplest solution to staff retention and recruitment is to offer bonuses to existing workers and higher starting salaries for new recruits.

Certainly, this is happening, with wage inflation in the UK currently running at 3.8 percent for December. But this should be set against the latest overall inflation figure of 5.4 percent, representing a real terms pay decline, so using a pay rise as a short term fix may not work in isolation.

Worse still, rather than feeling appreciated, employees can sense becoming part of a ‘transaction’ – something that reminds them that their real needs aren’t being met. That won’t set up a long-term retention fix either.

So – whilst wages are always in the mix of employee needs and benefits, broader factors are just as important, such as career progression, flexible working and work-life balance, company culture, diversity and inclusion.

Employers can’t fix what they don’t understand

In recent studies we’ve conducted during the pandemic, we have repeatedly heard employees craving a renewed sense of purpose in their work. Covid has provided a wake-up call to reassess the kind of social and interpersonal connections staff want with their colleagues, managers and customers/client too. Yes, they want pay, benefits, and perks, but alongside feeling valued by their organisations and managers.

Every organisation is different though, and so the starting point comes back to dialogue – employers can’t fix what they don’t understand. The best way to gain such knowledge is a combination of employee focus groups, 1-to-1 interviews and staff surveys. In our experience, it is staff focus groups that provide the richest and most insightful source of feedback regarding retention issues. In the current pandemic, online focus groups provide a fast, low-cost and convenient way of gaining such insight.

By not understanding what their employees are running from, and what they might gravitate to, company leaders are putting their very businesses at jeopardy. In healthcare, this means putting patients at risk, with staff shortages impacting longer treatment waiting lists and slower diagnoses. For commercial organisations, it can mean closing outlets or venues, reducing customer service levels, ultimately adding customer churn to the employee turnover.

Remember that staff shortages make the work experience of remaining staff that much tougher and can set up a ‘domino effect’ of putting doubt in their minds about staying too. That becomes a ticking time-bomb that doesn’t go away by itself. De-fusing it requires conscious action from employers, tackling issues head-on that in pre-pandemic times they may have been too laissez-faire to address, including:

Is our work environment too transactional?
Are our benefits aligned with employee priorities?
Do we offer the career paths and development opportunities that employees want?
Can we be more flexible in our working arrangements and cultural norms?

The Takeout:

Few organisations will ever face the scale of recruitment and retention challenge of the 1bn+ strong NHS workforce. But the lessons are there for all firms large and small.

The Great Resignation that is sweeping the globe is real, will continue, and may get tougher before it gets easier. It’s a critical moment to lean in and learn from staff about what matters most to them – from hard and soft benefits through to emerging factors you may not even know about yet.

Nevertheless, if you can lock in such employee insight, there could be a silver lining to this crisis - a chance to ‘reset’ your employee proposition to something that is sustainable and competitive, long after the current wave of vacancies has receded.

About Customer Faithful

As a research consultancy, we offer fast turn-around employee insight programmes to suit every situation - from global organisations who already run regular staff research, through to SMEs that may never have conducted any employee insight at all.

Whether this is your first time commissioning employee engagement research, or you are an experienced HR professional looking for an approach that goes beyond annual surveys, we can structure a programme to suit.