Tight business budgets causing a hiring freeze
A recent employment report has found that businesses are tightening their budgets, leading to issues with productivity, and hiring.
According to the latest Keegan Adams employment report, salaries in the financial services sector increased less then 3.6 per cent over the past year – barely clearing inflation but still far below cost of living rises.
“We are seeing tight budgets hold salaries down and bring productivity to the top of companies’ concerns. They also mean smaller hiring budgets, which – with confusion and job insecurity keeping employees in place – are seeing a Great Freeze,” said Keegan Adams Managing Director Claire Keegan.
According to the report, the gap between salary expectations and market realities has widened significantly. Just half a decade ago, a job move might have brought a 10-20 per cent pay increase, whereas in today’s market, the report claims that financial change is often not with only factors such as mental wellbeing, flexibility or professional development being improved during a job switch.
This issue is exacerbated by reports of ‘ghost jobs’ flooding the market, making the low financial incentives and confusion on the job market key detractors from looking for other roles.
“Despite the current people freeze, candidate expectations are still trending towards shorter tenures than historically – with Gen Z expecting to spend less than five years in their next role – but longer last year’s responses, driven up by concerns around job security and instability in the market,” noted the report.
For businesses, rising costs of living and volatile economic conditions are increasing pressure on firms and on business leaders to do more with less, bringing productivity and performance into sharp relief.
Coaching leaders have been turned to by a number of financial firms to improve the skills of in-house leaders so they can attempt to drive engagement and motivation, thus improving the organisation's productivity.
The report claimed that remuneration is sliding towards lower base salaries balanced by higher performance-based incentives, and underperforming employees are facing greater scrutiny due to budgets reallocating to high-impact areas and rewarding these “exceptional contributors.”
Rising costs of doing business and tepid economic conditions are increasing pressure on firms and in turn on business leaders to do more with less, bringing productivity and performance into sharp relief. Some firms are investing in coaching for leaders to adapt ways of working, improve productivity, and build team resilience.
Remuneration is sliding towards lower base salaries balanced by higher performance-based incentives, and underperforming employees are under greater scrutiny, with budgets reallocated to high-impact areas and rewarding exceptional contributors.
On the bright side, 39 per cent of financial and professional services employers reported changes to their Employee Value Propositions (EVP) in 2024, with hopes of attracting and retaining talent, minimising burnout, and mental health risks.
Despite this, only 28 per cent of employees reported an increased focus on EVPs, highlighting a gap between policies and organisational perceptions.
