Transformation programmes are back in full swing and no organisation wants to be left behind. Right now, there is an exceptionally high demand for skilled contractors. As specialist recruiters in the sector, we typically see a 20% drop in the number of contractors in employment at the start of the year, but it was only 5-10% in 2022. This is a sure sign that companies are not letting go of their best contractors, and the industry is facing a skills shortage.

With the above statistic in mind, it seems demand for change and transformation contractors currently outstrips supply. If you’re looking for a talented Salesforce Project Manager, for example, the chances are that they’ve probably already got a job and are mid-project. Competition for skilled contractors is fiercer than ever before, so companies must carefully consider how to attract the people they need and hold on to their current contractors, as there’s a good chance they’ll get approached by your competitors.

This war for talent isn’t going away any time soon. Since so many of my clients are struggling with this, let’s explore how we got to this point and outline how you can improve your chances of hiring the best people.

How did we get here?

The combination of Brexit and the pandemic was a perfect storm. The economic slowdown, disruptions to supply chains and customer habits, as well as uncertainty about the business landscape and new ways of working made many companies wary of rolling out their transformation programmes.

Initially this resulted in there being fewer positions for contractors to apply for. It was also thought that the new IR35 legislation might drive down the value of contract work. In fact, the opposite has happened.

Contract workers have more options than ever to choose from, so companies need to offer compelling packages or find alternative ways to be more attractive than the competition.

What can businesses do?

Offer higher pay

The brutal truth is that money talks. Companies who can afford to pay their staff the most competitive wages are always likely to have the upper hand when it comes to hiring. The contractors I speak to tell me time and time again that their rate is the most important factor when choosing a job, and we found the same in our salary survey.  Companies are also increasingly willing to make counter-offers – something we’re seeing more than ever – effectively instituting a bidding war which inevitably favours the company with the deepest pockets.

Provide better benefits

Money isn’t everything though. Packages can often be supplemented with persuasive insurance benefits, shares, and various other incentives like mental health support. In our salary survey, we found that flexible working was one of the most attractive benefits to contractors. Candidates who are unwilling to undertake a long commute five days a week might be prepared to do so for two. As well as allowing companies to recruit from further afield, offering remote and flexible working can also give employees a sense of trust and autonomy.

Allow more autonomy

Contractors value autonomy even more than permanent staff, so it’s important that you can show them that you trust them to do the job you hired them to do. With work-life balance becoming more important to everybody during the pandemic, allowing contractors more freedom than your competitors will be very attractive. Micromanaging is one of the biggest turn-offs for contractors, so it’s important to communicate very clearly that this isn’t your style. If your desired contractor is at a company that stifles their freedom too much, you’ll be the favourite.

Improve brand identity

A company’s brand can be a powerful recruiting tool too. As contractors have more choice over where they work, they’re more likely to choose companies that align with their values. Businesses should remain alert to this and take care to emphasise the areas of their company’s brand that will most appeal to a prospective employee.   Having a clear stance on topics like sustainability and diversity & inclusion or having active CSR (corporate social responsibility) policies will help you stand out from the crowd, potentially even attracting passive candidates to you.

Hire more junior people

In some cases, hiring managers should be prepared to compromise, taking on more junior candidates but investing more in their training. Although this approach might feel insufficient in the short term, it could pay enormous dividends in the long run. You’ll probably be able to hire them for longer contract periods and they’ll likely be easier to retain in the future if you’ve looked after them well. Being prepared to train up new arrivals can therefore extend companies’ access to talent, enhancing their long-term prospects and making them more resistant to the skills shortage.

What does the future hold?

The lasting effects of the pandemic, Brexit and the IR35 legislation means that the current skills shortage could endure for a couple more years. The continuing demand for skilled workers places the onus on employers to go above and beyond when trying to persuade the best people or exploring other ways to engage passive candidates.

If you’re struggling to attract the candidates you want and need help revising your offering, Deltra is here to help. I’m available to have a confidential chat and can provide advice, so feel free to reach out to me with the details below.

Connect with Josh on LinkedIn or drop him an email at josh@deltragoup.com.