Resourcing and talent planning report

Labour market slowdown and legislative changes impacting resourcing and costs

More organisations reduced (28%) than increased (22%) their recruitment of permanent employees over the last year. Over a quarter of organisations made redundancies and 29% replaced some jobs with technology and automation. 

Tighter UK migration rules and Employment Rights Act 2025 changes have affected resourcing for many organisations. Most employers believe that the measures in the Employment Rights Act 2025 will increase their employment costs. Just over a quarter (26%) expect to recruit fewer workers in response, while 20% will be less likely to hireworkers who need additional support. 

Demand for skills remains high despite a cooling market

Despite the market slowdown, 52% of organisations report that competition for well-qualified talent has increased over the past year and 44% that talent is more difficult to retain. 

Higher application volumes are not translating into quality candidate shortlists

Although many organisations experienced growth in the number of applications for vacancies over the last year, 58% of employers reported increases from unsuitable candidates and just 33% from suitable candidates. 

Over half of organisations that attempted to recruit experienced difficulties attracting candidates, particularly for senior and skilled positions.

Increased focus on developing talent in-house

Many organisations are turning to internal training and development to meet their  skill requirements.

Overall, 48% of employers increased their efforts to develop talent in-house over the last year. Upskilling existing employees was the most common response to recruitment difficulties and tighter UK migration rules.

Continued use of flexible and hybrid working but less focus on pay

Flexible working options remain important to attraction and retention strategies. Overall, 71% of organisations advertise at least some vacancies as open to flexible working. 

Demand for hybrid and remote working continues, with 25% of organisations increasing their use over the last year and just 9% decreasing it. Just over a third report it has improved retention (34%) and increased productivity (34%).

The use of enhanced pay and benefits to address recruitment difficulties has declined to 31%, down from 41% in 2024.

Mixed findings in recruiting diverse candidates

While 46% of organisations that recruited over the last year hired a more diverse workforce, 22% of employers reported challenges in hiring diverse talent. 

At the board level, proactive efforts to recruit diverse candidates have declined, with only 26% of organisations being very or extremely active in this area, compared with 40% in 2024. 

Incremental growth in the adoption of resourcing technologies and the AI challenge

The adoption of many recruitment technologies remains fairly limited, although there is incremental growth in the use of applicant tracking systems, online tests/ assessments and onboarding platforms. 

Just over three-quarters (76%) of organisations that use technology have increased their usage over the last 12 months, reporting benefits in recruitment speed, candidate experience, accessibility, the diversity of hires and the quality of hires. 

27% of organisations that attempted to recruit report that candidates made ‘excessive’ use of generative AI in applications. Over a third (35%) of employers attempt to monitor its use and 75% of these have rejected candidates for their use of AI. 

Advancements in strategic planning

More organisations are taking at least a medium-term approach to workforce planning, although there remains considerable variation in their outlook. Overall, 24% take a short-term approach (up to six months), down from 31% in 2024, while 16% are planning more than two years into the future. 

Data collection is increasing in specific metrics, such as forecasting hiring demands (31%), tracking time to hire (31%) and candidates’ experience (33%). Despite these small improvements, 46% of organisations still take an ad hoc approach to recruitment and only 19% calculate the return on investment of their recruitment processes.