At the start of 2021, uncertainty ran rampant as the world continued to grapple with the impact of the pandemic. The Covid-19 pandemic has been a catalyst for change in companies and industries over the past few years. Labor shortages, a lack of qualified candidates, and a shift to remote and hybrid working models have forced many leaders to rethink their business model and recruitment strategy, putting recruiters and staffing agencies under enormous pressure.
As the pandemic took hold around the world in 2020, many companies had to make tough choices. Cutting budgets, making redundancies, and introducing recruitment freezes. It was a worrying time for recruitment and staffing sector leaders—with finance directors being called on to be involved in the redundancy process.
Throughout 2021, Covid forced companies worldwide to navigate challenging operating environments and rethink how they organized their workforces. As vaccination programmes were rolled out across the globe, businesses in the U.S. and other countries slowly started to reopen their doors.
There were several challenges for businesses globally throughout 2021. Supply chain issues, cash flow challenges, the end of government pandemic support schemes, Brexit, rising costs, and labor shortages all added extra pressure to already overstretched businesses. The challenge of managing cash flow is a prime example of how recruitment and staffing agencies were forced to manage the increasing complexity and uncertainty that was common during 2021.
Wrapped up in this was a plethora of legislative changes brought about by governments trying to shore up their economies after the strain of the pandemic and its knock-on effects. All of this meant there was a steep learning curve for recruitment and staffing professionals, as they quickly had to adapt to ways of working.
Fear of mass redundancy in the early days of the pandemic has switched to worry over labor shortages in 2021. As economies began to swell, confidence among business leaders grew. This renewed confidence led to more job openings, with businesses on a recruitment drive to replenish and upscale their workforce—creating a hiring frenzy. In response to a soaring demand for candidates, staffing and recruitment companies expanded dramatically, placing recruiters under tremendous pressure as competition among them intensified. This sharp rise in demand, combined with labor shortages, led many businesses to turn to outsourced accounting and finance services to stay ahead of the competition.
The Great Resignation—or the Big Quit—had a major impact on labor markets around the world in 2021, but most notably in the United States. The pandemic was a catalyst for many employees to reconsider their career choice, their working conditions, and their longer-term aspirations. It also accelerated some of the Baby Boomer generation into early retirement. In November, a record 4.53 million Americans quit their jobs, according to the Jobs Openings And Labor Turnover report from the U.S. Bureau of Labor Statistics.
The Great Resignation left accounting and finance professional managing budgets to deal with a rise in expenditure. The Society for Human Resource Management (SHRM) estimates that replacing an employee costs six to nine months of their salary—for an employee earning $60,000 that would cost an employer around $30,000 - $45,000 in recruiting and training costs. There was also a knock-on for staffing and recruitment agencies, as recruiters struggled to cope with the tidal wave of demand from employers needing fill roles.
In a skills-short environment, it is essential for staffing and recruitment agencies to build a strong pool of screened candidates in order to keep pace with competitors and keep cash flowing into the business.
Accountants and finance professionals supported businesses to prepare for and implement complex legislation changes in 2021. Making Tax Digital, and post-Brexit changes. In the U.K. reforms to IR35 legislation were introduced, signaling a new era for contract workers. Recruitment and staffing agencies, financial institutions, and other companies that engage and place contractors had to adapt practices to ensure they remained compliant with the law.
Throughout the year, staffing and recruitment agencies felt the impact of legislative changes caused by Brexit. The hospitality, agricultural, and transport sectors were hardest hit by the halt on the freedom of movement of people and immigration. A report published by the U.K’s Office for National Statistics (ONS) shows that the number of EU HGV drivers fell by 43% in the year ending March 2021 compared with the previous year, while the fall in EU workers in hospitality may partly reflect an overall decline in employment within the industry.
While government pandemic relief programs wound down towards the end of 2021, businesses and clients continued to depend on accountants and finance professionals for advice about the programs.
In response to the pandemic, the boom in remote working continued in 2021. This sped up the adoption of cloud-based accounting and finance systems and other digital technology. The move to a paperless environment, online accounts management, and automated workflows all helped streamline accounting and finance processes—freeing up time for stretched finance and accounting teams.
The need to ensure financial records were secure, and that systems complied with IT security regulations, such as ISO 9001:2015 and ISMS 27001:2013, was vital. Although implementing these changes brought about some distraction and disruption, those accounting and finance professionals who made the move to cloud-based systems welcomed improvements in efficiency, knowledge sharing, and productivity.
One thing is for sure, the pandemic has shown accounting and finance professionals that change is inevitable, can arrive without warning, and clients’ needs are always developing.
As we take our first steps into 2022, reports suggest the great resignation will continue—at least for the first part of the year. A recent survey in the U.K. showed that younger employees are more likely to resign voluntarily from their job, with 33% of 18-24-year-olds surveyed looking to switch role this year. Reviewing expenditure budgets is essential to account for the additional cost associated with hiring and training new employees.
Resignations, labor shortages and staff absence because of Covid self-isolation can leave accounting and finance teams depleted and struggling to cope with demand. To stay ahead of the game, more firms are turning to outsourced accounting and finance service providers to manage fluctuations in demand. Outsourced accounting and finance services provide a lifeline to many businesses needing support at short notice—without long-term commitment. With a trusted outsourcing partner on call to help with pay, bill and payroll, credit control, management accounting and reporting, you can keep your business running smoothly.
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