Talent in defence & security: UK staffing market SWOT analysis

If you’re a senior leader or HR professional in the UK Defence & Security market, there’s a good chance you’ve wondered how the recent seismic shifts in the global market are likely to affect the attraction, retention and engagement of talent within your sector.

Of course, Coronavirus is hard to ignore in terms of impact, but Government budgets, Brexit and IR35 reforms are also key considerations.

Matchtech has been embedded in the Defence & Security market for over 30 years, helping thousands of permanent and contract job-seekers connect with employers within the Defence & Security supply chain and providing talent and staffing solutions to the MOD and many of their top 100 suppliers.

Based on our unique perspective as a conduit between employers and job seekers/contractors, our Defence Technology Department Manager, Aidan Wood, has compiled a report on the current strengths, weaknesses, opportunities and threats in regards to talent in the Defence & Security sector. Aidan covers some of the key considerations that Defence & Security organisations should make when shaping their hiring strategies in a post-COVID market.

Read on to find out more or get in contact to talk to Aidan about your hiring strategies.

Strengths

If we have seen one thing during the Coronavirus pandemic, it is that certain sectors, particularly those providing essential services, are essentially ‘recession-proof’. Defence & Security is certainly one such market and, throughout the pandemic, we have seen continued hiring activity and overall a much lower impact than in other industries such as automotive, aerospace and high-street retail. This is confirmed by the UK Government’s stance on the Defence & Security sector, which they said had a critical role in maintaining national security and government continuity interests during this period.

With this in mind, and with multiple global threats remaining at large, it would be reasonable to predict a positive outlook for the Defence & Security sector in comparison to many others. Spend within the Defence & Security sector is not directly reliant on consumer spending and, whilst Government funds may be depleted and a recession almost a certainty, it is unlikely that the Defence budget will be cut to support austerity measures. As shown by the below chart, even throughout the 2007-2009 Great Recession, defence spending by the UK Government still grew.

Beyond Coronavirus, further disruption to the UK job market is also expected in the short term, with Brexit still going ahead and IR35 reforms now coming into play in April 2021. Nevertheless, we anticipate the Defence & Security sector should remain resilient. Whilst leaving the EU changes our relationship with the rest of Europe, our seat at the table for NATO will remain unchanged and our commitment to protecting our own and our neighbours’ borders will remain strong.

From a talent perspective, this means that, whilst many other sectors will be unable to invest in recruitment, Defence & Security organisations are likely to continue looking for talent to deliver world-leading defence projects.

These opportunities will help support UK employment, which will be deeply impacted by Coronavirus, presenting both a strength and an opportunity to Defence & Security hiring organisations, who may be able to attract some of the very best talent from markets that have collapsed. We’ve included more information on transferring talent from different markets in the ‘Opportunities’ section below.

Whilst there are certain hot-spots for career opportunities in the Defence & Security sector, such as Bristol and Portsmouth, many of the 140,000 directly employed personnel (source ADS) are spread across the breadth of the United Kingdom, with Scotland, Wales and Northern Ireland all big employers to support and provide equipment to the UK Armed Forces. This means that, wherever potential candidates are located in the UK, it is likely there will be opportunities for them, making the Defence & Security sector a more attractive proposition as a whole.

Weaknesses

So with candidate availability being strengthened by lack of opportunity in other markets, what weaknesses are affecting the ability of Defence & Security organisations to bring talent onboard?

Well, to begin with, Defence & Security organisations still need to be able to actually attract talent to work for them. They will be competing with technology companies, e-Commerce & online retail, fintech, banking & insurance and energy companies; all of which have also fared well in the pandemic. And as always, there will be fierce competition for the very best talent.

In terms of attracting talent, by nature of how they operate, Defence & Security organisations tend to be less well-known than commercial/B2C businesses. The Defence & Security sector isn’t known for its trailblazing approach to Employment Value Proposition (to find out more about this, click here) and adopting all of the working practices that interest and motivate Millennials and Generation Z. The likes of Google and small tech start-ups will always be difficult to compete with, but the forced flexibility and adoption of secure technology in order to deliver work during the COVID pandemic has to be embraced longer term and a clear strategy to continue the progress will be absolutely critical to bring the sector back to the forefront of the minds of young engineers for their future careers.

Furthermore, once you have attracted candidates to even interview, Defence & Security companies should strongly consider their recruitment process and the experience that creates for candidates. Very few Defence companies can claim to have a slick recruitment process that doesn’t result in any candidate drop-outs and always delivers the best available resource on time. Whilst many CEO’s will state that the people of the company are the most important factor in their success, many companies still adopt disengaging and drawn out recruitment processes.

There are many aspects within a recruitment process that can lead to candidates dropping out. One part of this which is particular to the Defence & Security sector is the need to source Security Cleared (SC) and Developed Vetting (DV) Cleared resource, which is already in short supply due a lack of take-up for STEM subjects in further education. Whilst there is plenty of overseas talent that hold very desirable skills, the restrictions for Security Clearance simply means they cannot be considered.

The problem is perpetuated by the process that candidates must go through to get clearance. Defence & Security organisations are reliant on UKSV to provide clearance and this can cause huge delays in the recruitment process. Aside from lobbying the government to invest in a quicker process for everyone there is a very simple approach that can help alleviate this issue. Workforce planning, talent pipelines and virtual benches are all strategies that have been adopted by companies in the sector to reduce the pain and ensure projects and programmes can be delivered without delay and over-reliance on needing to recruit just already cleared staff or contractors.

All of these challenges tend to result in ‘bidding wars’ for SC/DV cleared talent. Engaging with specialist agencies and building talent pipelines in advance is one way that many companies who operate in this area adopt to try and alleviate having to increase their salary bandings year on year. Collaboration with consultancies and creating partnerships to ensure delivery on projects is also just as critical to ensure you’re not just perpetuating the merry-go-round of staff and inflating salaries across the whole market.

Finally, a weakness for many Defence & Security organisations is an unwillingness to consider transferable skill-sets. There is a “war on talent” out there and unfortunately the strength of resource available will not always perfectly match many hirer’s ideal criteria (especially if you’re looking for a like-for-like replacement for someone who just retired with 30+ years’ service). There always has to be a technical basis for any hiring decision, but transferable skills, behaviours, attitudes and abilities to learn quickly are often over looked if a candidate does not tick a very specific skillset box. Understanding the resource market is critical to enable hirers to make informed decisions and ensure they are making the best available hire. A shortlist of suitable candidates must be accompanied with market insights if hirers are to have any hope of making the best hire.

Opportunities

John F Kennedy once remarked that when the word ‘crisis’ is written in Chinese, it is composed of two characters; one meaning ‘danger’ and the other representing ‘opportunity’. This mindset needs to be adopted after such an awful global pandemic.

So what opportunities exist for Defence & Security organisations when it comes to attracting talent in a post-Covid world?

To start with, candidate availability is as good as we have seen since 2009 for niche skillsets across electronics, software and systems engineering. As mentioned in ‘Strengths’, the defence sector remains resilient and there is not an expectation of a high volume of redundancies coming from any defence companies at present, so candidate availability stems from other markets that have been more negatively affected by COVID.

Civil Aerospace and Automotive sectors have been impacted widely and whilst many have placed staff on the CJRS (COVID Job Retention Scheme), with sales for cars and aeroplanes significantly reduced, redundancies are expected across these sectors as recovery is anticipated to take many years. For example, new car registrations in April across the UK were down 97% and British Airways have been quoted to say they don’t expect the volume of flights to reach the levels they were in 2019 for another 7 years after this pandemic.

Automotive and Civil Aerospace sectors present one of the best opportunities for transferable skillsets across Engineering and Technology because much of the work is to safety critical or very rigorous standards, which often relate well to the Defence sector. Whilst some candidates may wait for news from their current company, many are already proactively seeking opportunities in more resilient markets such as the Defence sector to “beat the rush” if/when redundancies reach them.

Another opportunity which much be capitalised on is flexible working. The Coronavirus pandemic has forced many organisations to adopt flexible working when traditionally there has been very little flexibility within the sector with ‘security reasons’ often cited.  Many defence companies have now set up all employees and contractors to work from home with encrypted VPN’s for “Restricted” work. Whilst ‘Classified’ work still requires to be completed at a ‘List X’ site and some work will require access to specialist test equipment/rigs, many companies are working to de-classify work by removing the classified data from the software in order to allow more remote work. The classified data and then simply loaded back once back on site and in a secure environment. This won’t always be a possibility, but for many, more remote can be completed when this has been explored.

With location of office often being a big challenge in attracting candidates from further afield for niche roles, the ability to re-design your flexible working policy in order to attract new candidates that have previously been out of reach will present huge opportunities to your talent acquisition programme, employee engagement and attrition, as well as your Employment Value Proposition. If some element of flexibility/remote working is included, candidates who are unable to find a new position in their normal locality may also consider working further afield for the right opportunity.

Another opportunity to be capitalised on is IR35 (click here to find out more about IR35). Whilst Status Determination Statements (SDS) may have already been provided with a mix of ‘Inside’ and ‘Outside’ determinations, some of the working practises that seemed to be out of reach previously may now already be being embraced as a result of COVID.

The development of certain working practises across your contractor workforce may allow for an evolution on your Contingent Worker Policy (CWP) and bring about very different determinations ahead of April 2021. Clients who had already proactively developed their CWP and achieved ‘Outside’ IR35 Status prior to April 2020, looked to be ready to enjoy the pick of resource within their market, as they were able to offer Outside IR35 contracts and maintain, if not reduce, contractor costs as a result.

A proactive and renewed approach to IR35 ahead of the expected April 2021 changes could have significant positive impacts for any companies getting ahead and learning from the experience of the last 6 months. Some contractors remain nervous of the future changes and added to that the potential volatility that the COVID pandemic brings, they are now actively looking to secure a permanent role. Many contractors have a vast experience and whilst may have higher salary expectations than you’d ideally prefer, they will often bring an excellent array of technical experience that can rarely be captured in a normal labour market.

Threats

The biggest threat facing Defence & Security organisations from a talent perspective is simply being left behind.

There is a real potential of this happening if organisations aren’t aiming to proactively review their future “normal” working practices and flexibility on offer for staff. Many Defence & Security companies already have work-streams set up and are already working towards the ‘new norm’. It is anticipated that this will increase staff engagement and wellbeing, whilst also reducing attrition and becoming the employer of choice in their region if they can beat the competition to offering new-world flexibility. The risk of not doing this could place significant pressure on your existing staff engagement and lead to an increase in attrition as your staff members are able to reach new companies and opportunities beyond what they would have considered in the past.

Furthermore, the sector is still suffering in many niche skill areas due to the lack of investment in graduate and apprentice opportunities for a number of years. Many UK defence companies have a huge succession planning challenges and, unless this remains a key priority to engage with young engineers post-COVID, it could further deepen the issue for resource supply and create even bigger talent challenges in the future. Whilst the Defence sector hasn’t been able to compete with some other industries in recent years, marketing the strengths of the sector and investing in the next generation of engineers will no doubt bring many positives to any company for many years.

Finally, exports present a risk. The UK exports more than £7 billion of defence equipment and support contracts each year and, with the emerging markets contributing a large chunk of this in a post-COVID world, the priority on procuring expensive equipment from the UK may change. With Middle East countries leading the way on procuring defence equipment from the UK, the over-reliance on revenue from oil and recent impacts on demand for oil affecting the price so significantly, it would be reasonable to expect that some export contracts may be cancelled. This factor absolutely has to be considered in any workforce planning scenario.

Summary

Without the best talent, companies will not achieve strategic objectives and will run the risk of losing share to competitors. With such high skill shortages and every defence company struggling to recruit the best people quickly enough, the talent agenda has never been more important.

To summarise, we would recommend Defence & Security companies consider the following for their post-COVID talent agenda:

Strongly consider your recruitment process and the experience that creates for candidates to ensure you are making the most of candidate availability
Adopt strategies such as workforce planning, talent pipelines and virtual benches to ensure you have greater access to SC/DV cleared staff or contractors, so you can ensure projects and programmes can be delivered without delay
Engage with specialist agencies and build talent pipelines in advance to avoid having to increase salary bandings year on year
Understanding the resource market; make sure your specialist agency partners are delivering your market insights to help you make informed resourcing decisions
Keep a close eye on automotive and civil aerospace sectors to capture opportunities for transferable skillsets across engineering and technology disciplines
Re-design your flexible working policy in order to attract new candidates that have previously been out of reach; presenting huge opportunities to talent acquisition, employee engagement and retention
Use this opportunity to take on a proactive and renewed approach to IR35 ahead of the expected April 2021 changes; a well-formed approach may position you as the destination of choice for the very best talent
Look to proactively market the strengths of the sector and invest in the next generation of engineers; doing so effectively now will create many opportunities in the years to come
Factor any threats, including reliance on exports for example, into your workforce planning
With our vast experience across Engineering, Technology and Shared Services recruitment into this sector, we are already partnering with many defence companies to help them continually improve their talent strategy and take the above steps.

For further thoughts, discussion and sharing ideas, please don’t hesitate to reach out to Aidan directly.