Skip to content

Toggle service links

You are here

  1. Home
  2. Apprenticeships
  3. Apprenticeships blog
  4. The Open University Business Barometer 2018, Research Methodology, prepared by Third City on behalf of The Open University

The Open University Business Barometer 2018, Research Methodology, prepared by Third City on behalf of The Open University

The Open University Business Barometer 2018 Research Methodology

The Open University Business Barometer, which monitors the skills landscape of the UK, reveals that organisations in the UK are spending £6.3 billion a year as a result of the skills shortage. The research considers four main areas of expense: increased recruitment costs, inflated salaries, training for those hired at a lower level and temporary staffing for gaps that could not be filled.

The report highlights the sectors and areas in the UK where organisations are most struggling to fill vacancies, investigating the effect this has on staff and revenues, and looking at senior business leaders’ expectations for the future.

The full report is available at www.openuniversity.co.uk/ukskills

About the data

The Open University commissioned PCP Market Research to survey 950 senior business leaders between 8 and 25 May 2018. Senior business leaders were defined as Chief Executive Officers, Managing Directors, HR Directors and HR Managers. The data was made up of the following:

Business size

  • 500 small and medium enterprises (SMEs), employing between 10 and 250 members of staff
  • 450 large enterprises, employing more than 250 members of staff
  • Micro-businesses, which have less than 10 members of staff, were excluded from the survey as their experiences would be vastly different from SMEs and larger enterprises

UK nation

  • 500 organisations in England
  • 150 organisations in Scotland
  • 150 organisations in Wales
  • 150 organisations in Northern Ireland

Sector data is based on no fewer than 30 organisations, while regional data is based on no fewer than 50 organisations. All data was weighted by PCP Market Research to be nationally representative.

Extrapolations were made based on the survey data and business data from the Office for National Statistics 2017 Business Workbook, which shows there are 272,245 SMEs in the UK (excluding microbusinesses) and 9,825 large enterprises.

Comparability

The Open University has spent the last year honing and strengthening the methodology for the report, and as a result the data this year is not comparable with the data presented in 2017 (£2.2 billion cost to business). The methodology now looks at training and temporary staffing costs, which it has not done previously, and data previously secured through desk research (recruitment costs) has been secured through business research.

Calculations based on market research data

The data returned from the market research was analysed and processed by Third City. The following calculations were made using the weighted data for large and small organisations in order to calculate the amount spent in each area.

Additional recruitment spend

Respondents were asked if they had spent more on recruitment in the last 12 months than in the past to find applicants with the right skills. All those who agreed were then asked the value of their recruitment spend over the last 12 months, and how much of that expenditure was required because the organisation had struggled to find talent with the right skills. Respondents were asked to give an exact figure if known, or indicate a band (e.g. £5,000-£10,000, £10,000-£15,000). PCP Market Research provided a mean average for the responses by business size, which was then applied to the number of businesses in the UK.

  SMEs Large Enterprises Total
Total spend £1,072,070,318.56 £162,844,030.20 £1,234,914,348.76
Spent more on recruitment due to the skills shortage in the last 12 months 64% 68%  
Additional spend because organisation couldn’t find required skills £6,152.95 £24,374.20  
Total spend calculation = 272,245 x 0.64 x £6,152.95 = 9,825 x 0.68 x £24,374.20 = £1,072,070,318.56 + £162,844,030.20

Spend on increased salaries

Respondents were asked if they had increased the salary on offer for a role in order to recruit someone with the right skills in the last 12 months. Those who agreed were then asked on how many occasions they had done this (PCP provided a mean average for this by business size). Business leaders were also asked how they had increased the salary on average. Respondents were asked to give an exact figure if known, or indicate a band (e.g. £1,000-£2,000, £2,000-£3,000). PCP Market Research provided a mean average for the responses by business size, which was then applied to the number of businesses in the UK.

  SMEs Large Enterprises Total
Total spend = £1,875,606,380.03 = £281,059,474.52 = £2,156,665,854.55
Percentage who increased the salary on offer for a role in the last 12 months 56% 62%  
Average number of times salary on offer was increased in the last 12 months 3.90 4.62  
Average amount salaries were increased by £3,154.49 £9,986.93  
Total spend calculation = 272,245 x 0.56 x 3.90 x £3,154.49 = 9,825 x 0.62 x 4.62 x £9,986.93 = £1,875,606,380.03 + £281,059,474.52

Spend on training to boost skills of those hired at a lower level

Respondents were asked if they had recruited at a lower level than intended because of the skills shortage in the last 12 months. Those who agreed were then asked if they offered these hires extra training to bring them up to the level required for the role. Business leaders who offered training were asked how much extra they spend on training these employees. Respondents were asked to give an exact figure if known, or indicate a band (e.g. £1,000-£2,000, £2,000-£3,000). PCP Market Research provided a mean average for the responses by business size, which was then applied to the number of businesses in the UK.

  SMEs Large Enterprises Total
Total spend = £1,260,833,802.76 = £190,509,339.40 = £1,451,343,142.16
Percentage who increased the salary on offer for a role in the last 12 months 63% 66%  
Percentage who offered extra training to bring these workers up to level required 83% 88%  
Average amount salaries were increased by £8,856.85 £33,385.44  
Total spend calculation = 272,245 x 0.63 x 0.83 x 8,856.85 = 9,825 x 0.66 x 0.88 x £33,385.44 = £1,260,833,802.76 + £190,509,339.40

Spend on temporary staff where roles were left vacant

Respondents were asked if at any point in the last 12 months they had left a position vacant because they were unable to find a candidate with the required skills. Those who had left a role vacant were then asked if they hired temporary staff to fill that role. Business leaders who hired temporary staff were asked how much they spent on these workers. Respondents were asked to give an exact figure if known, or indicate a band (e.g. £1,000-£2,000, £2,000-£3,000). PCP Market Research provided a mean average for the responses by business size, which was then applied to the number of businesses in the UK.

  SMEs Large Enterprises Total
Total spend = £1,326,048,691.81 = £162,653,520.70 = £1,488,702,212.51
Percentage who increased the salary on offer for a role in the last 12 months 51% 61%  
Percentage who offered extra training to bring these workers up to level required 60% 60%  
Average amount salaries were increased by £15,917.62 £45,232.42  
Total spend calculation = 272,245 x 0.51 x 0.60 x £15,917.62 = 9,825 x 0.61 x 0.60 x £45,232.42 = £1,326,048,691.81 + 162,653,520.70

Additional calculations

The calculations above were repeated for each sector and region included in the report.