In a tight labour market, employers have to up their game to attract and keep the brightest and best employees, writes Caroline Madden.

Despite the recent spate of high-profile job cuts, Ireland still enjoys the enviable position of virtually full employment. This is great news from the job hunter's perspective: whether entering the Irish workforce for the first time, returning from a career break or simply switching jobs, they will often have to fend off several employers vying for their attention.

Employers, on the other hand, have had to up their game in order to attract and retain quality staff, especially in areas such as financial services, where staff shortages are particularly acute. For this reason, more and more employers are pouring increased amounts of resources into people management, also known as human resources management (HRM).

HRM stretches right across the spectrum, from staff recruitment and selection to training and development, from rewards and incentives to tackling problems such as high levels of absenteeism. Companies also have to ensure that they comply with employment law, which affects every aspect of people management.

At the recruitment stage, the current tight labour market has meant that many employers now incorporate several different mechanisms into their recruitment strategies. Gone are the days when a simple advertisement in the paper drew a deluge of CVs from eager applicants.

Recruitment agencies are now heavily relied upon, and many companies have introduced employee referral schemes, which offer bonuses to staff members who recommend successful candidates. There has also been phenomenal growth in the use of recruitment websites.

The selection process employed by a company can range from an interview to day-long assessments with personality profiling, group discussions and skill tests.

The more elaborate selection processes use up considerable resources and are more common among larger companies.

However, Mary Connaughton, head of HR development at the Irish Business and Employers' Confederation has observed that small companies are getting better at introducing some element of skills testing in assessing a candidate's ability.

"What we're seeing is that more and more interviews are becoming competency-based, so they're asking questions about particular experiences that the candidate has had - maybe in customer services, or working as part of a team, or decision-making - to get at the real experience of the candidate as much as they can," she says.

Employers now have to tread very carefully during the hiring process to ensure that they don't trip up on employment and equality legislation. They must also keep records of the process to show why the successful candidate was selected.

Companies are also pouring resources into training. Nationally, an average of approximately 4 per cent of payroll costs is spent by companies on training. Far more emphasis is now placed on development training for managers. "Any HR policy or practice is dependent on the manager being able to do it well, and that's why we've seen a lot more investment in leadership and management," Connaughton explains.

Well-trained and motivational managers can also play a key role in reducing the rate of staff turnover. Due to the cost of recruiting and training new employees, companies have also introduced generous and imaginative rewards as a means of retaining staff. CRH, for example, offers perks such as bonuses, travel allowances, pensions, saving schemes and further training.

This underpins its HR strategy of "achieving performance and growth through people", and the company believes that employee motivation can provide it with a competitive advantage.

Financial services players are known for their highly competitive employee remuneration packages.

The Japanese company Daiwa, for example, gives employees a day off on their birthday. "Our raw material is our people," the company has said in the past.

As our economy shifts away from manufacturing and becomes more reliant on highly-skilled service sectors, valuing and nurturing staff in this way will only become even more critical to the success of companies.