Dirk Hahn is a recruiter’s bête noire. The 55-year-old joined the recruitment agency Hays as a sales representative in 1997 and spent years rising through the ranks to chief executive, a role he took on last year. His firm makes money from people jumping jobs — a foreign concept to Hahn. “I am probably the nightmare candidate for Hays,” laughed the company man.

It was one of the few jokes Hahn cracked last week. On Thursday, his company posted a dismal set of full-year financial results, including a 92 per cent fall in pre-tax profits to £14.7 million. Hahn said that the FTSE 250 firm, which employs 11,000 people across 33 countries, was battling an unprecedented downturn. “This is not a normal market, it is really tricky,” he said.

Hays is not alone; its Surrey-based competitor, PageGroup, also announced that its profits had halved this month.

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Part of the recruiters’ woes can be explained by a drop in attrition, the rate at which workers leave a company at their own behest. Several years ago, chief executives were grappling with worker shortages and “the Great Resignation”, offering large pay rises to entice employees to stay. Now they are contending with a very different challenge — one that might be called “the Great Retention”. Against an economic backdrop that is still fairly precarious, many employees are staying put.

Data from the Chartered Institute of Personnel and Development shows that the percentage of employees who had less than one year’s tenure — a common proxy for turnover — had fallen to 16 per cent at the start of this year, down from an unprecedented peak of 18 per cent after Covid. That may sound like a modest fall, but City bosses complain that, in the professional services sector, attrition is particularly low.

“It is definitely down, nobody is leaving unless they have to,” said one senior accountant at a Big Four auditing firm. Some bosses are hoping that, as the economy improves, employees will feel more emboldened to look for work elsewhere.

Generally speaking, a low level of attrition is healthy for firms. Senior partners at Big Four accountants said that ideally, about 12 per cent of employees would leave during the course of a year. Any more than that is disruptive for work and can prove costly, as firms have to spend money hiring replacements.

But too few employees moving on can be equally damaging. If, for example, swathes of well-paid senior employees refuse to leave, an organisation’s wage bill increases. It also provides fewer chances for fresh blood to rise through the ranks and can cause stagnation. Jack Kennedy, a senior economist at the recruitment website Indeed, said: “There is a sweet spot which allows for some fluidity in the firm to bring in fresh ideas and keep a firm growing, while also holding on to employees.”

“It is quite a hard thing to fine tune,” added one senior accountant.

Part of this can be explained by a hiring freeze. James O’Dowd, the founder and managing partner of Patrick Morgan, a recruitment agency used by several Big Four firms, said clients had scaled back their recruitment. This made remaining employees more conservative. “Firms have really slowed down their hiring and that has had a knock-on effect on departures. People do not see there are jobs out there, so they stay put,” he said.

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Survey data from the accountant KPMG in July showed that a slowdown in hiring for permanent roles was in its 22nd straight month.

Those who are hiring have also become more picky about who they hire because of the lack of turnover. Daniel Harris, a director at the recruitment firm Robert Walters, said: “Clients are being more choosy in terms of having an extended interview process over several rounds. Some have also taken candidates out for lunch or drinks to make sure a candidate is the right cultural fit.”

Last autumn, PwC cut 600 roles, citing a low attrition rate that had heaped costs on the firm and threatened its hiring practices. Others in the sector have been more subtle at moving on what might uncharitably be called “the dead wood”. Staff at the management consulting giant McKinsey have complained that this year’s performance reviews are tougher than last, with an unprecedented number being put “on concerns” — an internal phrase conferred on employees who need to improve their performance or face redundancy.

In March, The Sunday Times revealed that the firm had asked hundreds of employees across the UK and America to take full salary for up to nine months while they looked for employment elsewhere.

Corporate recruiters are also having to get inventive. O’Dowd said that his firm was looking at more fertile regions: “The UK has been very sluggish over the past two years, so we have pivoted towards other markets. In the Middle East, consulting spend has been relatively buoyant, and that has led to high levels of hiring and movement between roles.”

Hahn has his own plans. Last week he announced that Hays was planning £30 million of further cost cuts, on top of the £30 million already announced. “We are not sitting on our hands,” he said.