Recruitment and retention issues are affecting around 80 per cent of SMEs due to fierce competition, rising compensation expectations, and demands for flexible working, according to WorkLife by OpenMoney.
In its most recent Small Business Monitor which was carried out by 3Gem among 750 senior financial and HR decision-makers in UK SME companies with 5 – 250 employees, WorkLife by OpenMoney found that of those surveyed who are having difficulty, 54 per cent think recruitment is the bigger of the two resource challenges.
The biggest concern regarding recruitment is candidates’ rising salary expectations. This difficulty is currently being faced by nearly 44 per cent of senior decision-makers, up from 34 per cent in the spring.
Other significant challenges include having to compete with other companies for talent (24 per cent), being unable to provide alluring incentives (22 per cent) or flexible working (21 per cent).
The survey identifies broader problems with hiring the appropriate people to fill roles in addition to the specific business-focused worries. For 44 per cent of businesses, finding qualified candidates with the proper expertise is a problem, and for 33 per cent of SMEs, a general labour shortage is a problem.
Additionally, nearly 43 per cent of respondents cite employee retention as a significant problem.
Around 46 per cent said that the threat of competitors offering greater salaries and benefits was their top concern, a sharp increase from 28 per cent in the previous research. Almost 33 per cent of respondents are concerned about losing workers who wish to change careers, which is a considerable increase from 21 per cent in spring 2022.
Demands for flexible work arrangements are also quite important. Around 33 per cent of SMEs are concerned about staff not wanting to return to the actual workplace, which is now the second-highest concern in relation to employee retention. Concerns about not providing enough flexible work choices to satisfy employee demands are also on the rise for around 22 per cent of respondents.
Nearly 23 per cent would prefer better access to the workforce from within the EU, such as work permits, to support their need for more resources, while 40 per cent believe that tax relief on employee perks would be helpful to help support the alternatives they may give to support staff.
WorkLife by OpenMoney managing director Niamh McLaughlin says: “It seems it never rains but it pours for SMEs recently. Having adapted to the market changes brought about by Brexit, firms then had to navigate the extraordinary impact and aftermath of the pandemic. Their reward? A prolonged period of high inflation, hitting supply chain costs, utility bills, and staff pay packets.
“Keeping a team together and happy in their roles is a key part of navigating times of difficulty, but it can be tricky for SMEs to maintain that stability when other pressures come into play. With the pandemic having caused a lot of employees to re-evaluate their career plans and work-life balance and many firms already fearing losing workers to competitors, the rising costs of living have only exacerbated recruitment and retention pressures further still.
“More than ever, a cost-effective and tailored benefits package can make all the difference to the attractiveness of the company and employees’ feeling of being valued at work.”