Small businesses really are the backbone of British industry. The country’s 5.7 million small- and medium-sized businesses (SMBs) still account for 99% of all UK companies – and together they provide the engine room of the economy.
SMBs employ 60% of Britain’s workforce, and micro-businesses alone — defined as those with up to ten employees — employ a third (33%) of British workers.
Yet despite their collective strength and importance, individual SMBs can face serious challenges when it comes to attracting, hiring and retaining skilled staff.
True, the battle for talent is tough for all employers, with the UK labour market continuing to tighten and unemployment at its lowest levels since the mid-1970s. But with many jobseekers able to take their pick of would-be employers, new research by Indeed has found that many SMBs feel their larger rivals enjoy advantages when it comes to attracting talent.
Indeed researchers who polled SMB owners found the vast majority (81%) believe recruitment is more difficult for them than it is for larger, more established companies.
Past experience suggests they might have a point. A third (34%) say they have issues even finding suitable candidates for roles, let alone enticing them to join their company.
Coupled with this, nearly half (42%) of SMB owners find that it takes them more than a month to fill vacancies.
The reasons given for these struggles throw up some interesting food for thought. Money can’t buy you love, and it possibly can’t buy you a workforce — or not exclusively at least — with only 26% of SMB owners feeling that salary is the key battleground on which they lose out to larger companies.
The main reason staff are less likely to choose a small company over a large one is the lower level of job security SMBs are assumed to offer, with 59% of small business owners citing this as their main recruitment issue.
Other stumbling blocks include a lack of name recognition (49%) and the reduced likelihood of career progression (43%), while perks also feature prominently; 42% of small business owners feel they cannot compete with their rivals in this regard.
The small business leaders polled also felt their appeal is diluted by jobseeker perceptions that working for an SMB involves harder work (29%) and less prestige (18%) than working for a big name company.
Whether or not these fears accurately reflect the impulses of prospective employees is largely irrelevant; the more pertinent question is what SMBs can do to counter the challenges posed by the goliaths of the UK business scene.
Just as SMB owners didn’t see money as being at the heart of the problem, money was also not seen as the overriding solution to recruiting and retaining staff; not least because offering disproportionately high salaries is neither viable nor sustainable for most SMBs.
Money does talk, of course. More than a fifth (22%) of SMB owners see higher salaries as their best option for attracting and retaining skilled employees, yet half (49%) saw offering flexible working as the best way to win the battle for talent.
That view certainly echoes what workers themselves say. The desire for a good work-life balance continues to grow, and a massive 70% of employees were recently found to want greater flexibility in the future, with 65% believing it will improve their wellbeing and satisfaction at work.
SMB owners are making their cultures more attractive in a number of other ways. Office treats (19%), expanded holiday allowance (18%), contributions towards the daily commute (13%) and private health insurance (10%) are among the most popular methods being adopted to lure skilled staff.
SMBs can provide positive environments for fulfilled, engaged and productive staff. Loyalty can be strengthened in many ways other than just a bigger pay cheque, and while SMB owners will always have a fight on their hands to compete with big businesses in many ways, owners can relish the opportunities to do so.
Their small size can actually play to their advantage. Many employees actually prefer to work within smaller organisations as they feel more connected both to their colleagues and to the goings on within the business itself.
From an employer’s standpoint, being small can actually allow their company to be more nimble and react more quickly to what employees want. Key issues like flexibility in working hours, compassion for staff’s needs such as childcare, and the promotion of a healthy work-life balance are increasingly important when dealing with a tight labour market and maintaining a productive workforce.
Higher salaries are another viable retention solution, though many SMBs may feel they will struggle to compete with the Goliaths of industry on these terms. Instead, the opportunity for career growth, variation in roles and responsibilities, and a flexible approach to time off are all emerging as strong options for smaller employers.
Happy staff are not the sole preserve of big businesses, not least because money can’t buy happiness. All employers face difficulties in ensuring their staff are motivated and fulfilled, leading to constant challenges in terms of retention and engagement of their workforce.
Smart SMB owners are already growing wise to this and in many cases are showing bigger businesses — with all their inherent advantages — how it is done with imaginative and forward-thinking solutions.