Small businesses cite skills shortage as reason for bad hires

A skills shortage is having a negative impact on small business recruitment, with more than half of small businesses claiming that a lack of applications is resulting in bad hires, research finds.

According to a survey of 1,000 small business owners, 40 per cent have exited over three employees over the last five years, and 14 per cent had exited over six.

The research was commissioned by Sandler Training (UK), a business development consultancy, to get insight into impact of bad hires in small businesses.

When asked what caused the bad hires, small businesses overwhelmingly find it is down to a poor quality of applications, with more than half (51 per cent) citing this as the main reason, followed by poor judgment (27 per cent) and rushing the recruitment process (11 per cent).

For small businesses the impact of a bad hire can have a huge impact on the bottom line. The small business owners believe each bad hire costs their business £13,799, factoring in costs for wages, recruitment and wasted time. This rises to £17,900 in London.

Despite the impact of bad hires, only 28 per cent of small business owners say that they conducted three or more interviews before offering a job. One in four small businesses (25 per cent) admit they hire after only one interview, while the majority (47 per cent) interview applicants twice before offering a role.

Shaun Thomson, CEO of Sandler Training (UK) says, ‘With unemployment at a 25-year low, it’s not surprising that the labour market is tightening and small businesses are feeling the effect with a reduction in applications. However this doesn’t have to result in poor hires.

‘The cost of investing in a robust interview process is much lower than the cost of a bad hire. By building a recruitment strategy that incorporates assessments, which will give information into candidates’ attitudes and how they should be questioned in interviews, businesses can ensure they get insight into whether they would be a good fit before an offer is made – avoiding the repercussions of bad hiring.’

On a more positive note, the small business owners believe that 74 per cent of their staff are critical to the success of their company, with the most valuable employees being in the Scotland, where this figure rises to 78 per cent.

The small business owners are also willing to reward valuable workers – when asked how much more they would pay a new recruit if they could guarantee from the outset they would become a valuable member of the team, the small business owners said they would be happy to increase the salary offered by 21 per cent.

Further reading on recruiting staff

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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Hiring Staff
Skills gap