Two thirds of UK SME bosses face recruitment and retention difficulties

New study suggests that one in five SMEs report having problems with a high level of staff turnover and recruitment.

The latest Aldermore Future Attitudes report reveals that two thirds (67 per cent) of SMEs, representing 3.82 million small and medium sized businesses across the UK, find it difficult to hire qualified staff members or keep existing talent in the company.

Hiring and retaining employees is fraught with difficulties for any business. The study, which surveyed more than a thousand business decision-makers across the UK, found that the most commonplace concern is finding the right people (32 per cent), with key employee positions often difficult to fill (20 per cent).

Retaining good members of staff once they have been found is a concern for a quarter (26 per cent) of business leaders, with a fifth (20 per cent) admitting to currently having a problem with a high workforce turnover. More than one in seven companies (15 per cent) find it hard to adequately develop employees who demonstrate great potential, and younger employees can be particularly difficult to keep on board (15 per cent). Almost one in three (29 per cent) say that they have experienced an increase in staff leaving their business compared to 12 months ago.

When looking at the reasons behind employees moving onto pastures new, bosses say the most common motive is a change in career (23 per cent), followed by wanting quicker career progression (21 per cent) and a pay rise (19 per cent). In terms of where they then go, nearly a quarter of their employees (24 per cent) land a job at a larger organisation in the same sector, a further one in seven (16 per cent) move to a larger company in a different industry and over one in ten (13 per cent) go to another SME in a similar industry.

Most small and medium-sized organisations in the UK (76 per cent) recognise they must make an effort to avoid employee churn and to keep their best people. Most commonly they do this by ensuring staff have a healthy work/life balance (28 per cent) and flexible working opportunities (26 per cent), followed by offering relevant training courses (23 per cent) and giving staff regular pay rises (21 per cent).

When recruiting new talent or when replacing staff members who have left the company, word of mouth remains the most reliable method of attracting new candidates (24 per cent). More than one in six (17 per cent) business leaders choose to advertise new roles and one in seven (15 per cent) hire external recruitment agencies.

Carl D’Ammassa, group managing director, business finance at Aldermore, says, ‘It’s a job seeker’s market out there and this trend looks set to continue over the coming years. Talented workers within the SME industry are able to find new employment quite easily, with many individuals moving on when they feel they can get a better deal or could progress further and quicker in a different environment. Competition for the best industry talent has always been fierce and business leaders need to put measures in place to ensure their companies are attractive places to work for ambitious employees.

‘The best people can have a significant, positive impact on how that business performs, so therefore it is heartening to see that the majority of SMEs acknowledge that it is important to make an effort to keep talented people by offering a good work-life balance, flexible working, and valuable training. This is to be applauded, and many larger employers could learn much from their smaller peers about maintaining staff satisfaction.’

Further reading on recruitment

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the and titles before moving on to be a Digital Technology reporter for the

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