Request a Free Demo

New survey shows the most pressing hiring problems facing SMEs 2020

In any business, but especially in startups beginning to scale and growing SME and , recruiting has always been a challenge.  The hires you make will help to define the future success of the organisation.  Choose the wrong person and that one moment of decision could take months or years to unpick.  

In our constant pursuit of excellence, we have again sought an understanding of the challenges facing our clients.  Are the difficulties in recruiting the same as always? Or, are they more difficult in an increasingly digital world that favours the gig economy?  As we began this year, we sought to understand if the challenges facing small and medium-sized enterprises are significantly different from those of large enterprises and multinationals. Over 78% of our respondents came from small to medium businesses, and almost 22% were from large enterprises. 

At HR Duo, we offer a complete HR Department, providing HR software and support and advice when you need it.  Therefore, we are continually striving to understand the recruitment sector. Consequently, we recently spoke to Business Owners about hiring practices.  We asked about the current state of recruitment and sought to understand the challenges they faced.

Of all those asked, 59.4% of Business Owners said they found it challenging to recruit staff.  This is 10% less than the 69% of CEOs and managers asked in 2017, a significant improvement. It suggests that new recruitment approaches are having an impact. However, it still represents a considerable concern about the state of the job market and the capacity to find the right candidate.

The biggest challenges when recruiting

There are two takeaways from the results that interested us the most.  First, the lack of required skills and experience still factored as the most significant challenge facing SMEs and Startups.  While this is down by 15% from when we asked the CEOs and managers three years ago, it still represents the highest level of concern.  Second is the impact of salary expectations. People expect to be paid more and consequently, it is difficult to hire the best team and maintain a reasonable salary budget.

Other concerns included a lack of applicants (38.3%), competition over applicants (11.7%), promoting the vacancy (10%) and office location (6.7%)

These results suggest there is still a need for solutions to closing the skills gap and seeking the right talent at the right price.

Managing the skills gap

Research suggests that the use of fluid working practices and a reward system are the best ways of addressing the skills gap.  Business looking to the future recognise that the working relationship with talented staff needs to be more flexible. There needs to be employee-centric approaches to development and reward.

Technology might feel like an existential threat, disempowering and disengaging those recruited.  However, it is also a way of engaging those with talent in varied and meaningful work. This tech allows employees the flexibility to work in a way that suits the lifestyle to which they aspire.

In this new model of working, Business owners and Founders need to look beyond the standard list of criteria and expectations of candidates.  The hard skills of the past, and even the softer skills that are more difficult to measure and evidence, are becoming irrelevant. Instead, companies need to be looking at the qualities that the candidates offer – including, crucially, the capacity to self-manage, to continue to learn, to work with honesty and integrity, following an internal code of ethics and a vision for a better future for the company.  

As we advised in our survey from 2017 and again, we suggest today, you need to go beyond that black and white list of qualifications to hire your new staff.  Finding the perfect candidate who comes ready-made to fulfil your position in your way is a rarity. If you find them, they are going to cost you more to hire because they have highly desirable CVs – and your competitors want them too.

So, the answer is a more liquid model of skills required by your business.  You need to recognise that the relationship with your employees is reciprocal and based on mutual respect and trust – Positive Employee Relations as we like to say. there are also opportunities to be flexible around working hours and locations. Companies that prioritise the wellbeing of staff will find they will become much more desirable to the best applicants.

This change in focus will require you to change your mindset when recruiting.  Rather than look at the skills list the candidate offers, look for the attitude they project.  You could take someone raw, straight out of university but who has a recent history of involvement in societies and charity events.  You get someone who needs your training for the skills you need but comes ready packaged with the right qualities to learn above and beyond your expectations. Of course this approach requires a significant investment in time and potentially, resources.

Managing your staffing costs

The apparent solution to recruitment issues might be to throw larger salaries at the applicants you can find.  The survey suggests that higher salary expectations are a significant challenge as it is. Consequently, the idea of going above and beyond this to hire the talent you require feels unrealistic and unsustainable.

The solution to the skills gap and the possible answer to staffing costs could well be the same.  Your performance management programme and training and rewards package could be integrated into your recruitment practices.  In a GETI survey for the oil and gas sector in 2019, the findings suggested that workers are looking for a package. Therefore, it might not be a matter of the highest salary.  You might not be able to keep up with this staffing cost. However, you could still attract talent by putting together a cohesive package that offers development. The same survey noted that applicants were not only looking at the opportunities today but the chance to travel, learn new technology and shape a career with your company.

You could easily reap the rewards by offering more than just a high salary.  Your pitch, when competing for the best talent, should include how you will value this applicant as an individual and look to add to their skills and abilities.  You want a workforce skilled enough to go it alone and succeed in their own right, but they don’t want to because it is so good working for you.  

As a small business, you can’t hope to out- pay larger enterprises.  However, you could look to outsmart them with a people-orientated recruitment policy.  The offer of a more substantial salary should be the last resort. If there is someone out there that you cannot do without – and who you do not want to be employed by your competitors, then offer a highly competitive salary might be in order.  However, in reality, you cannot use this as a policy with every hire you make. It is, therefore, a short-term perspective on trends that will likely continue far into the future.

Don’t ignore the issues with applicants

Although the headlines are salary and skills, a sheer lack of numbers when advertising a job cannot be ignored.  Almost 40% of Business Owners stated this was one of their top two concerns. If this is you, then you need to consider your relationship with the marketplace for talent and manage your expectations.  

What does this mean? It means you need to be required to put some effort into walking towards the candidates – rather than having these applicants walk towards you.  For instance, do you have a graduate scheme? Having links to universities and encouraging interns and graduate employees will show your willingness to seek out the best people straight out of university.  Although the biggest companies are very active here, there is is still scope for SMEs to compete. You need to play to your strengths though. Graduates joining you will get far more responsibility and a wider experience. Again, this means you need to invest in training as these workers will come raw and without specific skill and experience.  However, if you seek them out and draw them into your company out of university, you will earn staff loyalty. Where there is a lack of applicants, retaining the current employees must be a significant priority. Therefore, graduate hires offer this win: win for companies.

According to the Harvard Business Review (May-June 2019), much recruitment is done without a job being advertised. Most companies are recruiting people through social media, such as LinkedIn, bringing in people who were not necessarily looking to change roles. A lot of recruitment is now outsourced, and the subcontractor actively seeks the candidates to fill the position – persuading them to apply.  Whether this virtual approach to hiring is right or not is questionable. However, what it proves is that companies are recognising they need to go out and seek applicants and should not remain passive in this search.

To the future

Probably most significant in all these challenges is the fast-moving nature of the recruitment sector.  Not long after happening upon the best strategy to hire the best talent, the world moves on, and your approach no longer works.  You may have a method that nets a lot of applicants of whom a handful meet your hopes. You may have strict standards, keeping the bar high but are willing to put your money where your mouth is – supporting this strategy with a high staffing budget.

However, changing technologies – both in recruitment software and those that allow people to work in a way that suits a lifestyle they choose – may make these strategies redundant.  Therefore, using keyword searches on CVs, using AI on applications, allowing flexible working remote from the office and putting together a benefits package that makes people feel valued – these are the solutions that could move your recruitment forward.

February 20, 2020
By Grace Maguire

Bottom Banner

See HR Duo in action

Get hands-on with a personalised free demo from our expert team today.