In an increasingly challenging employment landscape, almost two-thirds of small and medium-sized enterprises (SMEs) are grappling with the formidable task of retaining their most valued staff members.
Recent statistics reveal that 64 percent of SMEs are finding it increasingly difficult to retain talented employees amidst the uncertainties of the current economic climate.
This issue seems to be particularly pronounced among the upper echelons of management, with a staggering 75 percent of Chief Executives and Managing Directors acknowledging the escalating difficulty in holding on to key staff members.
Retaining Talent: Beyond Salaries
Traditionally, competitive salaries and benefits packages have been the primary tools used by SMEs to keep their employees satisfied, with 44 percent of employers resorting to this approach. However, the landscape is evolving, and a paradigm shift is underway. Hybrid and flexible working options have emerged as a formidable alternative, with 41 percent of SMEs offering such work arrangements. It is increasingly recognised that these flexible work patterns play a pivotal role in the decision-making process of employees when it comes to staying with their current employers or seeking opportunities elsewhere.
Creating a positive and inclusive organisational culture is also a priority for SMEs, with 40 percent citing it as a key factor in retaining their staff. Additionally, 39 percent of SMEs provide professional development opportunities, including training and upskilling, to keep their employees engaged.
Budget Constraints on Upskilling
While upskilling and training are crucial for employee development and retention, almost half (48 percent) of SME employers are finding it increasingly challenging to allocate budgets for such initiatives within the current economic environment.
It’s not just retaining talent that poses a challenge for SMEs. On average, 16 percent of SMEs are facing difficulties in recruiting the right candidates. This number rises to 18 percent for businesses with a workforce ranging from 10 to 249 people. The ongoing economic uncertainty is, in part, inhibiting SMEs from expanding their operations by hiring more staff, with 39 percent of businesses citing this as a considerable hurdle.
Retention can be challenging
Alison Traboulsi, Product Manager at Direct Line business insurance, commented on the situation, saying, “Attracting and retaining skilled employees can be challenging no matter what size your business is. Competition for highly skilled talent is fierce, and aligning with the needs and demands of a constantly evolving workforce can be tricky. Employers need to balance their recruitment strategy to enable them to attract top talent alongside their retention strategy to ensure they keep their best employees. To do this, they need to make sure their staff are engaged, motivated, and committed to the organisation. The areas to focus on that have the most employee appeal are salary and benefits packages, flexible working, a positive work culture, career development opportunities, and a desirable work environment.”
In a world marked by economic uncertainty, the war for talent in SMEs is becoming increasingly complex, requiring a multifaceted approach that goes beyond traditional compensation packages and embraces the evolving demands and preferences of the modern workforce. As SMEs navigate these challenges, it’s evident that retaining valued employees and attracting new talent are pivotal factors in their long-term success and sustainability.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.