From unusual recruitment trends to rising business costs and hybrid working, small and medium-sized enterprises (SMEs) face a unique combination of staffing challenges in the post-pandemic era.
That is according to new survey results from Mentor, which reveal battles on multiple fronts.
The poll of 500 SME decision-makers, carried out by OnePoll, shines a light on the most pressing HR issues affecting these businesses in 2022.
It highlights four key themes:
1. Recruitment challenges take a heavy toll
Wage negotiations and interview no-shows are the biggest recruitment challenges for SMEs. Almost a quarter have seen new hires leave shortly after joining.
2. Staff attrition fuels talent concerns
The ‘Great Resignation’ has cast its shadow over SMEs, with more than a quarter struggling to plug talent gaps. Millennials are the workers most likely to have left for pastures new, with 29% of SMEs reporting this.
3. Cost of living crisis bites into budgets
Almost two-thirds of SMEs have endured above-inflation running costs, as the crisis hits the business world.
4. Juggling act on hybrid working, wellness and inclusivity
Around a third of decision-makers plan to scrap hybrid working within the coming six months. Diversity, equity and inclusion (DEI) is still not a priority for 28% of SMEs, meanwhile.
A large majority of SMEs have faced struggles when recruiting staff members, with only 5% experiencing no issues in the past 12 months.
More than a quarter (29%) reported problems with wage negotiations not meeting candidate expectations. The same proportion flagged the issue of people agreeing to interviews but not turning up.
Hybrid working expectations (24%) and new hires leaving shortly after joining the company (23%) were among the other top challenges.
London’s SMEs face the most intense pressure, coming top for pay negotiations failing to meet expectations (56%). The same was true for interview no-shows (48%).
The end of Covid-19 restrictions and a desire for a better work-life balance have inspired a ‘Great Resignation’ across many countries.
The UK’s SMEs are not immune, with 28% struggling to replace employees they have lost. North-east firms are under the greatest strain (69%). In contrast, SMEs in the West Midlands (28%) and north-west (23%) are leading the way in replacing staff quickly.
On a positive note, more than a third (38%) of SMEs nationally are yet to be affected, climbing to 65% in Yorkshire and the Humber.
Millennials aged between 25 and 34 are the hardest employees to keep hold of, with 29% of SMEs putting this age range at the top.
SMEs have not been shielded from the cost of living crisis, with nearly two-thirds (62%) reporting higher running costs. Some 55% also warned of above-inflation cost increases.
Certain regions have been hit particularly hard, with eight in 10 East Anglian firms seeing their costs jump by 11-20%. Costs have climbed by 6-10% for almost two-thirds of those in Yorkshire and the Humber. Meanwhile, in the capital, costs have surged 21-30% for roughly a third of respondents.
New divides are emerging around hybrid working, wellness initiatives and DEI.
While many firms continue to embrace a split between home and office working, the future is less certain for others.
More than a third (35%) of SMEs feel team dynamics have improved thanks to hybrid working, with London firms seeing the biggest upward swing (63%).
Yet many continue to face pushback from their staff. Between 26% and 50% of workers are resisting the office return nationally, according to 31% of the businesses polled.
The future of hybrid working also appears far from secure, with 32% planning to call time on the policy within three to six months. However, another 38% have no plans to ditch it.
Wellbeing initiatives are yet to catch on among some SMEs, with 31% having no plans in place. But others are showing more imagination, with 24% introducing flexible working hours, 23% opting for free or supplemented private healthcare, and 21% creating wellbeing champions.
More than a quarter (28%) of SMEs are failing to prioritise DEI issues, the survey discovered, despite a growing focus in the media. Only 21% flagged it as a top priority, with wide regional differences – 40% in London versus 3% in the West Midlands.
Looking to the future, inflation and profitability were flagged as the most pressing concerns for SMEs in the coming 12 months (both 24%).
Nationally, 14% cited recruitment as the biggest issue on the horizon. This rose to 24% among London-based companies.
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