SMEs face a unique set of staffing and HR challenges, new poll reveals

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.

Recruitment challenges take a heavy toll

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%).

Staff attrition fuels talent concerns

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.

Cost of living crisis bites into budgets

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.

Juggling act on hybrid working, wellness and inclusivity

New divides are emerging around hybrid working, wellness initiatives and DEI.

Clouds over future of hybrid workplaces

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 inches up SME agendas

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.

Progress on inclusivity stalls

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.  

Inflation fears loom large

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.

How Mentor could support you

Join MentorDigital for free help and advice in employment law, HR, and health & safety.
Get in touch for 24/7 support and dedicated account management from our team of experts.

Please note, Mentor services incur a cost.