As we head into 2023, it is unlikely that staffing challenges will be resolved for SME’s in the North of England.
The Commercial Director of WorkLife by OpenMoney, Paul Chedzey, points out that 78% of Northern firms that the employee benefits platform engaged with as part of its H2 2022 Small Business Monitor research were experiencing recruitment and staff retention issues.
What’s more, with latest data from the ONS showing that the number of job vacancies remains at historically high levels, Chedzey believes the end of these issues could be some way off yet.
Stiff competition and high salary expectations taking their toll on recruitment plans
“Over half (51%) of SMEs we engaged with who were facing resource challenges in the second half of last year said recruitment was the bigger of the two issues,” he added. “Of those citing recruitment challenges in the region, just 19% expected to be able to resolve them within the next six months. A quarter (24%) believed difficulties will persist for between seven months and a year, with 21% saying between a year and two years.”
The biggest worry in recruitment terms among Northern SMEs has been candidates’ salary expectations – and this worry continues to grow. Almost half (44%) of decision-makers WorkLife surveyed were facing this challenge, up from 36% in the first half of 2022.
“Other notable obstacles have been the cost of recruiting new talent (35%), and not being able to offer attractive incentives (19%) or flexible working (21%),” Chedzey said.
WorkLife has also been seeing broader worries among businesses in the North about finding the right people to fill roles. Sourcing quality talent with the right experience was troubling 41% of firms in the second half of 2022, while more general labour shortages were seen as a challenge for a third of firms (28%).
Competition and flexible working are the sticking points for retention
Looking ahead to 2023, Chedzey expects employee retention to remain a major issue for many Northern SMEs, with 45% of respondents already grappling with this challenge in 2022.
“The key concern has been the threat of competitors offering better pay and benefits, with just under half of respondents (47%) identifying this danger, up dramatically from 28% in our previous study,” he commented, adding “similarly, losing employees who want to change career was a worry for over a third (38%) of respondents, again up significantly from 31% in Spring 2022.”
Flexible working demands will stay high on the agenda too according to Chedzey. “Staff not wanting to return to the physical workplace was the fourth highest concern relating to employee retention in H2 2022, impacting a third (31%) of Northern SMEs, while not offering sufficient flexible working options to meet employee demands as also a growing worry (22%).”
Overall, Chedzey says it doesn’t look like things are about to get any easier for SMEs in the North of England this coming year.
He said: “Having adapted to the market changes brought about by Brexit, firms then had to navigate the extraordinary impact and aftermath of the pandemic. Their reward? A prolonged period of high inflation, hitting supply chain costs, utility bills, and staff pay packets.
“Keeping a team together and happy in their roles is a key part of navigating times of difficulty, but it can be tricky for SMEs to maintain that stability when other pressures come into play. With the pandemic having caused a lot of employees to re-evaluate their career plans and work-life balance and many firms already fearing losing workers to competitors, the rising costs of living have only exacerbated recruitment and retention pressures in the north further still.
“More than ever, a cost-effective and tailored benefits package can make all the difference to the attractiveness of the company and employees’ feeling of being valued at work this year and beyond.”
WorkLife’s Small Business Monitor is based on research carried out by 3Gem among 250 senior financial and HR decision makers in SME companies with 5-250 employees across the North East, North West, and Yorkshire & Humberside. Fieldwork for this report took place between 17-26 August 2022. For the full copy of the Small Business Monitor, please email [email protected]
