SMEs struggling to match multinationals when recruiting talent
New research from talent management platform Employment Hero lays bare the struggle SMEs face when attempting to hire.
The survey of 514 SME hiring leaders across a range of sectors found they were consistently losing talent to larger multinational organisations. These included leaders at micro-organisations with less than ten employees and larger organisations with up to 500.
The survey revealed that the average hire:
- Cost £3089 to advertise, a 68% increase on the cost in 2022.
- Received 10 or fewer applications.
- Took 31 days to fill.
There were considerable differences between SMEs however, with smaller businesses of less than ten employees like cafes and bars typically spending less on job ads, receiving less applications, but hiring faster.
Government data from the ONS suggests that these hospitality businesses also face the highest vacancy rate however, with about one in 20 (4.9%) unfilled positions at the end of August.
Competition from larger organisations who could offer more generous salaries was a consistent theme across the survey, with a majority (89%) of SME business leaders saying they were having trouble matching the salaries of larger organisations, and 69% saying they struggled to compete with multinationals for talent.
White collar SMEs in sectors like insurance and finance were the most exposed to these multinationals and faced the most acute challenges, with more expensive job ads (£5,316), a longer time to hire (46 days), and a higher turnover rate - 17% of new employees left within six months, meaning a newly-hired barista has a better chance of staying in their job six months than an insurance adjuster.
The full details of the report including breakdowns by business size and sector are available alongside comparisons with other countries.
Ben Thompson, CEO and Co-Founder of Employment Hero, commented: "Recruitment isn’t working for SMEs. They are the backbone of our economy but can’t keep up with a hiring environment of increasing complexity and cost, where huge multinational companies can easily outspend them in the race for top talent. We just can't stand by and watch our small business community, especially those relying heavily on seasonal workers during crucial times like Christmas, lose ground after facing such a tough time through Brexit and the pandemic.
"To tackle this, SMEs have got to play to their strengths in the hiring game, spotlighting what makes them stand out – things like their unique culture, flexibility, and growth opportunities. This requires creating a work environment that's not only adaptable but also lines up with what employees are really looking for. It’s about giving candidates the chance to really make their mark and have a visible impact on the business.
"Employment Hero exists to make employment easier and more valuable for everyone. We’re leaning into AI to shave down the time and money SMEs spend on hiring, so they can keep their focus on strategy. It’s vital that every business, no matter its size, has the right tools and platform at their disposal to uncover, attract, and hold onto the world-class talent they absolutely deserve."