In spite of the most pessimistic predictions about UK business post-Brexit, our unemployment rate continues to fall far quicker than the rest of the EU, with some 31.77m people in work at last count – 559,000 more than a year earlier.
The warnings of businesses cutting their workforce back have so far been proven wrong and SMEs are driving that trend – London SMEs in particular are the most positive on prospects for employment, expecting growth rates of 1.2 per cent in the next 12 months, compared with 1 per cent last year, according to a Capital Economics study.
Nevertheless, presented with a raft of new requirements, from auto-enrolment of pensions to the National Living Wage, UK SMEs are having to rapidly adapt to an ever-changing business environment. But what can SMEs do to ensure they’re hiring the right people, while staying ahead of the curve on new regulation?
Hiring and interviewing
Finding new, quality staff has never been easier in the digital age. Employers can use services from Linkedin to Gumtree, as well as a raft of specialised apps for finding specific skillsets.
Mark Lilley is founder of Abokado, a health food chain with around 250 employees that is currently opening a new store every six to eight weeks. He believes in hiring on recommendation of present staff – that is, their friends, family and flatmates.
“Generally it means that people understand what they are getting themselves into – friends will be pretty honest about our working life and work culture, and we find that actually recommended people stay on board longer.”
Daniel Gilbert, founder of Brain Labs, agrees that “the best people usually know the best people for the job… we find a lot of our staff through internal referral”. Clearly though, it’s almost impossible to source staff based on recommendation alone, and both businesses have a careers page on their website, where anyone can apply.
Even when recommended by “the best people”, businesses must still ensure their prospective hires are up to scratch. “We have a robust recruitment process with multiple interview stages and the same aptitude test for everyone”, says Gilbert. “We score them, bring them in front of an interview committee and determine their independent result.”
Once you’ve found your staff, ensuring they stay with you is just as important, says Felix Mitchell, founder of Instant Impact, a graduate recruitment agency. “With a generation that no longer believes in a ‘career for life’, retention has become almost as important as the hire itself. Businesses that are honest and transparent about job responsibilities from posting a job spec until final interview do much better.”
Hiring staff is seemingly the easy part. There are several new requirements businesses must comply with. One is automatic enrolment of staff into a pension scheme, which employers must make a minimum contribution towards, based on individual earnings.
Organisations with fewer than 30 staff have been rolling out workplace pensions since the summer of 2015, but now all employers, regardless of size, are required to do so by April 2017.
Some 83 per cent of SMEs have never offered a company pension before, and according to research from Smart Pension, more than half feel auto-enrolment will be a burden, and two fifths say it’s unfair. Smart Pension co-founder Will Wynne says that “auto enrolment was always going to be a challenge for smaller business founders. They are busy people, they don’t have the time to spend hours researching and implementing a pension scheme for their small workforce.”
Kiki McDonough, founder of the eponymous jewellery designer, shares the experience of many, reflecting that “anything that the government sets up is a minefield of admin – masses and masses of paperwork in language that nobody understands. These things take an incredible investment of time to implement, but of course they are very important. I do believe it could have been made so much more simple.”
For SMEs struggling with auto-enrolment, there are plenty of services around to relieve the burden. The Pensions Regulator offers wide-ranging support in helping businesses pick the right scheme. A host of other organisations, such as the Money Advice Service, can put you in touch with financial advisers in your local area.
National Living Wage
For some SMEs, the introduction of the National Living Wage (NLW) in April has been yet another onus.
Research from the Federation of Small Businesses (FSB) found that although a majority of SMEs were already paying their staff above the NLW, those that didn’t mostly had to absorb the costs by taking lower profits.
Lilley says that, although Abokado already paid above the NLW, when it was introduced they increased their pay further to attract, and retain, the best talent. The challenge was absorbing the costs, which they did through a combination of more efficient rota planning and reduced profitability.
“The most important thing was that the burden shouldn’t fall on our customers. We felt it was important to keep offering quality produce at a reasonable price – so we haven’t increased our selling price at all.”
Not all have been so lucky, and the research from FSB shows that 35 per cent of businesses surveyed increased their prices, reduced investment or – sadly, recruited fewer workers.
Emma Jones, founder of Enterprise Nation, says that SMEs are “working through what the changes mean for hiring and workforce development.
“It takes a lot to stop them from growing… they are a sturdy community that keep pushing through to build great companies and ensure their team is well taken care of, financially, and in having a gratifying job.”