Facing recruitment challenges and a changed office culture

Staffing is a key concern for SMEs. Yet particular economic conditions, and the aftermath of the Covid-19 pandemic have created new challenges for business in this realm

Key takeaways

One quarter of SME directors are having problems filling vacancies. The same number are having problems retaining talented staff
Recruitment challenges are less of an issue for larger SMEs
There has been a huge shift in office culture - with changed working patterns now a way of life
Only 27% of SME owners say the majority of their staff now work entirely from the office.

About the research

This analysis is based on bespoke market research commissioned by Barclays and conducted by Censuswide among more than 800 directors in SMEs. The sample covered UK companies with a turnover of £6m-£50m and the research was conducted in June 2022.

A hybrid approach

One change SMEs have had to navigate in terms of staffing has been the shift from office working to hybrid and homeworking. With this comes a corresponding shift in employee and business needs.

Another huge business disruptor having an impact on UK SMEs right now is dealing with recruitment challenges.

A combination of workers being able to work anywhere (while homeworking), the fallout from Brexit, and a healthy jobs market, means retaining staff and hiring talent is an issue for some SMEs. For employees, meanwhile, it means a wider choice of where to work.

The hunt for talented staff

One quarter of SME directors said they are attempting to hire staff but are having problems filling vacancies. Some 25% also said they are having problems retaining talented staff.

Our research found that these recruitment challenges were less of an issue for larger SMEs. In bigger SMEs (company turnover of £40m-£50m), 19% of directors said they are attempting to hire staff but are having problems filling vacancies, while just 15% said they are having problems retaining talented staff.

25% of SME directors are having problems retaining talented staff.

One regional difference that stands out is that recruitment challenges are particularly being felt in the North. There, 35% of directors said they are attempting to hire staff but are having problems filling vacancies. And one third said they are having problems retaining talented staff.

Northern Ireland also tends to sit as an anomaly in many of the findings, perhaps due to the impact of Brexit and changes to its import/export activities providing it with specific challenges. In Northern Ireland, just 18% of directors said they are having problems retaining talented staff, and the same number said they are attempting to hire staff but are having problems filling vacancies.

Findings show that many UK SMEs remain optimistic for the future and are focused on investing in staff to adapt to the new environment and to grow.

Some 40% of SMEs say they have hired employees in 2022, and 44% say they will be hiring new staff. This compares with 29% saying they will be making staff redundant this year. (Directors were able to choose multiple answers here.)

Recruitment as a priority

Another indicator that recruitment is a priority for SMEs is that when directors were asked what their investment priority for the next year was, the most popular answer was recruiting new talent. This was cited by more than a fifth (22%) as their top priority.

Investing in HR, existing staff, training and personal development ranked fourth in the list of priorities (chosen by 13% of SME owners), after business development/strategy, and IT and systems.

Again, Northern Ireland showed a different picture here, with 48% of directors there stating that their investment priority for the next year was recruiting new talent.

15% of SME directors say their investment priority (over the next 12 months) is IT and systems.

Staff issues, it is clear, remain high on the agenda for many SMEs, whether this is for reasons of filling gaps, developing talent, or moving the SME forward.

Changed working patterns

Our research shows there has been a huge shift in office culture - with changed working patterns that began during the Covid-19 pandemic now a way of life.

Only just over a quarter of SMEs (27%) say the majority of their staff now work entirely from the office. Meanwhile, more than a third (35%) of SMEs say the majority of staff work from home full time.

Having more people working from home full time than working in an office full time is a huge turnaround for SMEs. The impact of this change is perhaps still unfolding, and businesses must keep adapting to it.

In between these two camps, 38% say the majority of their staff work in a hybrid way, splitting their time between working from home and working from the office.

There are also regional differences in working patterns. In the South (not including London), 58% say the majority of staff work from home full time. In the Midlands, this is just 23%, and in Northern Ireland, 14%.

One thing is for sure – working patterns now vary greatly. A major business challenge for all SMEs is to adapt to this.

Strategies for success

The world of work has changed a great deal in the past few years – not least as a result of the pandemic. Our research shows that only 27% of SMEs say the majority of their staff now work entirely from the office. More than a third (35%) of SMEs say the majority of staff work from home full time. And 38% say the majority of their staff work in a hybrid way, splitting their time between working from home and working from the office.

So, what does the new-look workplace look like for you, and is your business set up to meet these new employee expectations?

Flexible

Many workplaces now offer some form of flexible or hybrid working. As a result, many have reduced their office space. Make sure you are striking the right balance here. Do you have sufficient space for your workers, and enough meeting rooms? Do you have quiet spaces for staff? Are there certain days of the week when the office gets overcrowded?

Plug and play

Consider the ongoing risk of cybercrime and ensure appropriate policies are in place for home working. For staff who are dividing their time between working onsite and offsite, connectivity issues such as struggling internet connections or an inability to get on to central servers or printers can be frustrating. Can staff easily connect and, if not, do they know how to get help?

Safety measures

While many of the restrictions of the pandemic period have now been removed, staff still want to feel safe and may still want you to retain some of the safety measures introduced to combat Covid-19. For example, do you have hand sanitisers on site, are your bathrooms and communal areas kept clean, and are masks available for those who want to wear them?

Creating the water cooler moment

The rise in hybrid and homeworking has removed many of those impromptu conversations with colleagues that can lead to great ideas. With less chance to chat through ideas at the water cooler, are you creating enough opportunity for people to be creative and communicate in an informal way with colleagues?

Building morale and togetherness

In this new world of work where we are less present in the office than before, teambuilding and socialising sessions can be invaluable. Think about how you can bring colleagues together – whether it’s a set day every month for everyone to be on site, or a quarterly team day with activities. Think about what types of activities will work well for different personality types, and vary the size of any group activities between pairs, small groups and larger groups, so that everyone gets a chance to speak.

Find out how SMEs are tackling three key issues