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Created on 27.02.2019

How SMEs can overcome major challenges in finding and retaining staff

SMEs face significant challenges in the battle to secure good employees. Martina Zölch from the FHNW School of Business outlines five challenges SMEs face in finding and retaining staff.

Professorin Martina Zölch im Gespräch über die Herausforderungen bei der Personalrekrutierung im Kleinunternehmen

Challenge 1: Don’t stick by familiar recruitment habits

It has become difficult to find staff in certain jobs and sectors. SMEs find this shortage of labour particularly challenging as they have to compete with larger companies to recruit suitable employees on the labour market. Some SMEs make the mistake of sticking by familiar recruitment habits – they only search regionally, only focus on certain types of employee or recruit via the same channels they have used for years. SMEs would be well advised to address the questions of “who are we searching for?” and “how are we searching?” When defining your target group, also consider those switching careers or candidates returning to the profession, or when it comes to recruitment channels, taking advantage of your networks or attracting back former employees by maintaining contact with people who have left the company. 

Challenge 2: Identify your strengths as an employer

SMEs cannot generally get the upper hand on the labour market with a strong brand, expensive recruitment campaigns or – in comparison to large competitors – high salaries. Salary is obviously a key factor. However, it is far from top priority for most employees which means that remuneration is not the only way of attracting employees. SMEs possess many other strengths which make them attractive employers, such as:

  • attractive products and services
  • integral and diverse tasks
  • high customer proximity
  • less bureaucracy and rapid response to changes
  • a relaxed atmosphere
  • mutual respect between the owner and employees

Don’t fall into the competition’s trap of getting hung up on what your SME cannot offer compared to large rivals. Instead, identify your company’s strengths and focus on them in your communication on the employment market. This allows you to take advantage of the opportunity to position your unique selling points as an employer and to develop an employer brand on a modest scale. You can also strengthen your bond with the existing workforce by drawing up your list of strengths with current employees.

Challenge 3: Recruit internally

Companies often overlook the chance to tap into internal potential and recruit in-house for planned new positions. During staff appraisals, systematically identify at an early stage who is willing and has the potential to develop within the company and which development measures are needed to enable the person to meet the job requirements in future.

A wide range of development opportunities exist here. They include off-the-job professional development opportunities, for example, continued training seminars and basic and advanced training courses. Special attention should also be paid to adult learning. On-the-job training at the workplace presents huge potential for employee development. The extension of the job profile, the assumption of more challenging tasks or project assignments represent excellent development opportunities. These can be supported by near-the-job measures such as mentoring schemes or specialist coaching and supplemented by team-oriented initiatives, such as knowledge tandems or exchange of experiences (ERFA groups).

Challenge 4: Delegate

In small companies there is a risk that the bosses will want to take most decisions or carry out all key tasks themselves. This means they miss out on the opportunity to delegate responsibility and provide interesting tasks for employees with potential which would help their development. As the owner of a SME, consider which tasks you could assign to your employees. This will not only improve staff retention by providing employees with opportunities to develop both personally and professionally, but it also reduces your workload. 

Challenge 5: Be flexible

The demand from staff for flexible working models has become greater – this may be because employees are seeking a better work-life balance – which is increasingly common where family members have to be looked after – or because they want to organize their leisure time as they wish. If SMEs stick to the principle of only offering full-time jobs, they put themselves at a disadvantage on the employment market, not just vis-à-vis major corporations, but also innovative start-ups adopting flexible approaches as part of their ethos. If companies provide greater flexibility, employees tend to be more willing to go the extra mile for the company. This means you should offer them flexible working models in relation to working hours and/or place of work whenever the job and nature of the business permit. Consider getting rid of block working hours and introducing home office days. Adopting flexible working models will give your small company greater scope to deal with fluctuations in orders. You will also increase your attractiveness as an employer and staff loyalty to your company. 

About Martina Zölch

Prof. Dr. Martina Zölch has been a lecturer at the  Institute for Human Resource Management  in the School of Business at the University of Applied Sciences and Arts Northwestern Switzerland (FHNW) since 2012. Her core competencies as an HR expert include recruitment, demography management, management development and flexible working models. The Institute for Human Resource Development offers a  certificate of advanced studies (CAS) in integrated HR management for SMEs.  A practical guide was published under the same title in 2018 by Springer Verlag.

Martina Zölch, Leiterin des Instituts für Personalmanagement und Organisation (PMO) an der Hochschule für Wirtschaft FHNW
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