Recruiting and retaining key talent is a long-standing issue for SMEs, but news that over half of employees are considering leaving their jobs is an eye-opening development. How can these businesses manage recruitment and retention costs, and keep their staff?

What are the recruitment and retention challenges for SMEs?

The evolving employment market, encompassing recruitment and retention, is a challenging space for SMEs, not least following the increase in the employer’s national insurance rate, which caused many firms to put a freeze on hiring. New figures from Personio underline how critical the issue has become.

According to the research, more than 50% of SME employees have considered quitting because of poor pay, work-life balance, workplace stress and a lack of opportunities for career progression. This is a staggering figure. And the impact on firms of losing key talent is just as concerning.

The study shows that SMEs have wasted on average between £233,000 and £235,000 in the last year on poor recruitment and preventable staff turnover. Unsurprisingly, talent shortages are now considered by HR decision-makers to be their greatest risk.

Why recruitment and retention is challenging for smaller firms

Away from debate on attracting candidates aged under 30, managing demand for flexible working conditions and the need to offer more AI training options, a key challenge for smaller firms lies in accessing the expertise needed for successful recruitment and retention.

With many smaller firms not having dedicated human resources personnel or departments, confidence about hiring is not high – according to research from Talent Hub, only a third of small businesses are confident about recruitment. Also, the study showed that three quarters of small firms lack adequate training in relation to key talent recruitment and retention.

How alternative finance can help firms manage key talent costs

The recent research from Personio and Talent Hub highlights the issues that SMEs are facing when it comes to hiring and retaining key talent, with the costs involved in ensuring the two processes are done well clearly weighing heavy on firms.

In the current climate, balancing the safeguarding of cash flow with finding money to invest in training, systems and employees is far from straightforward. This is where alternative finance can help.

Small business lending from traditional sources remains subdued at the end of Q3, with almost 40% of firms finding accessing affordable finance one of their biggest challenges. Against this backdrop, services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate.

These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

Notably, the Growth Guarantee Scheme is providing a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

SME finance options for investing in key talent

The number of SME employees thinking about quitting underlines how critical the issue of key talent recruitment and retention in the sector has become. And costs are clearly central to the challenges that many firms are dealing with.

Access to finance is integral to managing these costs and ultimately keeping key talent on board. This is why it is important that key decision-makers are aware of all the finance options available to them, including the services of alternative lenders.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.