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28th January 2021


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Small firms' recruitment plans in jeopardy, finds new research

The likelihood of small businesses creating jobs to drive economic growth is in jeopardy because fewer believe they will be able to employ new staff in the year ahead, a new survey suggests.

According to the latest quarterly Referendum research from the Forum of Private Business over a fifth of small business owners (22%) expect to recruit in 2011 - but confidence that they will be able to do so is dwindling compared to December 2010, when almost 30% of respondents said they planned to take on new staff.

While 14% intend to simply recruit in the coming year, a further 8% plan to hire but believe they will have to train new staff in the necessary skills their businesses require.

In addition, business owners surveyed by the Forum have identified a pressing need for external support and training for themselves and senior managers in a number of key areas, including finance, product development, employee engagement and sales & marketing.

"It is concerning that small business owners' confidence in their ability to create jobs in the current economic climate and drive recovery is falling, and clearly there is still a pressing need to address barriers such as employment taxes and red tape, steep recruitment costs and skills issues," says the Forum's Research Manager Tom Parry.

"But we also need measures to support staff retention - and the upskilling of senior managers and business owners themselves. Further, policies such as the abolition of the default retirement age are unhelpful at a time we should be incentivising business growth and job creation with employment-friendly incentives.

"Micro, small and medium sized businesses were responsible for 65% of jobs created between 1997 and 2007, so smaller employers are crucial to job creation in this country.

"In contrast to the United States, where smaller firms are already starting to employ again, the high cost of employment, fear of making a mistake in the recruitment process and the continuing uncertain business climate are deterring our members from recruiting at this present time."

Overall, 37% of respondents to the Forum's survey said new staff not being able to 'fit in' is their biggest recruitment concern, followed by complying with employment legislation (36%), a lack of technical or specialist skills among recently-hired workers (36%), a poor attitude and unwillingness to learn (31%), the tax system making recruitment unaffordable (23%) and a lack of basic literacy or numeracy skills (23%).

Further, 19% of small businesses surveyed identified difficulties in complying with equalities legislation as their main recruitment barrier.

More than half (54%) said they expect to retain their current employees, with an additional 4% identifying a skills shortage among existing workers, while just 4% believe they will have to shed some staff in order to meet their growth plans. In addition, 4% intend to use only subcontracted labour.

Approximately a quarter (26%) of respondents said greater profitability would support their efforts to retain staff, with 17% citing less red tape, 15% improving business confidence and 11% support for training in the workplace.

Other beneficial measures identified include more awareness of how to access support (7%), greater flexibility over staff pay and tax perks (5%), simplifying taxation (4%) and better access to finance (4%).
Members surveyed by the Forum also identified support requirements for their own skills shortages, and those of senior managers, ranging from internal upskilling and informal advice to mentoring and coaching, training courses and formal advice and consultancy.

Overall, 41% said they require outside support on developing new products and services, while 23% believe they will be able to learn this internally, and 40% want external aid to support recruiting and training new staff but 23% think they can teach themselves.

Just 10% of respondents feel they can develop the skills required to access further finance internally, while more than half (52%) are seeking outside help. Similarly, for improving financial systems, the split is 41% to 15%.

For improving quality control it is 36% and 24%, employee engagement is 36% to 19%, strategic management is 36% to 17%, leadership and management is 27% to 22% and sales and marketing 21% to 17%.

Face-to-face training is the most popular means of support, selected by 61% of respondents, followed by seminars and workshops (43%), online training (26%) and via a telephone helpline (13%).

Word of mouth recruitment via business networks is the most widely-used recruitment channel, selected by 56% of respondents, followed by local newspapers (46%), job centres and the job centre plus network (36%), a business's own website (22%), recruitment websites (18%), recruitment consultants (17%) and social media (7%). Just 3% of respondents selected trade fairs and recruitment events.

Many small business owners combine more than one recruitment channel. Overall, 63% believe their chosen approach to be 'effective' and 22% 'very effective'. However, they identified a number of ways the process could be improved, including less cost (13%), better vetting of candidates by the ob centre and agencies (9%), a more skilled labour force (9%) and reduced regulatory requirements (7%).

When asked what they wanted from the Government, one fifth of respondents (20%) called on ministers to make regulations 'fairer' to give them more control over recruitment, 13% said employment law should be reduced specifically, 8% that the coalition's 'Employers' Charter' should be given more weight and 7% said that general levels of tax should be reduced.

The not-for-profit Forum's research is carried out via its Communication's Director business support solution. The organisation is lobbying to create employment and improve skills as part of its new Get Britain Trading campaign. To sign up visit:


21st April 2011

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