By Martin Atkins and Ed Hussey, Menzies LLP
It may have seemed a long time coming, but recent ONS analysis shows that average weekly wages in the UK have reached their highest levels since before the 2008 financial crisis, ending a 12-year squeeze on workers’ salaries.
Following an annual rise of 1.8 per cent, average weekly earnings excluding bonuses hit £474, which is £1 higher than the pre-downturn peak of £473 recorded in March 2008. However, wage growth is not necessarily good news for everyone. While positive for employees, an increase in employment-related costs could cause some employers to lose sleep.
Recent surveys are also suggesting that employment growth will continue to pick up in Q1. But with more and more people in employment, businesses in many sectors could find it more difficult to recruit the people they need, and skills shortages could worsen. For SMEs, there is an urgent requirement to review remuneration and reward packages and invent new ways to recruit and retain talent.
Regardless of the size of the business, the most common problem for employers is finding staff who are highly skilled and versatile. Whilst traditionally, highly-skilled workers in large organisations have had a lot of bargaining power when it comes to salary, rapid technological changes affecting many sectors of industry have meant that some workers have been unable to keep pace. Some organisations may be comfortable hiring a candidate in the knowledge that additional training may be required, if they can afford to make the investment to satisfy all aspects of the role requirements. However, SMEs may struggle to make that investment, and thinking outside of the box is therefore essential.
In an increasingly competitive job market, the power of an exceptional ‘employer brand’ shouldn’t be underestimated. For employers, establishing an accurate representation of the organisation’s culture and staff is essential, starting with understanding the business’ USPs. It is important to create a public profile highlighting what the business stands for, encouraging potential new candidates to consider where they might fit within the organisation and the skills they can offer. To ensure this profile is authentic, employers should seek positive quotes and feedback from the existing team. This can then be shared across the firm’s communications channels, including its website and social media, as these are often the first port of call for potential candidates.
The recruitment process also gives the business an opportunity to present its core values in the best possible light. Here, the use of hi-tech interfaces and other technologies can help businesses to personalise their interactions and leave a positive lasting impression. However, something as simple as providing responsive, friendly points of contact can set an employer apart. The recruitment process must also be flexible enough to take the personality and aspirations of a potential employee into consideration, as this can help to ensure that they are a good fit from a cultural perspective. With the right approach to learning and development in place, many employers take the view that the rest can be taught.
As well as attracting top talent, SMEs should be focussed on developing existing members of staff. Employing a dedicated HR team to take responsibility for coordinating a company-wide training programme can help to give individual workers more stability and direction. To keep workers aligned with the strategic needs of the business, providing them with the necessary information and support to realise their potential is key. Ultimately, any business relying on skilled workers to generate revenue must take responsibility for boosting those skills in order to maximise profit.
It is inevitable that one day a business might lose a star performer. Whilst larger companies can usually accommodate such a loss, it can be more damaging for SMEs. To avoid this, SMEs should aim to create ‘good leavers’ who remain assets for the business long after they have moved on. Extending a positive attitude throughout the duration of an employee’s time within the company can help to maintain positive employer / employee relationships. Exit interviews can help to identify where the leaver’s needs weren’t being met, and such insights can help to shape the future of the organisation. As well as looking after leavers, employers must stay focused on keeping existing workers happy by promoting work-life balance and putting in places policies that encourage fairness and inclusion.
When competing with larger firms, one of the challenges for SMEs is ensuring that any wage increases are sustainable as, inevitably, any increase in costs may have to be passed on to the client. In a climate of rising costs, managers should be empowered to have brave conversations with individual workers about the value of what is being delivered, at the same time as offering support and building strong working relationships based on mutual respect and trust.
Securing talent has always been tough for SMEs and recent wage growth has only made it tougher. Whilst higher salaries might seem like good news for all, it doesn’t automatically mean better career progression, and could create skills shortages within some businesses. By refining their employer brand and improving recruitment processes, ensuring they are aligned with the organisation’s values, businesses can succeed in building an army of skilled, adaptable and diverse individuals.