Entrepreneurs struggling to find quality staff: Ernst & Young

There is widespread employer dissatisfaction with the quality of staff, according to new Ernst & Young research.

Ernst & Young surveyed more than 8,000 Ernst & Young Entrepreneur of the Year winners from 35 countries about job creation. More than 80% of respondents founded their companies.

The research reveals entrepreneurs are an engine of job creation – respondents expanded their total workforce by an average of 16% in 2011.

In the United States alone, respondents grew their headcounts by 18% in 2011, while the Asia-Pacific reported a 16% growth rate and Europe clocked in at 12%.

This year, 68% of respondents expect to expand their workforce in the country where they are based, while 44% expect to expand outside their home country.

However, entrepreneurs on the whole are not satisfied with the quality of their local workforce.

In choosing their top three positive and negative factors affecting their 2012 hiring plans, only 9% included the quality of the local workforce as a positive, whereas 13% saw it as a negative.

Ernst & Young partner Bryan Zekulich, who is also Oceania head of Entrepreneur of the Year, told StartupSmart starting a business and recruiting the right people is a journey.

“The expectation is to employ senior experienced people to help them out,” Zekulich says.

“That journey means an expectation [from the entrepreneur] of what they want and what they need, but they’re not quite getting the quality.”

With regard to attracting and recruiting suitable staff, Zekulich says it’s important to ensure staff members are suitable culturally as well as professionally.

“Entrepreneurs tend to be very strong in the way they run their business and things like that,” he says.

“The challenge is to match the right people to the right entrepreneur.”

Zekulich says there is no formula for this, describing it as “a little bit hit and miss”.

“That is the challenge for the entrepreneur – to pick someone they get on with but who will also be a challenge for them,” he says.

The other key finding to emerge from Ernst & Young’s research is entrepreneurs’ ongoing inability to access finance – almost two thirds find access to finance difficult in their country.

This finding comes from research conducted by Ernst & Young in 2011 for its Entrepreneurship Barometer – an analysis of the G20 entrepreneurial ecosystem.

This includes a perception survey of more than 1,000 entrepreneurs across the G20, interviews with entrepreneurs and funders, and research into funding levels.

“Among the entrepreneurs surveyed, almost two thirds say that they find access to finance difficult in their country,” the report said.

“Bank lending remains difficult to obtain, particularly in the early stages of growth. Risk aversion… has also made it more difficult to obtain equity finance.”

Zekulich says entrepreneurs drive 50% of jobs, yet they receive just 6% of overall investment.

“Entrepreneurial companies are nimble… so their growth trajectory is quite strong, but their ability to finance that is quite hard,” he says.

“The funding cycle is something that’s still a problem and there’s nothing on the horizon to suggest that will change in the future.”

“Angel investors need to accept an element of risk because that’s the nature of these start-ups.”