Seven implications of ‘the war for talent’, according to a panel of SMEs

The staffing dramas of SMEs are well known. Speak to practically any business owner and they’ll bend your ear about it. According to the SME panellists we speak to at Cameron Research, there are seven clear implications of the ‘war for talent’:

1. Salaries are rising. Some very steeply;
2. SMEs are having to accommodate their employees, who hold the power;
3. Business owners are having to do more ‘hands-on’ work themselves;
4. SMEs are having to knock back work as they cannot fulfil it;
5. SMEs are casting the net wider to find staff;
6. They are offshoring; and
7. They are introducing more technology to minimise the need for human involvement.

1. Salaries are rising

Wage/salary increases across the economy are a given, the only question is by how much.

“Our churn has gone from 13% to 25%.  It’s coming down again now but that’s completely unprecedented for us.  So I’ve got my people and culture person looking into it right now — exactly what can we do to retain people?  That has to be a focus for us.  Aside of paying people more of course — well we’re doing that anyway, the average salary here is up by nearly 25% in a year.  Totally unsustainable in my view.”  — Clinical trials business, 220 full-time employees (FTEs).

“Our costs are pretty stable, mostly it’s contained except wages of course. It’s just hard to find to people and hard to keep them so you have to pay them more, that’s pretty standard, every business would be the same … We’ve probably had a 5% increase in the wages bill over the past 12 months. It’s meaningful but it’s not murder at this stage.”  — Media and publishing business, 100 FTEs.

2. Employees hold the power – SMEs are bending over backwards for them

SMEs are doing a lot to attract — but even more so — retain staff. They realise that finding new staff is problematic but losing existing staff is a disaster.

They talk about offering staff study time, mental health days, extra leave, buying morning tea/coffees/breakfast/booze, seeking their buy-in in decision making, acknowledging them more etc. Here’s a taste.

“Retaining staff is a big focus for us and COVID-19 has amplified it.  We’re always conscious of keeping the team buoyed up and helping them manage their stress levels because everyone’s just been so busy.  We offer lots of rewards along the way such as a ‘re-balance’ day every quarter which is like a mental health day so we encourage staff to spend it on the couch or go on a walk or just have some quiet time and switch off from work. We do social things like lunches and dinners – we had a lunch just last week to celebrate end of financial year. We’ve recognised since COVID-19 that people really need that social connection. We also offer development training sessions which benefits us and them.”  — Recruitment business, 18 FTEs.

“We have a very aggressive equity share plan, and that’s a key way of attracting talent, pointing out that they can own a chunk of the company … Also we emphasised that they’ll ‘get listened to’ ∞ it’s not just the most senior person who does all the exciting work, one of our more junior people interviewed the PM recently.  That sort of stuff interests journalists.”  — Online media/news service, 11 FTEs.

“You just have to keep your proposition attractive for staff or they’ll go. In our case we’ve been very proactive with remuneration, so we’ve dramatically increased salaries of the most senior people that we’ve identified are most critical — anywhere between about 5% and 14% — but we’ve also introduced a better bonus structure … Although I’ve always understood that remuneration is about 7th on the list of what people want, so we’re also focused on providing opportunities for personal growth, ensuring they know they have a future in the business, even just the fact that we’re an Equal Opportunity employer.”  — Business services company, 140 FTEs.

“Well obviously we’re having to pay them more, I think that goes without saying. But also, we’re spending a lot more on HR and training. Even things like forming a social committee where we may have a BBQ breakfast or something and we give some money to charity.  Or with a Christmas party we’ll get people more involved … We’re also firming up our team leader approach, every fortnight they meet and they talk with each other, then they take those messages back to their groups — it’s great, it rusts them on, makes them feel more appreciated.  It takes time but we think it’s worth it.”  — Import/wholesale/retail business, 120 FTEs.

3. Business owners are doing more ‘hands-on’ work themselves

Some of our panellists report that they are picking up the slack and doing more ‘hands-on’ work themselves because they can’t find staff. This is an understandable action for them to take although it does have the effect of reducing their bandwidth for thinking strategically about their business.

“I ended up finding a pharmacist through word of mouth but they can’t start for a while and they can only do 3 days a week so I have to fill in the gaps.  It’s not where I had imagined I’d be at this stage in my career, but I was desperate and that’s all I could get.”  — Pharmacies, 16 FTEs.

“Part of the reason I’m doing 2½ days clinical a week is because of the staff shortage.  If we go back years, I wasn’t doing ANY clinical. Now I’m doing way too much.”  — Specialised Physio, 29 employees (some PT).

4. SMEs need to knock back work

No business owner wants to say ‘no’ to a customer. But if they don’t have the staff, they cannot fulfil the order …

“That’s the biggest challenge we’ve got.  We recently opened up a new cafe but we can’t open it up as much as we’d like to because we can’t find enough staff.  There just aren’t enough people coming in from overseas and the locals are being snatched up by larger companies.”  — Cafes, 14 FTEs.

“I’ve invested a lot of money in equipment for the aches and pains clients, but now I don’t have enough instructors who know how to use the new equipment.  I’ve had to turn clients away simply because we don’t have enough instructors to take the classes.  It’s really frustrating not having the labour to support my business ideas.”  — Fitness centre, seven casuals/contractors.

5. They are casting the net wider to find employees
SMEs are looking in places that they traditionally overlooked in order to find the staff they need …

“We’ve actually been very fortunate because I have a contact at Deakin University and through that we’ve picked up three fabulous kids and we started them on a day a week and then a couple of days and now they’re permanent. Fantastic young people, fresh ideas. They don’t understand our business, but they understand the tech stuff and the marketing stuff and they’re the roles we’ve got them in.”  — Home loan provider, 21 FTEs.

6. They are offshoring

There are two primary benefits of offshoring jobs. First, it is cheaper, and second, SMEs can actually get the labour they require, which may not be available in Australia …

“Obviously costs are going up all the time — but in fairness, inflation has been so unbelievably low that I don’t think people can really complain about it.  In our case we’re using technology all the time in order to be more efficient and take costs out.  Also we offshore where possible, and again that takes costs out.”  — Business services, 140 FTEs.

“I’m now looking at outsourcing some of our work offshore.  I never thought I’d do that but I’m now open to the idea. My concern has always been around our clients’ thinking on it, in terms of data privacy and not giving that opportunity to local workforce but I don’t really have much choice — staffing challenges are forcing me to do this.  Wages are significantly more than what they used to be which affects our ability to reinvest back into the business.”  — Accounting business, 2 FTEs.

“We’ve hired 122 people in the last year. That’s tough and there’s only so much more we can do here so we’re opening an office in India, largely to get those tech and programming skills — we just need to find people.”  — Clinical trials business, 220 FTEs.

7. SMEs are embracing technology in order to reduce the need for staff

This is not a trend that is being driven by the war for talent — rather it is continuation of a pre-existing trend.

“We’re always introducing technology to improve our efficiencies, and one of the other benefits is that you can reduce staff — so we’re about to lose a couple of people and we won’t replace them.”  — Swimwear import/export/wholesale, 9 FTEs.

“We’ve focused more on our online store.  We encourage customers to order online and we’ve implemented the click and collect system — we didn’t have that before, so people couldn’t choose online before — and that helps, during the lockdown or even now, they have the option.  Our sales have increased but it doesn’t mean that our staff (numbers) have to increase.” — Retail cleaning products, 4 FTEs.

Conclusion

Concerningly for business owners, they don’t report any easing of the challenges in finding and retaining staff. They are price-takers when it comes to their staff, and this can be quite galling for some business owners who have never experienced that before. They are having to bend over backwards to accommodate staff and they don’t expect that to stop any time soon.

This article was first published by Cameron Research.