Six in 10 small firms hit by skills drought: Report

Six out of 10 Australian businesses are struggling to find skilled staff despite a small uplift in overall business performance, according to a new report.

The Sage Group, a global supplier of business management software for SMEs, recently released its SME Business Sentiment Index for 2011, based on the responses of more than 600 business owners.

The report reveals that 38% of Australian businesses feel they are performing better than in 2010, while 17% believe their business performance is worse.

With business performance starting to pick up, the issue of staff shortages is also beginning to emerge as a major issue, with six out of 10 businesses saying they are struggling to find sufficient numbers of skilled staff to meet their requirements.

Adding to this problem is the fact that more than a third of businesses say existing staff are beginning to make demands for wage increases, while almost half of businesses say they have increased pay levels during the past 12 months.

“While businesses clearly understand the importance of retaining existing staff, surprisingly few have structures in place to help this occur,” the report says.

“Although 58% of businesses state that yearly staff reviews are a critical part of keeping staff engaged, only 24% have undertaken and implemented reviews and career development plans for every employee in the past 12 months.”

According to the company, the results show a clear gap between what is required of businesses – with regard to staff retention – and what is actually happening within many businesses.

“Should this gap not be addressed, the challenges of finding and retaining quality staff will be further exacerbated in the future,” it says.

Businesses are divided on their views of the economy, with 31% believing the economy is recovering compared to 2010, while 30% say it has declined.

Only 33% of businesses feel confident about the year ahead, compared to 28% who say they are less confident than they have been in the previous 12 months.

Alan Osrin, managing director of Sage Software Australia, says most businesses appear to be emerging from the global financial crisis, with more than a third feeling confident about the year ahead.

“However, events of the last six months, such as natural disasters, continued rising costs and lower quarterly GDP figures, could weigh significantly on these positive perceptions,” Osrin says.