How the Recruitment Crisis is Affecting Small Business

The headlines have not been encouraging. Thousands of vacancies remain unfilled in the UK, the ‘perfect storm’ commentators tell us, created by the collision of Brexit and the Covid pandemic. What does this recruitment crisis mean for small businesses? And what’s the solution?

It’s a crisis that has affected most industries. Summer headlines noted that Alton Towers, the popular theme park and summer holiday excursion destination, was struggling to recruit as were other large corporations. For small businesses, it meant reduced opening times as well as supply chain disruption.

Prontus clients have been affected. We have struggled to recruit the right people into the right roles on behalf of our clients, and have been making calls on behalf of some clients to their disappointed customers to cancel orders, inform of delays and, in many cases, to cancel the services they were receiving.

As with any crisis, there are winners and losers in the recruitment crunch. In some industries, candidates can command a higher salary but for others, it means little to no growth. Recruitment agencies are working overtime headhunting people for vacant positions. For some businesses, including hospitality, the care sector and retail, filling posts is nigh on impossible. 

The effects of recruitment crisis on business

Recruitment issues are nothing new with shortages of qualified, skilled candidates being in direct correlation to factors such as changes in law, recruitment processes, and the like. This crisis, for example, has seen a sharp spike in demand for lorry drivers and other positions in the transport, logistic and warehousing sector.

It’s not just a lack of people and unfilled vacancies that affect a business. There are other effects that are felt just as keenly. 

• Increased recruitment costs

Recruiting is never cheap. To do it properly takes time and commitment, as well as plenty of energy, organisation and a budget for various recruitment advertising platforms.

When there are unfilled vacancies, the pressure is on. Recruitment platforms can hike their prices and using a recruitment agency can come at a significant cost, especially if they charge their fee-based as a % of the final salary of a candidate. That said, filling a position using the skilled services of a recruitment agency can and does work but multiply this by several vacancies and you can see how much of a cost this could potentially be and with a guarantee of success. 

With the recruitment crisis beginning to bit - and with no end in sight - recruitment costs looks set to continue.

• ‘Picky’ candidates

When the jobs market is heavily skewed in one direction, the result is one group fares better than the other. Currently, the swathe of vacancies means that job-seekers can be ‘pickier’ about the role they take on, with who, how much for and the conditions and environment.

Working from home became the norm during lockdown and with many finding this a great way to work, it is a mode of working that looks here to stay. And hybrid working - working partly in the office, partly from home or from a shared workspace - is also a common ask-for-and-granted work wish. 

For some candidates, flexi-working is essential and, along with other wants on their wish list, any employer that is not able or willing to offer these are not top of their list to work for.

• Scarcity of skills

There are many reasons why the UK is experiencing a ‘recruitment crisis’. As well as lockdown and furlough rules, Brexit and issues with visas and work permits have impacted industries and sectors too. 

Scarcity of skills is one main issue. Lack of HGV drivers, for example, has pushed wages to unprecedented levels, along with bonuses for drivers joining new firms as a means of attracting drivers and keeping them.

When skills are scarce, the solution is rarely quick. For example, to sit an HGV licence, a driver needs to find around £3k to fund training as well as time to sit tests. Likewise, not all firms are keen to take on new drivers and with text centres under pressure, booking and passing a lorry test can be more difficult than people think.

It’s not just in the field of logistics that skills are scarce. The care industry is finding it difficult to recruit and retain care workers. The pool of workers is getting smaller for all kinds of reasons, including carers leaving the profession, exhausted and stressed from the long hours and difficult working conditions. Again, the solution is not an easy one and neither is it a case of one-solution-solves-all. 

When skills are scarce, businesses will need to think on their feet. That may mean looking for a different skill set, offering training positions and apprenticeships as well as how they can manoeuvre their current staff team to cover key areas.

• Higher turnover of staff

Every business wants to avoid a high turnover of staff for both reasons of reputation and the cost of recruitment. Currently, with such difficulty in filling vacancies, it must send a chill down the spine of every business owner and HR head when a staff member tenders their resignation.

With staff being enticed away by competitors, often with better pay offered, it can feel like a difficult storm to ride out.

How long with the recruitment crisis last?

It is difficult to see when the crisis will end. For some sectors, recruitment seems to be in a perpetual state of crisis. People tell horror stories of how their dream job turned into a nightmare, whilst for many of us, the daily 9 to 5 grind is no longer something they wish to be a part of. 

This may be one reason why there were over 80,000 new businesses registered in the Uk during 2020 according to Small Business UK, an increase of 41%. The majority of new business owners are grabbing their slice of the creative online retail sector, a growing industry that has the potential to yield lucrative returns.

The face of recruitment in the UK is changing. And like all change, there will be winners and losers. For small businesses, it is proving yet another challenge with businesses turning down work as a result of a lack of staff. Whilst some are sitting tight and riding out the storm, others are taking a more agile and responsive approach to fill key vacancies.

Attracting new recruits on salary alone, say some small business owners, is no longer viable. Offering ‘well-rounded’ packages, from flexi-hours to hybrid working is key, if possible, as well as other benefits, such as childcare vouchers, training opportunities and more.

Employees are looking for a work-life balance but until some industries and sectors find this, they may find that recruitment stays an issue.