Attracting and retaining the right employees is, and will continue to be, the major challenge for European mid-market companies. Businesses across Europe are bracing themselves for a long, hard-fought war for talent, as the EU bids to compete internationally. Warns Christophe Letellier CEO, Mid-Market Division, Europe, Sage.
According to research of 2,000 medium sized businesses in 17 countries across Europe. Sage’s annual Business Index survey showed that the war for talent is hotting up as economies recover, business confidence rises, and companies look to key hires and star employees to drive and sustain growth. But the factors challenging business include a paucity of skills and belief that national education standards need improvement. More than a third of mid-market businesses (defined as those above 100 employees) in the survey said governments should be doing more to improve skills development and education to boost business confidence (39 percent across all markets).
And 14 percent of businesses surveyed across Europe said that recruitment and retention were the biggest challenge for them in the next year. It is a concern in particular for mid-market companies in Germany (20 percent), Poland (17 percent) and Austria (17 percent). The figure in the UK was 12 percent, suggesting that British firms are focusing on developing new business and expanding into new markets as the UK economy leads the charge in the global recovery. A lack of a skilled workforce to recruit from was also a leading issue to doing business for many mid-market companies, with 12 percent across all markets cited this as the biggest challenge. Business leaders in Germany were the most concerned about recruitment with 29 percent citing the lack of a skilled workforce to recruit from as their biggest problem. However, in the UK this was lower down the list of challenges with just eight percent saying this is an issue, indicating that although the skills issue remains a perennial bugbear to employers, UK businesses have access to comparatively highly skilled employees than those within mainland Europe.
Other problems cited by businesses included too much bureaucracy and legislation to understand and apply (at 22 percent) and the respective governments’ handling of current economic challenges (at 12 percent). The vast majority of UK firms (78 percent) also told the survey that more needed to be done by the UK Government to get banks lending to small businesses again. Despite these challenges concerning the business world, the Business Index survey found that optimism among mid-market businesses was at a three-year high. The survey showed that UK mid-market companies were positive about their own prospects, recording a score of 64.84 out of 100, slightly lower than the 65.82 global average. Mid-market companies were markedly less optimistic about the prospects for their respective country’s economy (53.19) and about the global economy (52.41). These figures were 54.60, and 53.18 respectively in the UK, suggested a slightly more positive outlook than the rest of the world currently enjoys. Mid-market businesses are the unsung heroes of the European economy, and the bedrock of that success are the people. Businesses need to do everything they can to ensure they attract the right talent, so they can continue to succeed and grow during what remains a challenging business environment, despite the economic recovery. The data indicates that companies are getting squeezed in the war for talent at a time of unprecedented competition, and that differentiation between businesses is essential as potential candidates start to focus on what tools and processes an organisation can offer skilled staff members.
Now more than ever, businesses in the mid-market space need to ensure they are giving staff access to the latest, smartest, most effective opportunities, training, tools and technology. To do so organisations should consider methods such as Strategic Workforce Planning (SWP) and plans that take into account talent strategies, as well as the most impactful external factors that cause employee unhappiness and turnover. This is especially important in those departments where highly skilled or talented personnel remain at a premium. The cost of staff turnover can be significant and is not always entirely appreciated by all those involved in hiring and management. One management consultant estimated that the direct financial costs of recruiting, attracting, and training new personnel can vary from between 50 to 300 percent of the position‘s annual compensation. This is before indirect costs of recruiting are included, which comprise factors such as the impact to customer relationships, the drain of knowledge, skills and experience; and effects of delegating additional duties to remaining staff.
