Try to be Flexible: How SMEs Can Attract Staff

It may once have been true that the most talented individuals would look for employment at large, well-known companies. Substantial budgets allow big organisations to offer higher salaries and broad ranging benefits. However, it is becoming increasingly the case that talented people seek the informal environment and varied workload offered by SMEs. Big salaries have become less important than overall job satisfaction, which is dependent on a myriad factors.

There are countless advantages of working for an SME. Firstly, there are fewer employees and so staff members are able to build rewarding relationships, thus forming solid, more productive teams. A Great Place to Work, a global human resources firm, studied successful workplaces for 30 years and reported that “investing in a high-trust workplace culture yields distinct, tangible business benefits” including attracting “better quality job applicants”.[1] Furthermore, most employees will have the opportunity to work closely with senior management, so work is more likely to get noticed and ideas are more likely to be heard. The environment of an SME is generally less formal and bureaucratic and the work more varied; this keeps employees engaged and drives productivity.

The best employees are most likely to be career-focused people. As such, you will need to show them that you can offer promotion possibilities that come with additional perks along with additional responsibilities. SMEs typically have fewer employees than larger companies and so there is more opportunity to demonstrate creativity and skill. Let potential recruits know that there is room within your SME to develop and flourish and that their efforts will be rewarded with appropriate promotion.

SMEs that are recruiting must focus on projecting the message that their work environment is more progressive and desirable than that of a larger company. A company website is an excellent shop window: photographs and website content (blog posts, for example) should reflect the flexible, exciting environment you can offer as an SME. Optimise your use of social media to connect with younger talent and extol the benefits of working for an SME.

Attaining a better work/life balance has become a high priority for most employees and SMEs are best placed to offer desirable flexible working hours. According to recruitment agency Robert Half, 29% of HR executives found that work flexibility was the main motivator for staff members.[2] The offer of split-shifts, customised hours or telecommuting will appeal to potential workers, particularly those with young families.

An excellent benefit scheme is a way for SMEs to attract high-calibre employees. In their most recent annual trends survey, MetLife reported that in 2014, employees who claimed to be very satisfied with their workplace benefits were almost four times more likely to be very satisfied with their jobs.[3] Similarly, a study by Bupa last year found that 42% of SME workers felt that workplace benefits were the most important consideration when choosing a job.[4] This is good news for SMEs who may often find it easier to make changes to their benefit schemes compared with larger organisations and so are able to integrate features that will appeal to new recruits.

Flexible benefit plans allow employees to select the additional benefits that best suit their lives, such as increased pension contributions, childcare vouchers, subsidised training, and access to mentoring, company cars and entertainment incentives. Healthcare is one workplace benefit that is increasingly in demand as it offers real value to employees.

Attracting the best recruits may seem like a daunting task for some SMEs. But, in actuality, SMEs are more than able to attract staff by capitalising on those aspects of their work environment that separate them from large organisations. Flexibility is of primary importance in the battle for human capital so don’t underestimate the power of a flexible benefit package, not only to motivate existing employees but also to attract new recruits.

Mark Howlett
CEO

Telephone: +44 (0)20 7893 3456

Email: contactus [@] broadstone.co.uk

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[1] http://www.greatplacetowork.com/our-approach/what-are-the-benefits-great-workplaces

[2] http://www.roberthalf.co.uk/how-to-attract-the-best-talent

[3] https://benefittrends.metlife.com/benefits-impact

[4] http://www.bupa.com/media-centre/press-releases/uk/flexibility-key-to-retention-and-happiness-in-uk-smes/

Coming out as "protectionist"

With the Labour party toying with the politically risky idea of rolling back the new pension flexibilities it is perhaps a good time to consider where we may be going.

The success of the flexibility and freedom of choice for all with their pension assets hinges on the quality of the guidance AND advice that individuals receive. Everyone in the industry can already tell you that a form of generic guidance will be insufficient for the majority to make the right decision and will come down to chance without the correct appreciation of the risks. Without an appreciation of the risks many will experience poor and disappointing outcomes. With flexibility and freedom comes a bewildering array of choice and complication and the opportunity for mis-selling and further devaluation of pension savings.

If the first step on the path to advice is guidance, albeit restricted to pensions assets, then this will give us the greater chance to see better outcomes for members.

However, for this to succeed financial education needs to be increased at all levels. Employers should be encouraged, on a safe harbour basis, to provide financial education to all staff, from new joiners to those looking to leave and move into retirement. Schools need to engage with charities like MyBnk and the like to start the cultural change to financial literacy, knowledge and understanding across the board.

We must recall, and not forget, that drawdown was described just weeks before the 2014 Budget as a highly sophisticated product only suitable for wealthy investors. Drawdown is complicated and a minefield for laypeople to address alone. With this the prospect of pensioner penury is a very real one.

On one hand many people are naturally frugal and the argument exists that they may live on too little to keep what they have. However, many will spend too fast too soon and run out of money and fall on the state.

By retaining an income requirement a level of guaranteed income, a safety net remains, with full flexibility allowed for benefits in excess of this.

However, continuing with complicated rules does also devalue pensions and almost certainly results in individuals being forced into buying annuities at a time when they do not give the best value. Although with improvements in longevity many will still win this bet.

So, on balance I believe that a brake should be applied to the flexibilities:

 

1.   Delay the introduction of full flexibility (see 2) for the process and guidance to be properly introduced. Allow capped drawdown, as now, without triggering the Money Purchase Annual Allowance

2.   Continue the Minimum Income Requirement (MIR) for flexi-access drawdown at £12,000 pa.

3.   Continue with the small pots solution, indexed with Consumer Price Index (CPI) so members with small funds can still receive these where the MIR is not reached

4.   Increase the Minimum Pension Age (MPA) to 60 (for flexible access) to prevent early depletion of funds

From conversations across the industry and it appears their two broad camps exist. One in support of the full reach of the freedoms, with the clear upside for many. The other, as I am, proposing a check to this trajectory, mindful of the potential for significant downsides… the debate will continue.

 

David Brooks

Technical Consultant

Telephone: +44 (0)20 7893 3456

Email: contactus [@] broadstoneltd.co.uk