3 big HR pain points for SMEs - and how to alleviate them

by Bita Taghavi-Stevens

We don’t need to tell you how turbulent the past two years have been for small and medium-sized businesses.

Now that the storm has passed, what does the post-pandemic landscape look like for HR?

According to Vodafone, 25% of British SMEs are currently fighting for survival. With ‘quiet quitting’, the great resignation, and managing the new hybrid work model, HR has never been more complex or more challenging. 

As we head towards 2023, here are 3 key pain points to keep your eye on – and how to alleviate the them…

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Flexible working


While the pandemic may be over, it’s created a new paradigm for where and how we want to work.

A recent global study by Future Forum (backed by Slack), found that 80% of workers expect flexibility in where they work, and 94% want flexibility in when they work. What does this mean?

It means there’s a widening gap between the expectations of employers and employees.

According to Gartner, 75% of employers believe they offer flexibility but only 57% of employees agree. Who has to try to bridge that gap? HR leaders.

It’s clear that flexibility is a priority for employees – and if you don’t adapt to this expectation, your engagement, loyalty, and ultimately, retention, will suffer. In fact, 70% of employees who are unhappy with their level of work flexibility say they’ll be looking for a new role in the next 12 months.


What can you do?


Talk to your employees. As an HR leader, you need to find out exactly what they expect and what ‘flexible’ looks like to them.

For some people it might be condensed hours, for others it might mean working remotely for half of the week. Find out by conducting a survey or organising a focus group.

Once you have a clear picture, you can see where any conflicts of expectation lie. This, in turn, should help you make changes to find a happier medium – a strategy that balances the needs of the business with the expectations of your employees. And when you communicate changes, make sure they’re tied back to the original survey so your staff know that they've been heard.

As an added bonus, this kind of transparency will make your employees feel a sense of belonging, which is likely to have a positive impact on loyalty and retention.


Employee turnover (the great resignation)


For SMEs, employee turnover has always been one of the biggest pain points – and the great resignation is the salt in the wound. While we might not hear this buzz phrase as much as we did a few months ago, that doesn’t mean people aren’t leaving their employers.

Post-pandemic, 50% of employees say they feel motivated to make career changes in order to find more happiness at work. This is bad news for SMEs.

With the average cost of hiring a new employee being around £3000 (before training) – and a fiercely competitive job market – it’s never been more crucial to hang on to your talent.


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What can you do?


Apart from flexibility, job satisfaction is one of the top reasons people are quitting, so make this a top priority.

Ask employees how satisfied they are with all aspects of their employment; their role, workplace culture, learning opportunities, career planning, benefits.

Do your employees have a clear path to a pay rise? Is their workload fair? Have they been given enough responsibility and autonomy?

While you won’t be able to transform everything, once you know what your people want, you should be able to make some changes that will improve satisfaction.




For the first time in almost half a decade, job vacancies are higher than the number of unemployed people. This means recruiting has become more expensive and more challenging than ever before.

While big, global companies have always had more money to spend on employer branding, external recruitment, and tech, the differences are becoming even more apparent – and SMEs are bearing the brunt. A recent study conducted by Mentor for Natwest found that 28% of UK SMEs are struggling to fill vacant roles.

So how do you attract the best talent when you have less money, a small HR department (often just one person), and USPs that have taken a beating from a virtual, global market?


What can you do?


As a small or medium-sized business, your size and infrastructure is ultimately your biggest USP. Small means flexible, nimble, and innovative, so make sure your candidates know this.

Start by creating a personal, supportive recruitment experience by checking in with your candidates throughout the process. You should also involve your MD or CEO in interviews. This will make your candidates feel important and valued – and crucially, it’s something that they wouldn’t experience at a larger company.

Perhaps the most attractive USP you can offer your new recruits is the opportunity to be a big fish. This is a big draw for candidates, so make it a key aspect of your recruitment drive.

In large organisations it can be difficult for employees to see how they impact the bottom line – or to even get their voices heard – but in a smaller business, it’s much easier to see the impact of their role.

Let people know that you encourage innovation, that you want to hear their ideas, and that they’ll be able to make a real difference. And let them know how they can develop, grow, and learn new skills; without all the corporate red tape of big business, change happens faster, and they won’t be hemmed in.

It’s also important that you don’t limit yourself geographically – just because you’re an SME, it doesn’t mean you can’t take advantage of the global market. Recruiting overseas is often more economical and you'll also gain access to a wider pool of talent. If you’re worried about logistics, using a Professional Employer Organisation (PEO) to recruit (they also take care of other HR functions like payroll and tax) is a great way to get all of the benefits without any of the hassle.


While there’s no denying that this is a uniquely difficult time for HR leaders in SMEs, there’s always a fine line between problem and opportunity. On the plus side, employees have never been more transparent about what they want. For SMEs that are agile enough to adapt to this shift, there’s a clear opportunity to win and keep the kind of talent that will help you achieve new growth.


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