A new Index reveals that talent management will be a major challenge for half of UK SMEs over the next 12 months.
The research, which was carried out across UK SMEs after the 8th June election, also reveals that businesses remain confident about growth over the next 12 months. In fact, 70 per cent claim they expect sales to increase during this period alongside profitability. This is despite inflation hitting the highest levels for four years alongside the drastic fall in sterling which has impacted companies trading overseas. These factors, coupled with Brexit negotiations and political turmoil, are not eroding the confidence of UK SME leaders in their future success.
Roger Martin-Fagg, Vistage Chief Economist comments; “It’s no great surprise that SMEs across the UK are nonplussed about the ongoing Brexit negotiations. What’s happening now is simply a process to agree the divorce settlement. This will continue until March 2019 when we officially leave the EU. It’s at this point the future trade relationship will be agreed, this is when the changes that could impact business in the UK will be implemented. Reaching this deal is crucial; no deal would be a disaster for our economy.”
When the leaders of UK SMEs were asked to cite the biggest challenges facing their business in the next 12 months, almost half cited talented management. This includes hiring, retaining and training employees. Industry figures show that this could be a growing problem over the next seven years as 14 million employees are expected to retire but just seven million people of working age will enter the market, leaving a seven million deficit.
Roger Martin-Fagg, Vistage Chief Economist continues; “When it comes to talent management this is about finding and retaining the right people to take your business to the next level. With employment levels at an all time high I suspect business owners will have to offer new talent packages above current market levels to get them through the door, along with finding more innovative ways of targeting people that aren’t looking to move jobs. This is why UK SME leaders are citing this as a top concern, after all your business really is about the people that run it with you.”
When asked what changes have been made as a direct result of Brexit negotiations, it seems businesses are focused more on trading costs more than staff. Over one in four have responded by increasing prices and a further fifth plan to do this.
Other changes include: reduced overheads, set up bank accounts in alternative currencies, frozen headcount, made redundancies, frozen salaries, and some have paused investments.
The research also revealed that the overall economic turmoil in the UK is a concern for SME leaders. Four out of ten concede these conditions have declined in the past 12 months and a further half expect this trend to continue.
In stark contrast, SME leaders across the pond feel far more positive about their economy in the US under Donald Trump’s leadership. In fact, 55 per cent say the US economy has improved over the past 12 months and 38 per cent believe this will continue in the next year.
Neil Johnstone, Managing Director Lorega commented: “Whilst the uncertainty of Brexit is a concern, the strength of the overall economy poses the biggest threat to my business. As a UK financial services provider, a sharp decline in consumer confidence inevitably leads to a fall in investments and general financial planning for the future.”
Bill Williams, Chief Executive at Centre for Engineering and Manufacturing Excellence (CEME commented: “We are in a crisis situation on the skills front. In the manufacturing sector we need twice the number of engineering talent than we now have. If employers can’t recruit talent from Europe it will be the competitive edge of British business that will suffer. We need a Brexit deal that will easily allow all employers to recruit the skills that UK business needs”
Half of UK SMEs still consider the EU to offer the greatest long term opportunity in terms of an effective trade deal with the UK, double those that cite the US. This is closely followed by Asia Pacific at 17 per cent. Again, the research in the US shows over a third of business leaders believe a trade deal with Europe should be a priority for Trump’s administration compared to just 11 per cent citing the UK.
Jan Chmiel, Managing Director of Vistage concludes; “It’s great to see leaders of SMEs across the UK unshaken by the ongoing Brexit negotiations. This is a long and slow process and whilst it’s sensible to be prepared, we can’t second guess what the final deal will look like. However, we can’t ignore the fact that confidence in the economy and its prospects for the next 12 months is very low. With this economic uncertainty unlikely to waver, it’s important that leaders of UK businesses continue to regularly monitor and review running costs. Changes will need to be made to limit any negative impacts of Brexit, but a failure to remain vigilant could also lead to opportunities being missed along the way.”
