One in four firms in the North are under-staffed due to labour crisis, according to WorkLife Small Business Monitor

More than a quarter (26%) of smaller firms in the North East, North West and Yorkshire surveyed by WorkLife as part of its Spring 2022 Small Business Monitor claimed to be under-resourced.

The findings suggest that staffing problems could stop firms from achieving their potential.

Among those facing resourcing constraints, the key factors were employees leaving to pursue new opportunities (31%) and better pay and benefits (28%).

Other contributors included financial challenges (23%), labour shortages (19%), slowing customer demand (19%) and employees not wanting to return post-furlough (22%).

A spokesman said: “With four in 10 (46%) respondents in the region experiencing challenges in regard to employee retention at a broader level, resourcing challenges could become more prevalent.

“Small businesses struggling to retain staff said the key issue was the cost of rewarding and incentivising employees in line with their expectations (28%), along with a perception that competitors are offering more attractive pay and benefits (28%) and low staff morale (31%).

“There are also clear indicators staff expect more flexible working arrangements post-pandemic, with some respondents acknowledging staff don’t want to return to the physical workplace (25%) and also difficulties with keeping employees engaged remotely (25%).

“A quarter (21%) of firms noted that employees still had concerns around job insecurity, while just under a fifth (16%) cited a lack of understanding around how employees want to be incentivised.”

“It’s not just holding onto employees that could compound resourcing issues, with 23% of North of England respondents citing challenges enacting recruitment plans.”

Among those facing problems, the most significant contributor was finding staff with relevant experience (55%), followed by a perceived inability to reward and incentivise employees in line with their expectations (41%) and meet salary demands (36%).

A third of businesses in the region are worried about competing with their peers for talent (33%).

Rob Marshall, Head of Product & Proposition at WorkLife by OpenMoney commented: “These figures paint a clear picture of the maze of complexities smaller businesses are faced with right now in recruiting, retaining, and rewarding employees.

“While employers are aware of the issues, after a tough two years it’s unsurprising to see cost coming up as a key concern when thinking about their ability to overcome them.

“This strongly implies that smaller firms need to be exploring more cost-effective means of rewarding employees if they are to recruit and retain a team who can help them successfully see through the months ahead.

Mr Marshall added: “Having an attractive rewards package in place doesn’t always call for significant – and permanent – financial outlay from the company, but rather support, flexibility and opportunity that fits with employees’ individual needs.

“Showing that you’re prepared to go above and beyond to keep valued employees won’t go unnoticed by talented individuals who might be thinking about whether or not they want to stick around.”

WorkLife’s Small Business Monitor is based on research carried out by 3Gem among 250 senior financial and HR decision makers in SME companies with five to 250 employees across the North East, North West and Yorkshire. Fieldwork for the Spring report took place between 9 to 17 March 2022.