Finding people with the right skills for their businesses to thrive and grow is a persistent challenge for small business owners.
The gap between the skills small and medium employers need and the skills ready available or accessible in the workforce is widening. Business owners are seeing few applicants with the necessary skills and experience. To compensate for these recruitment challenges, long hours are being worked by owners, with some even delaying expansion.
These challenges have been well-documented by the likes of the Federation for Small Businesses. They show that 78% of SMEs report difficulties in recruitment, with 82% noting a lack of individuals with the relevant qualifications, skills and experience, and 60% report low applicants generally.
When hiring doesn’t go to plan, it’s expensive. Estimates suggest it can cost up to three times an employee’s annual salary if they leave within the first year. For smaller businesses, the impact is greater with small teams less able to take on the departed’s additional work.
So how can skills offer part of the solution?
What skills do SMEs need?
Though there are many definitions out there, we define skills as the ability to successfully enact a repeatable process. All skills fit into three main categories:
- Technical Skills: skills that are specific to a particular job or industry – not easily transferred beyond the sector to which they relate. For example, user experience design, copywriting, programming.
- Basic Skills: these are broadly defined as literacy and numeracy, and basic digital skills.
- Essential Skills: highly transferable skills that everyone needs to do almost any job. These are defined as eight complementary but distinct skills: listening and speaking; creativity and problem solving; aiming high and staying positive; teamwork and leadership.
Four ways transferable skills support SME recruitment
For SMEs to succeed, they need a range of skills that will support team members to perform effectively now, but that will also allow them to adapt in the face of change. A focus on essential skills can support SMEs in four main ways:
Essential skills are resilient to change
Rapid advancements in technology are making knowledge and technical skills outdated faster than ever. This makes building a strong and adaptable workforce dependent on essential skills. These are those uniquely human skills, like listening, teamwork, or problem solving, that transfer across jobs and industries. They also enable the development of new knowledge and technical skills.
Essential skills impact job performance
Employees say that essential skills help them achieve their objectives and build relationships at work, with 92% rating them important for success within their career – above sector specific knowledge (84%) and technical skills (65%).
Skills are five times more predictive of job performance than educational qualifications, and two times as predictive as professional experience. So, with a skills-first focus, SMEs can better predict which candidates are more likely to be successful, ultimately reducing the risk of bad hires.
Essential skills can widen the talent pool
SMEs play an important role in employing those furthest from the labour market, many of whom face barriers to gaining qualifications or relevant work experience.
Skills-based recruitment can help to encourage applications from people ho may have developed the necessary skills outside of formal education or a specific job role. If made aware of the essential skills required, 64% said they would be more likely to apply.
A common language and shared understanding
Skills like ‘Teamwork’, ‘Leadership’ and ‘Problem Solving’, have often been poorly defined, taught and assessed. The leading model – the Universal Framework – brings a greater level of clarity to the essential skills, crucial across all jobs and industries.
Each skill is broken down into 16 objective and observable steps and stages, which enables a more precise and accessible way to talk about skills. For example, what level of teamwork does the role need? Do they need to work well with others, or contribute to group decision making? Or for problem solving, do they need to be able to conduct research to explore complex problems, or create different solutions?
A skills-based approach to recruitment, utilising the Universal Framework, can help SMEs overcome challenges in a tight, competitive market by attracting the right people with the right skills.
Take the next step
To learn more about implementing skills-based hiring, you can download Skills Builder’s free recruitment toolkit or visit skillsbuilder.org/employers.
