Our 2022 Salary and Employment Report painted a challenging picture for employers and business owners, with record-high levels of employee turnover, shortages of skilled staff in a tight labour market, low unemployment, and wages rising to keep pace with surging inflation.
Most people know the story of David and Goliath, how a young man defeats a fearsome giant using only a slingshot and a stone. In the world of business and HR, we often talk about the fortunes of large corporations; the ones with oodles of employees, multiple offices, plenty of resources, and the ability to sit tight and ride out waves of economic uncertainty.
But the New Zealand economy is made up of Davids - 97% of all Kiwi companies have fewer than 20 staff - and these small and medium-sized enterprises (SMEs) may struggle to weather rising costs and labour shortages or to offer the top-dollar pay packets large corporations can. But, as David highlights, size isn’t always everything.
The advice we’re giving our clients who are having difficulty attracting and retaining skilled staff is to leverage their “SME Advantage”. This entails determining the smaller and more meaningful perks employees and job hunters value and tailoring a unique package for each individual. Stock-standard benefits no longer cut the mustard and require an added layer of personalisation and creativity. Let’s explore this in more detail.
1. Look beyond the pay packet
The good news? It’s not all about the money. We often talk about pay being a ‘basic hygiene’ factor for businesses, in that you don’t want to get it wrong, but there are many other things that are just as, or more important, to people.
Trade Me’s 2022 Employer & Job Hunter Intentions Report looked at the key factors driving job hunters, and the pay rate or salary package rated way down at #7.
Work-life balance was #1, followed by job security and stability and the nature of the work the person will do. This report is backed by recruitment agency Randstad’s 2021 research that found work-life balance was the most important driver for those looking for new roles, while attractive salary and benefits, job security, pleasant work atmosphere, and good training were next in line.
You want to keep salaries in line with market rates and ensure those rates stay in touch with regular salary reviews. If you are having trouble benchmarking pay rates and benefits specific to your industry, seek expert help.
2. Personalise your offerings
Everyone is different, so you should determine what benefits and support are meaningful to each employee. Put simply, it’s about applying a “tell us what you want, and we’ll make it work” approach to remuneration, and while some corporates are starting to do this, most are policy or budget-constrained.
This is a SMEs opportunity to shine. One person might want a gym membership or additional Kiwisaver contributions for their first home; another might value extra training opportunities or more leave. It’s also worth investigating perks like unconventional new parent policies beyond simply topping up paid-parental payments.
As we said, you might not be able to compete with larger companies' pay packages, so get creative with your offerings, play to your strengths and win the talent.
3. Build trust and support your staff
No one likes to lose talented people and the impact is even more acute for SMEs. Productivity in a big corporation might not be badly affected by the loss of a few employees, but losing three people in a business of 15 employees means you are down 20% of your workforce, which is serious, particularly if a single person holds a required qualification or certification, e.g. a bar manager’s certificate.
We can’t stress enough how important it is to support your people and get the basics right from the start. Establish a solid basis for every employment relationship by ensuring all the legal aspects are locked down and do what you say you will do, from the hiring process on. Set performance expectations, get onboarding right, and ensure people can raise any issues. This all builds trust and confidence which flows into higher staff retention.
The COVID-19 pandemic provided graphic evidence of what supporting staff looks like in practice, with the Randstad report finding employee loyalty increased in NZ companies that kept people employed and working remotely, and ensured their health and safety.
4. Flexibility is key
Our research and other reports show that work-life balance is now top of mind for employees, and flexible work arrangements and remote working is now expected by many, at least some of the time.
Many companies are responding by offering a hybrid work model, where people come to the workplace some days and work from home on others (don't forget to ensure the remote work environment is as well-equipped and safe as the workplace). Small businesses also have an advantage in being able to pivot more easily than a large organisation, much like a speedboat can change course quicker than an ocean liner.
We’ve seen many SMEs respond nimbly to the challenges of the pandemic, while some big businesses went into full panic mode and restructured, often multiple times. This all speaks to having a small team of talented people committed to the business, and adept at changing ways of working to make the most of opportunities.
5. Build your mission and culture
Small businesses are often run by passionate people and the ability to articulate a clear vision of why you are in business and what you are aiming for provides clarity and purpose for employees who know how they can contribute.
Research proves that people now want to work for an enterprise that does good, with half of the candidates in the Randstad report stating they wouldn’t work for a company with a bad reputation, even with a pay increase.
Dynamic team culture is another thing SMEs often excel at. Colleagues don’t all have to be best mates, but little things add up, like having team lunches, organising small events, or celebrating achievements.
Also, don’t overlook the impact of poor performance or conduct, and when you need to take disciplinary action or restructure, ensuring you manage these processes swiftly and ethically will be a positive thing for the overall company culture.
6. Connection, recognition and security
Nothing beats genuine human connection and social interaction, and SMEs have a unique ability to build thriving employee relations for the simple reason that there are fewer people. No one gets lost in a small business.
Regular performance review discussions are a vital way to connect to your employees, so you can accurately track, recognise, and reward high performance (or look for constructive solutions to under-performance). Honest lines of communication between employer and employee mean you can better understand staff needs or convey changing business needs, and can then work together to formulate responses.
Job security can be another edge over the large corporate culture that too often values perpetual restructuring to the detriment of employee engagement, motivation, and company culture.
Providing opportunities for internal career progression also gives people a long-term view of their future in the business.
You’re not alone
In a small business, people are typically performing multiple roles. Owners, too, often have to be “on the tools” while managing and developing the business. So, sometimes these important hygiene factors, or people and compliance issues can get parked or overlooked.
It doesn't have to be this way: if you don’t have the time or expertise, help is out there.
