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Small firms downgrade recruitment plans

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Hopes that the economic recovery can be fuelled by widespread job creation among smaller employers may need to be tempered.

According to the latest research from the Forum of Private Business (FPB), there has been a fall in the numbers of small firms that believe they will be able to employ new staff in the year ahead.

Of those firms surveyed, some 22 per cent said they expected to take on new workers in 2011, but confidence that they will be able to do so is dwindling compared with December 2010 when almost 30 per cent of respondents said they planned to recruit.

While 14 per cent intended simply to boost their workforces in the coming year, a further 8 per cent planned to hire but believe they will have to train new staff in the necessary skills their businesses require.

Just as concerning was the proportion of firms that identified a lack of skills and a need for training.

The skills shortages were limited not just to workers but included important areas of management, too, such as finance, product development, employee engagement and sales and marketing.

Overall, 37 per cent said new staff not being able to ‘fit in’ is their biggest recruitment concern, followed by complying with employment legislation (36 per cent), a lack of technical or specialist skills among recently-hired workers (36 per cent), a poor attitude and unwillingness to learn (31 per cent), the tax system making recruitment unaffordable (23 per cent) and a lack of basic literacy or numeracy skills (23 per cent).

On the issue of training support for managers and business owners, the needs ranged from internal upskilling and informal advice to mentoring and coaching, training courses, and formal advice and consultancy.

Overall, 41 per cent reported a requirement for outside support on developing new products and services, while 23 per cent believed they will be able to learn this internally; 40 per cent wanted external aid to support recruiting and training new staff but 23 per cent thought they could teach themselves.

Just 10 per cent felt they could develop the skills required to access further finance internally, while more than half (52 per cent) were seeking outside help. Similarly, for improving financial systems the split was 41 per cent to 15 per cent.

For strategic management the figures were 36 per cent to 17 per cent, leadership and management 27 per cent to 22 per cent, and sales and marketing 21 per cent to 17 per cent.

Face-to-face training is the most popular means of support, cited by 61 per cent, followed by seminars and workshops (43 per cent), online training (26 per cent) and via a telephone helpline (13 per cent).

Word of mouth recruitment via business networks was the most widely-used recruitment channel (56 per cent), followed by local newspapers (46 per cent), job centres and the job centre plus network (36 per cent), a business’s own website (22 per cent), recruitment websites (18 per cent), recruitment consultants (17 per cent) and social media (7 per cent).

Tom Parry, the FPB’s research manager, commented: “It is concerning that small business owners’ confidence in their ability to create jobs in the current economic climate and drive recovery is falling, and clearly there is still a pressing need to address barriers such as employment taxes and red tape, steep recruitment costs and skills issues.

“But we also need measures to support staff retention – and the upskilling of senior managers and business owners themselves. Further, policies such as the abolition of the default retirement age are unhelpful at a time we should be incentivising business growth and job creation with employment-friendly incentives.

Mr Parry added: “Micro, small and medium sized businesses were responsible for 65 per cent of jobs created between 1997 and 2007, so smaller employers are crucial to job creation in this country. 

“In contrast to the United States, where smaller firms are already starting to employ again, the high cost of employment, fear of making a mistake in the recruitment process and the continuing uncertain business climate are deterring our members from recruiting at this present time.”