Attracting and retaining human talent is a significant challenge in the start-up, SME and investment ecosystems. Enterprises require a skilled and motivated workforce to achieve their business objectives, and competition for top talent is fierce. The success of a business depends on the quality of the team and the talent that it attracts.
Here are some factors that contribute to this challenge and suggestions on how to overcome them:
Limited resources, uncertainty and financial constraints
One of the main reasons why SMEs struggle to attract and retain talent is the financial constraints they face. The businesses we work with often have limited resources and this can make it difficult for them to attract and retain top talent as they cannot afford to offer the same salary and benefits packages as larger, more established companies. As a result, SMEs need to be creative in their compensation packages and offer equity, stock options, and other non-financial incentives to attract talent.
Start-ups and SMEs are also often seen as high-risk ventures, and there is always the possibility that the company may fail. This uncertainty can make it difficult to attract top talent who may prefer the stability of a more established company. “It’s a reality, but there is a typical profile of people who are attracted to startups and SMEs. I also see a new trend of senior executives leaving big companies to join startups and SMEs because they are attracted by the dynamism, the flexibility in the way they work, the more agile decision making and a job that can be more personally satisfying”, says Ndeye Thiaw, co-founder and director of Brightmore Capital.
Additionally, SMEs need to have a clear vision and mission to attract top talent. Employees want to work for companies that have a clear purpose and are making a positive impact in the world. SMEs that can articulate their vision and mission and demonstrate how they are making a difference are more likely to attract and retain top performers.
Another challenge SMEs face is the work-life balance. SMEs are known for their long hours and demanding work environment, which can lead to burnout and high turnover rates. A small team often means that employees may have to wear many hats and take on more responsibilities than they would in a larger organization. This workload can be overwhelming and lead to burnout, which can contribute to high turnover rates.
To retain talent, SMEs need to create a positive work culture that values work-life balance and employee well-being. This can include flexible work arrangements, health and wellness programs, and opportunities for professional development. Early-stage companies can also look to provide a clear career path for employees that outlines opportunities for growth and advancement within the company and attracts high performers with a potentially faster career trajectory than large organizations. A potential disadvantage of “wearing many hats at once” can be spun into a recruitment pitch of developing a broad set of skills that can help to ambitiously propell a career forward. Providing add-ons such as training programs, mentoring, and the opportunity to attend conferences can also help employees grow their skills and knowledge and contribute to the success of the company.
Early-stage businesses often have a unique culture that may not be appealing to everyone. We encourage our SMEs to foster a positive company culture that emphasizes teamwork, collaboration, and creativity. It is important to create a company culture that is inclusive, supportive, and aligned with the values of the employees. This can be achieved through regular team building activities, open communication, and a supportive work environment.
A strong leadership team
Finally, SMEs need to have a strong leadership team in place to attract and retain talent. SMEs need to invest in their leadership development and create a culture of accountability, transparency, and trust. “Too often, we see early-stage companies overly reliant on the founder for all areas of day-to-day management. As part of our investment-readiness conversations, we advise companies to build a leadership team that’s not a one-person show. This necessitates investment in hiring senior staff,” says Dmitry Fotiyev, Brightmore Capital’s co-founder and Partner.
Employees want to work for leaders who focus on the strategic aspects of the business and can thus inspire and motivate them, provide clear direction, and support their professional growth. So, while attracting and retaining human talent is a significant challenge in the start-up and investment ecosystem, there are ways to overcome this challenge. At Brightmore Capital we always encourage SMEs to offer creative compensation packages, to enable and empower a positive work culture and to have a clear vision and mission while investing a lot of time and energy into their leadership development.