Talent is one of the defining challenges that scale-ups face as they grow. Whether that is the social and technical skills of their workforce, the ability to recruit from overseas or having the talent to secure international business, scale-ups have consistently highlighted the need to attract the right skills and experience as the biggest challenge to their future growth. More than any other factor, the issue of being able to access talent has persisted as one that holds fast-growing businesses back.
This is a constant challenge. Drawing from the findings of its annual survey, the 2018 ScaleUp Institute Annual Review reports that 80% of scale-ups identify access to talent as important to their continued growth. Talent has remained consistently the top priority for scale-ups over the past four years. The Annual ScaleUp Review aims to advance understanding of the challenges that scale-up businesses face, and how to build effective ecosystems at a national and local level. The review can be found in full on the ScaleUp Institute’s website.
There are a number of inescapable features of today’s labour market: unemployment is at its lowest level in a decade and wages are rising. As such, the right talent can be increasingly discerning about where they work and the terms they demand. This is not just salary, but lifestyle considerations – remote working, flexible hours and equity participation.
Managing these issues takes skill, and ‘culture’ can be a key part of growth. The majority of successful entrepreneurs acknowledge that having the right people in place, people who share their values, has been the most important thing in realising their strategic vision. Some will get through multiple staff changes before they get those in place who support the values of the business. Melinda Nicci, the founder of health and wellbeing website Baby2Body, said: “It has been a real challenge to find the right people that fit the culture and values of the business. The values in our business are very strong and occasionally, we have found that people we’ve hired haven’t shared those values. However, we have now built a really stable team and it has made all the difference.”
There are other challenges with talent management. Ensuring diverse and inclusive workforces, including drawing women back into the workforce, is another key issue. Those who have done so successfully report good rewards. “Fifty per cent of our senior management team is female,” says Sheila Flavell, FDM’s Chief Operating Officer. “It’s had a huge impact. We have a 0% pay gap and have had sustained this for two years running. It’s important to us: our staff want to work for an organisation that shares their values. We really embrace diversity. We have a returners programme and 94% of participants are women.”
The Review shows scale-ups clearly recognise the value in nurturing young talent. They consistently offer more apprenticeships, internships and work experience than their larger peers. They employ graduates (70%), post-graduates (52%) and school-leavers (36%). Two-thirds of scale-ups offer opportunities to younger people through work experience (51%), apprenticeships (38%) and internships. This compares to just 18% of all UK firms that offer apprenticeships.
Many have had to reshape their businesses to meet the needs of this younger talent base. For example, hard-to-teach social skills are a priority for 80% of scale-ups. That said, many scale-ups would still rather their new hires came with skills already in place. 40% of scale-ups chose technical skills as the most important criteria for new hires. For the future, scale-ups rate critical thinking as the most important skill. Service orientation is also important, which means anticipating, recognising and meeting others’ needs. Cognitive flexibility is also a key skill, with 4 in 10 scale-ups naming it as one of their three more important criteria.
Getting these skills in place is a key challenge looking into 2019. One of the ScaleUp Institute’s ten recommendations to government for the year ahead was to ensure that Britain is in the top 5 of the OECD PISA rankings for numeracy and literacy by 2025, and ensure educational institutions guarantee that students come into contact with the top 50 scale-up business-leaders within 20 miles of their establishment. It also recommended that Local Enterprise Partnerships and local policymakers should work with existing private collaborative initiatives to promote the top 50 scale-up companies in their jurisdiction so that potential employees know them much better.
This year’s Review shows that many businesses would do even more to nurture the next generation should there be easier connections with schools and universities. The report shows that that where scale-ups do not offer apprenticeships, it is largely as a result of problems finding suitable candidates. 3 in 10 say they do not yet have good links with universities or schools.
Brexit remains a challenge. Scale-ups have an international employee base, with two-thirds employing people from overseas. 61% employ staff from the EU and 35% employ staff from outside the EU. Two-thirds say it is vital or very important that they can continue to bring in talent from abroad. Half of all exporting scale-ups say it is important to have a fast-track visa system when hiring people and talent from overseas.
Irrespective of the challenges, 8 out of 10 scale-ups expect in 2019 to again grow by more than 20%: scale-ups would not be scale-ups if they were not positive and energetic in confronting challenges. They are doing a great job of nurturing and retaining talent. They are exploring numerous ways by which they can fill their talent pipeline.
Smith & Williamson: talent to scale – rewarding and keeping the best people
Your business needs great people to fuel its growth.
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By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.