One in four SMEs fill talent void with apprenticeships » SMEInsider

One in four SMEs fill talent void with apprenticeships

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Many SMEs find it difficult to find the right candidates when recruiting. A new report by Albion Ventures finds that one in four are developing apprentice schemes in order to fill the talent void.

The 2014 Albion Ventures Growth report, which examines the challenges and opportunities faced by 450 small and medium sized businesses (SMEs) with a combined turnover of over £1.6 billion, shows that a third (32 per cent) of firms feel that they lack expertise in key areas. One in ten (9 per cent) SMEs believe that a lack of management expertise is a significant barrier to growth and a further 9 per cent said that a lack of business mentoring is a threat to the growth of their company.

This lack of investment in skills cannot be solely placed at the feet of government. Businesses admitted that they themselves are most likely to focus their training resources on skilled staff, with two in five (39 per cent) committed to this compared to only 27 per cent who plan to train and develop semi-skilled staff and 14 per cent for low-skilled and low paid staff.

Interestingly, the number of firms who lack core skills inversely correlates with company size as firms develop the personnel they need as they grow. While smaller businesses appear content with their skills base, ‘threshold’ businesses – with turnovers of between £500,000 and £1 million – recognise the need to bring in more skills in order to take that next step, with more than half (53 per cent) recognising that they lack the required skills in key areas.

The report also highlights that staff retention is cited as one of the biggest challenges for organisations, with those businesses looking to grow eager to develop ways by which they are able to identify and retain the strongest team.

In order to combat this skills shortage, the Albion Growth Report reveals that UK SMEs are increasingly looking to apprenticeships. While the report revealed that only a minority (12 per cent) of SMEs currently have an apprentice scheme in place, a further 23 per cent are considering launching one in the future, and only 1 per cent of firms are currently running a scheme that they will terminate.

The attraction of apprenticeships appears to be primarily financially motivated in the shape of reducing staffing costs, but also many SMEs see it as a chance to highlight their Corporate Social Responsibility credentials (44 per cent) by investing in the local community. The tax incentives offered by the government also appear to be boosting take-up for schemes, with this cited as a key reason by 38 per cent of firms who employ apprentices.

The report by Albion Ventures shows that the value of apprenticeship schemes is much more apparent to ‘optimists’ than ‘pessimists’ – over three times as many ‘optimists’ (14 per cent) run schemes as ‘pessimists’ (4 per cent).  More than two in three ‘pessimists’ (69 per cent) say they would not consider running an apprentice scheme in the future.

“While it is a welcome boost that apprenticeships are becoming increasingly popular, it is imperative that we actively look to help those businesses, whose growth is being held back by a dearth of key skills, take the next step,” said Emran Mian, Director of Social Market Foundation.

Mian recommended taking a look at ways by which the government could boost the pick-up of apprenticeships. Fourteen per cent of SMEs said that they would be more likely to consider taking on an apprentice as a result of the Government’s relief on national insurance contributions for employees under 21, but this rises to 34 per cent for SMEs with more than 50 employees.