SMEs take distinct approach to recruitment

Eurofound’s recent study on job creation in small and medium-sized enterprises (SMEs) included an examination of SMEs’ approach to hiring, which is quite different from that of larger firms.

Recruitment is usually informal, for instance, but while most SMEs do not follow any standardised procedures, hiring decisions are thought through strategically. SMEs tend to consider carefully whether the workload of the position will be sufficient in the long run and recruit only if the job is deemed sustainable. Processes do become standardised with repeated recruitment, as owners become more experienced in hiring. And while recruiting new staff is time consuming, owners prefer to put in the time and do it themselves as they see staff as the most important resource of the company.

Selection

Smaller employers apply different criteria in choosing recruits than larger companies. SMEs are less interested in formal qualifications and tend to evaluate an applicant’s motivation, skills and capacity to learn. They also focus on candidates’ transversal skills – skills that are relevant regardless of sector or occupation – and soft skills, such as teamwork, willingness to work hard, international experience, flexibility and adaptability.

The ability of the candidate to fit into the existing workforce and culture and to share the company’s ambitions is critical. For this reason, SMEs place a lot of emphasis on face-to-face interviews with candidates. These are conducted by the owner, often with other senior staff or staff who will work closely with the new recruit. Candidates normally go through two or three interviews, but testing of competences is less common. Gut feeling can be pivotal in the final hiring decision.

Channels

The recruitment channels that SMEs use to identify candidates tend to be quite limited. Accessibility and cost-effectiveness are important, so they often turn to personal and professional networks. In general, they don’t favour online recruitment, but certain sectors – such as the creative industries, the technology sector, finance and engineering, and young growth businesses – typically use social media and internet job search tools. For jobs involving high levels of responsibility or requiring higher skills, they enlist a greater number of and more sophisticated channels.

SMEs do not typically use public employment services, and only a few national public employment services (notably in Belgium, France, Germany, the Netherlands, Norway and Sweden) have a formal strategy for working with SMEs. Private recruitment agencies tend to be too costly for their small-scale recruiting.

Quality of candidates

The informal approach means that recruitment can be relatively fast, and the types of channels used by SMEs keep down costs. However, this often means that SMEs reach a smaller number of candidates than they would like, and the quality of candidates turned up by the search can be disappointing.

Some job-seekers find the prospect of working for an SME unattractive, and there is evidence that certain aspects of working conditions tend to be of lower quality than in larger firms, such as job security, pay, formal training opportunities and career prospects. At the same time, workers in SMEs benefit from some advantages inherent to the smaller scale of the employer, including better working time flexibility, autonomy, meaningful tasks and involvement in decision-making.

More detail on this topic and on job creation in SMEs is available in the report Job creation in SMEs: ERM annual report 2015.

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