Attracting the right people

9:25am Saturday 15th March 2008

In this era of skills shortages, it's harder than ever for smaller firms to lure the top talent.

But there are ways to attract staff without breaking the bank. Charles Cotton gives some tips to help businesses compete with the biggest corporations.

More than four in five employers are hoping to hire staff, according to a recent Chartered Institute for Personnel and Development report.

But against a backdrop of the highest employment rates in a generation, more than half of these companies are also worried they will experience problems in filling posts.

And it seems these fears are justified. According to the CIPD 85 per cent of companies have struggled to recruit for at least one vacancy in the past year, and 37 per cent of employers are responding by increasing the salaries or the value of the benefits package on offer. Yet for SMEs about to recruit, it can be difficult to work out what rewards will make a real difference in attracting, retaining and motivating staff.

A good starting point for a firm is to examine the total reward' practices. This includes all financial rewards (for example base pay, variable pay, benefits and share schemes) and non-financial rewards (such as personal and career development opportunities, the quality of working life and recognition).

Traditionally, competitive pay has been regarded as a key attractor. Employers can work out what a competitive salary is from examining job adverts, buying regional or occupational salary surveys or by using a pay consultant. Each approach has pros and cons, so companies have to decide what is appropriate for them based on their particular circumstances, such as location, type of job, time and in-house resources.

While pay has been seen as important in attracting staff, benefits used to be viewed as the way of keeping them. But before deciding which benefits to offer, SMEs should decide whether to provide benefits at all. Clean pay' is an option for new firms that don't have a history of giving benefits and other non-cash incentives. The firm just provides a salary and, if it makes sense, a cash bonus. This is easily communicated and understood, easy to administer and is also easy to benchmark in the market.

Currently, there are few tax advantages in benefits so for a bit more money you could use clean pay. As for employees, they can use this extra cash to purchase the benefits that they value the highest.

Editor's Choice