Seven in ten SMEs have no contingency plans for key staff departures
Aldermore’s Future Attitudes report has found that 70% of business owners at small and medium-sized businesses (SMEs) have no contingency plans in place for senior staff departures.
Aldermore says contingency planning for senior staff exits is crucial to ensure business continuity. Having clear processes in place can help minimise the potential financial damage to a business and loss of staff morale.
Smaller businesses are most likely not to have formal plans in place for radical staff changes; with small (73%) and micro (75%) businesses acknowledging a lack of contingency planning. This is especially important for SME business leaders as two out of five SME employees (42%) say they plan to leave their current employer in the next five years.
With many bosses potentially unaware of their employees’ intentions to leave they could struggle with the wider impact of sudden departures on their business; highlighting how close SMEs could be to financial and structural volatility, as a result.
Gen Z business leaders (aged 24 and under) and Millennial business leaders (aged 22-34) were almost twice as likely to have contingency plans in place compared to baby boomers (41% vs. 22% of businesses led by over 55s). Overall, businesses with a younger employee base tend to have a greater expectation that staff will leave to pursue other opportunities.
While SMEs appear unprepared for departures, business leaders themselves are the opposite; 73% of leaders at medium-sized businesses have already planned their exit; with one in five (18%) doing so in the next 12 months.
Tim Boag, group managing director, Business Finance at Aldermore, said: “The potential fallout from senior departures can be very damaging to the health of smaller organisations.”
“Contingency measures can not only help prevent financial loss but can also be a useful tool to help manage staff morale when well liked employees leave. Ultimately, while some level of staff turnover is inevitable at every level of a business, contingency planning can significantly reduce the stress of the process and ensure smooth transitions.”
Aldermore’s Top 5 Tips for Talent Retention:
- Make current employees feel like business leaders: Employees want to feel like their career is progressing. Where possible, SME business leaders should recognise the loyalty and commitment of long-term employees. This could be by offering a partnership model which allows them to have a financial and leadership stake in the long-term success of the business.
- Introduce a profit share scheme: A profit share scheme can be an effective way of incentivising employees to stay on, particularly in a climate where bonuses have become less common. It also has the added benefit of making employees aware of the business’ profits and bottom line.
- Provide training opportunities: While money and opportunities for promotion are obviously important, people crave new experiences. Providing a robust programme of training for employees can help them feel like they are progressing and growing their skills.
- Introduce sabbaticals or extended holiday for long-serving employees: Giving employees the opportunity to take some extended leave can mean they feel free to pursue their own interests or take that dream extended holiday they’ve always planned. This sort of flexibility is the sort of perk that can keep talent within a business.
- Consider flexible working or job sharing: Over time, it’s inevitable that an employee’s circumstances will change. Giving employees the opportunity to work flexible hours or job share, so that they can address childcare responsibilities, care for a parent or even avoid rush hour is a great way to demonstrate that business owners value them.