SMEs suffer from brain drain as one in five employees leave each year

Small businesses in the UK are struggling with high rates of employee turnover, according to a new report.

The study, from Pure Benefits, found that nearly one in five (18%) workers employed by small businesses leave their jobs each year.

Small businesses with 49 or fewer employees account for more than 12.4 million jobs in the UK, as well as a total annual turnover of more than £1.2 trillion. Around 450,000 people employed at smaller businesses left their jobs every year over the last five years, the study found.

Recruitment and retention can be real issues for SMEs and, without the right people in place a company may find its growth opportunities hampered or may even require restructuring in order to continue trading. Recruiting and training can also be time consuming and expensive and an ongoing skills shortage in many areas makes the current business landscape even more challenging.

According to the report, one of the primary reasons given for employees leaving was the lack of employee benefits available at SMEs.

Many small business owners were confused about the options available to them, with nearly two thirds (63%) saying that they did not know how to find cost-effective solutions for their staff. Just over a fifth (22%) of small businesses reported that they did not offer any employee benefits at all.

Where they do exist, the most common benefit offered was a pension scheme, which was provided by 77% of SMEs employing between 25 and 49 staff and 72% employing five to 25. With the introduction of the workplace pension scheme, all businesses should automatically enrol workers into a workplace pension scheme if they are aged 22 or over and earn at least £10,000 a year.

Other benefits included tax-free bike schemes (offered by around 20% of small businesses) and critical illness cover, which was offered by 14% of small businesses employing up to 25 staff. According to the report, small businesses could face a ‘brain drain’ as talented employees move to rival companies offering more attractive benefits packages.

By Phil Smith

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