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New Zealand is a great example of a small place that can do very big things. Over the past 18 months, the country’s economy has been held up as an example of how to catch a strong tailwind.
"A ‘lack of skilled staff’ has been identified as the biggest problem facing small business in New Zealand."
Fred Ohlsson, Managing Director Retail and Business Banking, ANZ NZ
It’s been described as a “rock star economy" and just this week economists suggested it was entering a period of “unprecedented growth”. This success has been built largely on the collective ingenuity and effort of small business, but there is one thing dampening the mood.
SMEs account for 90 per cent of New Zealand companies, employ nearly a third of all New Zealanders and work incredibly hard to carve out a niche in a competitive market of just over 4 million people.
NZ’s SMEs are super lean, defiantly unbureaucratic, battle hardened by the GFC and now are feeling pretty good about how the future is looking. After easing over the preceding two quarters, business sentiment across NZ’s small business community rebounded in December according to ANZ’s quarterly Business Micro Scope survey of small businesses.
The composite measure of business confidence in the small-business sector lifted to the third highest level to be registered in the past 15-years. With the recession now a distant speck in the rear view mirror, the optimism is being fuelled by three main factors – the post-earthquake Canterbury rebuild, dairy prices, which rebounded slightly this week after recent falls, and interest rates which have held at near record levels for much of the past five years.
Casting a shadow on this good news is an issue which has become more acute as small businesses take advantage of favourable conditions and actively pursue growth.
A ‘lack of skilled staff’ was identified in the Micro Scope survey as the biggest problem facing small business in New Zealand. Eighteen per cent of all small businesses identified this as the biggest problem they face, up 3 percentage points from September.
HOW SMES CAN HIRE AND RETAIN TALENTED STAFF
- Make staff part of the vision
A clear vision of your business’s decision is critical but so too is ensuring your staff feel they can make a contribution to growing it.
When you are clear about what your company is, where it is going and what it expects, staff can make better-informed decisions when taking on a role, reducing the likelihood they will be disillusioned and leave.
- Create a culture people want to stay in - or return to
Young staff often want to travel or try new roles. But as one business owner told us: “We train people up and then they want to go on their OE (overseas experience) but they nearly all return and bring back skills and experience. We let them know they’re always welcome back”.
- Explore technology that lets people work flexibly
Technology enables small businesses to widen their catchment to employ people from anywhere in the country, not just those living close to the office.
- Make learning part of the job
Star performers are more likely to stay if they are offered opportunities for continuous development. This is particularly smart if you are a small business with limited scope for upward promotions or salary increases.
- Small perks go a long way
As well as benefits such as health or life insurance, small perks that don’t cost a lot are appreciated and build loyalty. It might just be the use of a holiday house owned by the boss, free coffees on Friday or dry cleaning.
Each passing day of sustained growth brings more confidence to reinvest and take on staff, but the lack of skilled staff threatens to hold firms back from reaching their full potential. Compounding the issue is the investment in time in finding the right staff.
Unlike most corporates, small, privately owned businesses after often run by the owner and rarely employ a human resources specialist. The owner has to scope the role, find and interview candidates, and do the associated paperwork themselves. That’s a big commitment when your total staff might only number half a dozen.
Migration and training are keys to ensuring businesses can access the skills they need to deliver on the opportunities presented by favourable economic conditions, and there’s positive news on both fronts.
As was reported in ANZ BlueNotes in October, New Zealand’s brain drain has turned into a brain gain as thousands of expat New Zealanders return home to enjoy the fruits of the economic recovery.
Joined by significant numbers of new migrants, they pushed net migration figures for the year to September to 45,500, or just over 1 per cent of the population. That’s a massive turnaround from new outward migration of 3280 just two years earlier.
Many of those expats come loaded with valuable skills they picked up working for larger companies during their time away. Businesses also understand they need to take a long-term approach to recruiting and training new staff.
Industry training fell sharply during the recession, from 133,000 trainees to 83,400 at the start of 2013. The Micro Scope survey showed that while current hiring intentions by micro-sized businesses remained flat, hiring intentions of larger small businesses have improved 2 points.
This came against a backdrop of above-average hiring intentions across the small business sector for the past two years. The trend looks set to continue - the net number of small business expecting an improvement in the nationwide unemployment rate in a year’s time rose from a net +20 in September to a net +25 in December.
Fred Ohlsson is MD of Retail and Business Banking at ANZ NZ.
Photo: ChameleonsEye / Shutterstock.com.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
- Make staff part of the vision
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The one issue holding NZ SMEs back
2015-01-19
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