People & Leadership

Effective talent management on a tight budget: 6 tips for small businesses

How can your small business keep talent management costs down? Discover six ideas that will help you along the way.

Small and medium-sized enterprises (SMEs) are the driving force of the global economy. Did you know that 90% of businesses are SMEs and contribute to more than 50% of employment worldwide?

Yet, for 67% of them, survival is a top concern right now.

High inflation, economic uncertainty and an increase in the cost of living, not to mention a tight labour market, are making ‘business as usual’ very challenging. In fact, 93% of HR leaders told us they were concerned about the economic climate today.

Managing your talent in the right way will be pivotal to keeping your employees engaged and productive in this challenging economic landscape, and in this article, we share advice on how you can do that.

Here’s what we cover:

Small budgets, large workloads

With restrictive budgets, talent management has become the number one priority for HR and business leaders going forward.

The problem is that 90% of HR leaders say having limited budgets is a top concern, and 89% are worried they don’t have enough resource in their team.

So how can you do more with less when it comes to managing your people effectively?

Here are six ideas to get you started…

1. Prioritise communication

Today, 74% of employees feel they are missing out on news and information.

Yet, when people have a sense of community at work, they’re 55% more engaged, and 66% more likely to stay with their organisation.

Good communication in itself costs nothing, so spending time over your communications is vital to make sure you get the right message across.

Paired with an effective way of communicating to your employees to provide them with latest company news, such as through a cloud HR system, you’ve got the ability to reach all your employees in one go and to share with them your latest news and updates.

This becomes even more important in tough times when people want to band together.

If you communicate a well-developed plan for survival and growth, and invite questions and comments from your employees, they’re more likely to get on board.

2. Be flexible

Ask your employees if anyone would like to reduce their hours or work part time. You may be surprised to see a healthy show of hands.

As many as 56% of employees are now willing to accept less pay in exchange for a better work-life balance and those who work at companies with flexible working policies are 2.1 times more likely to recommend working for the company.

Be open to flexible working arrangements such as remote work, job sharing, or part-time work.

This will help you save on overhead costs. You can put that money back into other strategies that help you retain and even recruit more skilled employees. 

Flexible working can also help you tap into hidden workers, such as carers of children and the elderly, or those with a disability who are either traditionally overlooked in the recruitment process or can’t work full time but have the valuable skills that you need.

3. Encourage employee involvement

Involve employees in decision-making and problem-solving so they don’t have to defer to you for everything, and you can in turn delegate and reduce your workload.

Fully empowered employees make good decisions and think flexibly to resolve problems.

That’s good for your business and your bottom line.

In fact, 85% of HR leaders are thinking about how to empower more employees to make good decisions quickly.

By involving others in the decision-making process, you’re creating an opportunity for team members to share ideas, learn from one another, and work together toward a common goal.

You also foster collaboration, which can help to save you time and resources by finding a resolution quicker.

Including your employees shows them you trust and value their opinions, which is important for building engagement. And as we all know, engaged employees are more productive.

4. Prioritise training and development

Invest in training and development to help your employees grow and develop. Deploy their newly learned skills efficiently in your organisation.

It will not only benefit your people but also the business.

Just 38% of small businesses say their employees undertook training in 2021 and 2022 – meaning many could be losing out on nurturing talent, as well as attracting new staff.

Upskilling and reskilling staff is a valuable way to make sure your employees don’t walk out.

As business tycoon Richard Branson once famously said: “Train people well enough so they can leave, treat them well enough, so they don’t want to.”

Training is also more cost-effective than hiring new people. The cost of replacing an employee is between one-half to two times their annual salary.

Meanwhile, the cost to reskill employees can average around $24k (£19k) per employee.

Also, prospective recruits may overlook a smaller salary if they can see a clear pathway ahead with skills training and progression.

5. Look for external help

81% of HR leaders told us they’re suffering from burnout from the sheer number of challenges they have faced and overcome over the past few years.

This has been even trickier for smaller organisations with little resources.

Partner with other businesses and organisations to share resources and expertise or seek guidance from industry experts and other HR leaders to help you make the most of your limited budget and resources.

The world of work is still a confusing place and it’s difficult to navigate it on your own. Seek a mentor or join a business network to help you keep pace with these rapidly evolving times. This can also help you feel less isolated.

By working with others, you can:

  • Share ideas, resources and strategies to improve employee experiences
  • Provide learning and development
  • Have efficient and progressive performance management reviews
  • Improve diversity
  • Create an environment in which employees don’t want to leave and new recruits want to join.

6. Leverage technology

Automation could save you between a day and a day and a half every week. Yet, just 54% of companies say they’ve adopted some form of automation today.

Consider using technology to manage time-consuming tasks such as scheduling shifts, tracking timesheets, approving holidays, raising expenses, reporting, manually entering new joiner data and tracking performance management to save you valuable time.

If you’ve found yourself drowning in admin work with little time to think about your talent management and how to create positive employee experiences, HR tech can really help you.

That’s time you can win back to work on more complex HR issues or to focus on engaging directly with your employees. You can even use the technology to survey your employees in order to understand them better.

In fact, more than 80% of HR and business leaders say HR will move away from admin towards a more strategic and people-focused role as employee experiences and satisfaction become more of a focus.

There’s a ton of affordable automation tools that can help you take the grind out of HR admin, free up your time to focus on your people and build the kind of business that you want to see.

Good talent management doesn’t need to be expensive

People are a business’s most important but most expensive asset.

Yet just 13% of HR leaders are prioritising financial management today.

When it comes to your people, particularly under current economic circumstances, you should consider how to get the best out of them in a most cost-effective way.

Luckily, good talent management practices don’t need to break the bank.

Use your budget wisely by focusing on your people and on their experiences and skills.

That will help you build a truly collaborative, resilient and agile workforce that can not only steer you through the tough times but also produce results, so your company can thrive in the long term.

Investing in technology can save you time and money in the long run. HR tech enhances your talent management practices, so your business can streamline processes.

Also, the right HR tech will give your people great experiences in return, enabling them to feel productive, which you’ll see reflected in the company’s bottom line, too.