SMEs simply don’t have the resources to compete with multinationals on pay when it comes to hiring high-skilled people. Yet there are plenty of alternative strategies they can successfully deploy to help level the playing field.
“SMEs are often portrayed as losers in the war for talent,” says Ksenia Usanova, assistant professor at UCD’s Smurfit Graduate Business School. But it’s not quite true.
“Compared with multinational corporations and large domestic firms, many SMEs face both resource and legitimacy disadvantages, which directly affect their ability to attract highly qualified employees. Due to financial constraints, they rarely invest heavily in human resources and often lack in-house HR professionals. They also tend to have lower employer visibility. As a result, jobseekers have limited information about them and may perceive them as riskier employers,” she says.
However, she argues some of the characteristics that make SMEs unique can and should be positioned as an advantage.
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For example, large corporations are increasingly criticised as places of work characterised by bureaucracy, rigid hierarchies and slow decision-making, she points out.
“This is precisely where SMEs can differentiate themselves. They can highlight autonomy and visible impact, flexibility and faster decision-making, as well as opportunities to build something from scratch and work in creative environments where innovation can flourish,” she points out.
SMEs can also benefit from taking a more considered approach to recruitment, particularly in relation to who they are trying to attract.
“Rather than competing for the same talent pools as large corporations, SMEs can focus on different groups of qualified employees,” says Usanova, who suggests that broadening the talent pool can pay dividends.
“One such group is semi-retired professionals. These experts are often less interested in prestigious employer names – which they may already have had – and more attracted to creative environments with visible impact,” she suggests.
Research suggests another group worth focusing on includes highly qualified workers who feel “stuck in corporate machinery and are seeking new formats and meaning in their work,” she says.
Investments in workplace learning and development can help too, enabling SMEs to grow skills from within rather than search for them without.
It allows them to “shift their focus from ‘hunting stars’ to developing talent internally, choosing to make rather than buy talent,” she says.
Collaboration is another promising solution, whereby SMEs can partner even with firms that are otherwise competitors.
“This practice, known as co-opetition, involves companies competing while also intentionally co-operating in selected areas to create value that is difficult to achieve alone,” she explains.
Visible in some of the industry clusters around the country, it means that, through joint efforts, SMEs can address the challenges of legitimacy and visibility referred to above. “For example, they can collaborate on employer branding at industry or regional level, run joint recruitment campaigns, develop shared platforms or work collectively with universities to reach young talent earlier,” says Usanova.
Once SMEs clarify how they differ from large corporations, they can further refine their unique employer proposition, she points out. SMEs are not, however, a homogeneous group, something they may wish to lean into.
“They differ by age, size and growth stage. Younger and smaller firms may emphasise innovation, future orientation and ‘growing together’, while more established SMEs may highlight autonomy, flexibility and informal culture,” she says.
“Larger SMEs can often offer a balance between structure and flexibility, combining clearer roles with proximity to top management. Understanding unique points and making them explicit helps attract the right people whose expectations are in line with what a specific organisation can offer.”
Finally, although many SMEs still rely on reactive and highly informal HR practices, evidence from a recent meta-analysis suggests that a more strategic approach to recruitment is associated with better SME performance and innovation.
“Strategic does not necessarily mean formalised or bureaucratic. It means being intentional – clearly identifying the profiles needed by, for example, prioritising skills fit or organisational or cultural fit, determining where to look for them, and applying more systematic screening and interviewing,” she adds.
“There is no one-size-fits-all solution. Practices borrowed from multinationals are often difficult to apply to SMEs given their economic, resource and institutional contexts. It’s less about copying multinationals and more about understanding their own strengths and strategic choices.”
