top of page
  • Louisa Plint

How can SMEs and startups compete in the 'war for talent'? Five tips for success.

In the ever changing landscape of the world of talent, employers of every size need to adapt and evolve in order to stay competitive. Across the world, the talent market has become tougher and tougher, whether because of Covid, the changing expectations of potential employees, the recent flood of job opportunities putting the power in the hands of candidates, or rising salaries increasing hiring costs. This has give rise to the 'war for talent' and as aggressive as it sounds, companies are digging deep to retain and value their staff or waving massive incentives and sign on bonuses as well as remote and flexible working to attract the best talent available.

Competing with the giants

In many markets, there is an acute shortage of talent, especially in areas such as technology. Large companies often have significant funds to spend on their talent acquisition process to access what talent is available and incentivise them with higher salaries and more competitive benefits structures. Furthermore, one of the key aspects of hiring success is retaining the best talent you already have. Large tech companies have consistently spent to retain the talent they have already invested in. Whether in the form of salary increases or less financial incentives such as holidays, benefits or training and mentorship, they have an extensive arsenal to hook in their key hires. This is why it is being referred to as a 'war for talent'. Unfortunately, smaller companies don’t have the luxury of unlimited budgets to spend on such flattery.

Competing with the rest

It’s not only the behemoths that make talent acquisition difficult for SMEs and startups. Other small businesses similarly drive forward competition, and the problem isn’t getting better. In 2019, in the UK alone, there were 636,000 new businesses registered, a number that only increased in 2020, reaching a whopping 726,000. So, not only do businesses need to fight to be seen in the shadows of the giants, but those shadows are full of other fast moving startups with similar offerings and the same struggles. What’s more, those entrepreneurs represent a significant talent loss to the rest of the market because they themselves are no longer seeking employment.

So what are the specific challenges facing startups and SMEs?

Inexperience can make sourcing talent more difficult in the 'war for talent'

Despite some assumptions around the mechanics of talent acquisition, it is in fact an art, and those that are good at it produce results far beyond those of a hiring layman. Startups ironically face the challenge of lacking talent in talent acquisition. Furthermore, this inexperience can be detrimental to a business that has limited resources and small teams heavily affected by poor hires.

So what can startups and SMEs do to counteract their lack of experience? It’s a simple solution. Leave it to those who know. With any other area of business, there is an instinctive habit to outsource to those who know better, but there is traditionally apprehension around spending on recruitment expertise. Often small businesses perceive recruiters as expensive and without understanding the mechanics of hiring, they don’t see the value. However, the right recruiter can source the best talent for a growing business and in turn accelerate their growth without drawing the attention of the internal team away from the business at hand. In short, if you think you’ve paid too much for your recruiter, they’ve done a good job.

Competitive salaries aren't the only way to incentivise talent

There is often a sense that the salaries on offer at startups aren’t competitive enough, and at face value that can be true given the expectations of the role, and the fact that often the job requires significantly more to be covered than if you were in a comparable large business. Inexperienced hirers are less likely to effectively negotiate with candidates and current employees, often compounding the budget problems. This leads to talent loss and extended time to hire. But it’s important to remember that most candidates considering working for a small business know that salaries will likely be lower and often there are more nuanced and long term benefit hikes associated with committing early, from equity share to

There are a multitude of ways to incentivise prospective talent beyond the bottom line, and the luxury of a small business is that creating such innovation doesn’t require a huge amount of effort or bureaucracy. Flexible working, alternative benefits, unusual office or team perks, and options can all be enough to get the top talent over the time.

Recruitment processes

There are a number of things that SMEs and startups often lack when compared to both larger companies and alongside that, talent acquisition specialists. First is a solid recruitment process. More often than not, small businesses fumble their way through each recruitment push without thinking too much about the interview process or assessments while giants have well-defined processes that have been used hundreds, if not thousands of times.

This challenge can be exacerbated by lack of access to the most innovative recruitment technologies that not only save the team time, but also increases the rate of successful hires. Whether it’s CV searches, job posts, effective ATS software, CV parsing or skills assessment tools, each step of the process can be simplified by introducing technologies that often cost more money.

The best way to compete in this area is to ensure that whatever process you choose, whether it’s just an excel spreadsheet or you invest in an ATS, you make sure it’s consistent and well maintained. In the long run, you will track talent better allowing you to make better hiring decisions that in the future will generate you more revenue whilst costing you less.

Brand value

Brand is a massive advantage for bigger, more established companies. The likes of Google and Apple are always going to outperform in application clicks than a small business. What’s more, their brand is so solid, many candidates perceive a role at one of the top tech companies as a privilege.

So what can you do to put yourself on the map to the top talent? It all comes down to EVP or Employee Value Proposition. It’s essentially the bundle you offer your talent, and it doesn’t just include the paycheck. Rather, it is a statement of the holistic benefits of being a part of a particular company. If a startup can create a rock-solid EVP, the salaries themselves will become less of a factor to their potential hires.


Acquiring talent is a pain, whatever size the company. One of the best ways to reduce the amount of talent required is to ensure that those you’ve already invested in don’t leave you. It is particularly important to make sure you have a slow turnover of staff because every time a team member leaves, especially quickly, your brand reputation will be damaged. Not only that, it’s extremely expensive to hire so retention will always reduce costs.

The impact of a single person leaving a large company is comparable to a mosquito bite, while a small company losing one of say, six staff is the equivalent of losing a leg. The impact is significantly worse, and, in the worst cases, could lead to the failure of the company.

In order to avoid such potentially detrimental losses, small businesses need to focus on a few key areas. Onboarding is a key part of a new employee’s journey and will set up their perceptions of the company from day one onwards. It needs to be done right. Secondly, support is necessary to reduce the risk of overwhelm, and to ensure that new staff feel that their development journey isn’t a solo mission. Lastly, company culture will have a daily impact on an employee’s perception of the company, and if the culture isn’t right, the employee won’t feel engaged and will likely leave.

It is a challenging time to be hiring, for everyone, but there is an opportunity for companies of every size to develop stable hiring strategies that will work, not just now, but in the future.

Work in partnership with Auxeris.

Auxeris is making a change in recruitment. The model is broken and we're developing ways to fix it with ethical recruitment practises, a fairer cost structure for you and a bigger compensation package to our talented specialist recruiters that identify talent for your roles. Find out more about us

bottom of page