How SMEs can gain a critical advantage for recruitment and retention

Talent attraction and retention continue to rank amongst the toughest challenges facing SMEs today. How do you stand out from the rest of the market in the first place to create a high quality, reliable talent pipeline, and then continue to motivate, engage and develop your people in the longer term? 

While there will always be multiple factors to consider, one area creating a significant advantage for businesses in today’s competitive talent marketplace is ESG.

Recent studies* have shown that a purpose-driven organisation can be nearly three times more likely to retain its best people, and as demographics and attitudes to work and sustainability shift, ESG is becoming an ever-most essential part of the employer brand proposition. 

Building a compelling employer brand

Just as consumer trends indicate that people are becoming more selective about the places they spend their money, so too are they increasingly seeking purpose and meaning in their work. In a competitive job market, that makes a strong employer brand crucial.  

Embracing ESG principles demonstrates your business’s commitment to making a positive impact beyond profits. By integrating environmental sustainability, social responsibility, and strong governance practices into your company culture, you create a compelling employer brand that resonates with top talent. Candidates are increasingly drawn to organisations that prioritize ESG, as it aligns with their personal values and desire to contribute to a better world. 

To see an example of this in action, check out our recent case study with Libertine. 

Attracting purpose-driven talent 

ESG initiatives can be a magnet for purpose-driven professionals who are passionate about making a difference. By emphasizing your SME’s commitment to sustainability, community engagement, and ethical business practices, you can attract individuals who are not only highly skilled but also deeply motivated to work towards a greater cause, meaning they are more likely to be engaged, productive and dedicated. 

Enhancing employee engagement and retention 

Employee engagement and retention are critical for SMEs looking to maintain a stable and high-performing workforce. Embracing ESG principles can have a really positive impact on employee satisfaction and loyalty. When employees feel that their organisation cares about the environment, supports the community, and upholds ethical standards, they develop a sense of pride and purpose in their work. This fosters a positive work environment and strengthens employee loyalty, reducing turnover and the associated costs of recruitment and training. 

Offering rewards and incentives that don’t cost the earth 

ESG can be leveraged to provide meaningful rewards and incentives that go beyond financial compensation. Many people will place high value on non-monetary benefits, such as flexible working to allow volunteer opportunities, sustainable workplace practices, and support for personal development. By integrating ESG-related rewards and incentives into your company’s compensation package, you demonstrate your commitment to employee well-being and development, reinforcing their sense of value within the organisation.  

Creating an inclusive and diverse culture which embraces difference and provides a spectrum of opportunities tailored to individual values and motivations will nearly always create a more motivated and engaged team, so investing in initiatives which support communities and the people within them are key. 

To see the impact of culture and people-focused strategies in retention, take a look at this case study from P&HS architects.

Differentiating your SME in the talent market 

In a competitive talent market, SMEs often struggle to stand out among larger, more established organisations. ESG can be the key to differentiation. By embracing ESG principles, you position your SME as a forward-thinking, socially and environmentally responsible employer. This can really set you apart from competitors and create appeal for candidates seeking an employer that aligns with their values. Differentiating your SME through ESG not only attracts top talent but also positions your company as an industry leader committed to sustainability and ethical practices – which also makes it more risk-resilient and attractive for investment opportunities. 

While ESG has been seen as more of a concern of larger corporates, times are changing fast and it is becoming critical for SMEs to adopt compliant practices.  By embracing ESG principles, you can build a compelling employer brand, attract purpose-driven professionals, enhance employee engagement and retention, offer meaningful rewards, and differentiate your SME in the talent market. In today’s talent-driven economy, SMEs that prioritise ESG will not only attract top talent but also foster a culture of purpose, innovation, and long-term success.

*McKinsey & Company, 2022 ESG Report

If you would like advice and guidance getting started with ESG, or to develop your existing strategy, we have trusted people experts near you who can help on a flexible basis to suit you. Why not book a complimentary 30 minute consultation call by emailing [email protected] calling us on 0345 646 5201 or filling out this form.

Alison Folwell
Head of Marketing, Alison Folwell

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