Small and Medium Sized Enterprises

Small and medium sized enterprises exist in many forms. Some are listed, usually on the Alternative Investment Market (AIM), while others are either family businesses or founder owned. Equally, they may be private equity or venture capital backed.

Many SMEs owe their success to the entrepreneurs who founded and continue to run them. If they have survived and flourished in recent years, it is often because their owners have backed their ability to make money in their chosen market with their own capital and that of family and friends. These entrepreneurial traits will play a significant part in helping to underpin the economic recovery.

Even in today’s tough business climate, SMEs continue to search for the right executive and non‐executive talent to ensure they are well placed to succeed in the upturn. Specialist help can assist them in that search, although recruiting into SMEs requires a very different approach from that used for larger, more traditional and more conventionally funded organisations.

The primary consideration for a recruitment consultant will be the company’s aspirations for growth. Some SMEs are managed to suit the lifestyle of the individual or family owner, generally paying modest salaries to match the company’s limited ambitions and typically having little need for recruitment advice perhaps until the company is put up for sale.

SMEs with most to gain from professional recruiters like Odgers Berndtson are usually venture capital or entrepreneurially funded, specialist ventures within a larger organisation, or privately held businesses. Whatever their ownership structure, they have one characteristic in common, namely a need to prepare for transformational change, whether in the form of new investment, divestment, rapid growth or a flotation.

Common Characteristics

The SMEs that Odgers Berndtson works with most successfully share one or more of the following features:

• The current or projected rate of growth is in the range of 10‐50%. Often the company will be looking for a doubling of turnover and/or profit, year on year, difficult though this is to achieve.
• The skills and experience of the management team are not commensurate with this rate of growth or the future needs of the business, particularly if a listing or sale is planned. To reflect this fact, current levels of executive remuneration may be below the market norm, which in turn can make it harder to recruit the right talent to help the company deliver its growth strategy.
• The company will be an infrequent, or even first time, user of sophisticated recruitment, and hence unfamiliar with the process, costs and capacity to add value.
• It is unlikely that the company will be able to afford all the skills it needs to deliver every stage of the growth plan, putting a premium on versatile executives with diverse skills and the ability to acquire new ones quickly. Target recruits will typically have a broader skill set and experience  than they would in a larger company environment.
• Skills shortages are often predominantly in specialised commercial or technical areas of expertise.

View or download full paper