Member Article

Are apprentices the future of SMEs?

Talent always needs to be a key focus for businesses. Recruiting and retaining team members is a key priority for any firm, yet in the media we hear endless stories about employee morale and loyalty being at an all-time low, with many looking around for new opportunities. In fact, research from the charity CABA has revealed that 35% of employees admit that they regularly consider leaving their job or handing in their notice.

For small businesses, this churn can be a costly issue. Staff turnover is an expensive issue to deal with, and can cause significant disruption to operations when handled badly. In fact, Accounts and Legal has estimated it costs SMEs £11,000 for each employee they need to replace. This can be a staggering amount for any business, but for a small business it can be a real burden, especially considering the UK average staff turnover is 15%.’

So, as leaders, we all need to look at alternative ways we can harness talent. One option that many have explored is hiring apprentices. According to the Federation of Small Business (FSB), 24% of SMEs already offer opportunities to apprentices, with a further 24% saying they would consider taking one on in the future. However, these numbers look less promising when you consider that the number of apprenticeship starts has dropped 40 per cent year on year, according to government data .

In this year’s Spring Statement, hope was offered in stopping this decline, as the Chancellor ‘released’ an extra £80 million in funding to help small firms recruit more apprentices. However, on closer inspection the announcement was not quite as it seemed, with the extra funds in fact coming from the existing Department for Education apprenticeship budget.

While the approach caused some initial confusion, it helped to catapult this important topic back into the limelight. What we, the business community needs, is some clarity around the issue. Speaking from personal experience, we know the value that apprentices can bring to a business, and we have been very lucky to create a thriving programme for those at the start of their career looking to join our Northampton office. Based on this experience, below are the main ways I believe apprentices can help boost small businesses.

1. People and processes

For SMEs who do have the opportunity to hire apprentices, it really does provide a great talent pool. At Opus Energy, we’ve found that hiring apprentices certainly helps with retention and productivity, with around 50% of our apprentices continuing their long-term career with us, and I’m sure many other businesses with apprenticeship programmes would agree.

Bringing an apprentice into your workplace could also help to meet a skills or resource shortage. Hiring apprentices gives businesses options; either to train them for specific roles, or, like we do, give them a taster of multiple roles across the business, leading them to choose their preferred role at the end. We’ve found the end result is that they’re well-fitted to the job they eventually choose. In smaller businesses, this rotation may be seen as a luxury – however, giving younger talent a range of experience across the business will ultimately help them do their job better, as they’ll have the background knowledge which they can then apply at a later date.

It also adds a new perspective to the business. Hiring new talent can help businesses to see things in a different light, providing new outlook on processes or procedures, which can reinvigorate a business. Even better, it may help you understand your customers better if your workforce is able to replicate and and empathise with your target market.

2. Reputation

From a reputational point of view, being seen to take on local talent and help boost youth employment in the area can help to raise the profile of the business, while also contributing in a tangible way to the local economy. There are also benefits in terms of social mobility and diversity according to the Chartered Institute of Personnel and Development (CIPD) , meaning smaller businesses really can stand out from their peers in terms of how they’re perceived.

3. Government support

The government provides support to small businesses (with a salary billing of less than £3m ) by covering almost all the costs of apprentice training. Businesses that qualify pay for just 10% of these costs, while the government provides the remaining 90%, meaning small businesses can take the opportunity to invest in their future employees. This not only frees up P&L, but it gives small businesses the chance to really invest in apprentices. SMEs should use the cost savings to encourage close skill sharing and training, so new recruits soon become the lifeblood of the company.

4. You’re hired

According to a report published by the CIPD, 66% of employers experienced improved staff morale, while 70% saw an improvement in their product or service offering by bringing in apprentices . For many, this is an opportunity too good to miss, and personally speaking, it is so rewarding investing in talent and seeing them grow into a fully-rounded employee.

This was posted in Bdaily's Members' News section by Nikki Flanders, Chief Operating Officer, Opus Energy .