HMRC release research on access to talent issues faced by scale-up businesses

Last week, HMRC released research with Ipsos on access to talent issues faced by scale-up businesses. The research included 1,460 interviews with businesses and a 30-in depth interviews with businesses who had taken part in the survey.

Purpose of the research the research aimed to:

Key Findings

The research revealed that both scale-up and large businesses reported difficulties in recruiting and retaining talent, with scale-ups slightly disadvantaged in offering competitive financial benefits, such as signing bonuses. While scale-ups generally shared recruitment challenges with larger firms, they lagged behind when it came to offering these additional financial incentives.

Interestingly, while scale-ups differed from smaller non-EMI businesses in several areas, they showed similarities in their experiences with major growth events. For example, scale-ups reported lower levels of growth activities—such as capital investments, significant turnover increases, and expansion into new markets—closely mirroring small and micro firms, while larger businesses and EMI claimants demonstrated higher activity levels in these areas.

Approaches to Recruitment and Retention

To attract talent, businesses primarily relied on offering flexible working arrangements (58%) and benefits in kind (21%). For retention, strategies included offering bonuses (64%) and additional leave for long service (34%). However, despite changes being made to employee packages, salary remained the most crucial factor in determining recruitment and retention success.

Effectiveness of EMI in Addressing Recruitment and Retention

Businesses using EMI viewed it positively, citing improved recruitment and retention as key benefits. However, there were concerns about the scheme's limited effectiveness in attracting younger employees and international talent. Additionally, awareness of EMI was found to be low, with only 11% of businesses familiar with the scheme. Non-participating businesses were often hesitant to join due to concerns about giving away ownership and doubts about its effectiveness in recruiting their target talent.

Next steps

This research highlights the pressing challenge of talent acquisition for scale-up businesses, a concern echoed by techUK’s scale-up members. To address this, the EMI scheme must be made more accessible, better promoted, and tailored to effectively recruit younger employees.

In techUK's forthcoming Growth Plan, we propose strategies for the Government to better foster an environment that enhances access to talent and skills for scaling tech and science firms.

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