Millennials – the key to future growth for SMEs?

Date: 13-09-2015

Tagged as: ArticleGameplanStrategyGrowth

 

So-called ‘millennials’ – those born between 1980 and 2000 – could hold the key to future growth, according to new research by Lloyds Bank. With 86% of SMEs reporting that the future growth of their business relies on recruiting talent from this Generation Y demographic, what does that mean for businesses today and how can you attract them?

millennials combined graphic It is estimated that millennials will account for more than half of the global workforce by 20201. They're going to shape tomorrow's workplace, and be tasked with generating the value to support an ageing population as they do.

Given their influence, today's progressive businesses are understandably keen to ensure that they attract and retain core talent from this dynamic demographic.

Why are millennials so desirable?

Our research shows that SMEs are investing an average 15% of their turnover on recruiting millennials, so clearly business leaders are wise to their importance. But what really makes this particular group so sought after?

Attracting the new generation of talent isn't just about available numbers. It's about tapping in to a range of attributes, from hard skills such as digital and technological know-how, to the softer skills of fresh ideas and new perspectives, according to the SMEs we spoke to.

This supports the findings of The 2015 Millennial Majority Workforce study. Carried out in the US, where this year millennials are expected to become the largest generation participating in the workforce, the study reports that: "68% of hiring managers say millennials have skills prior generations do not."2 As technology advances, demand for digital purchasing increases3 and social media plays an increasingly key role in marketing, the demand for tech-savvy Generation Y-ers is set to rocket. Businesses need to act now to keep up.

How can I attract millennials to my business?

There's certainly a degree of pull/push supply and demand when it comes to recruiting millennials. From a business perspective, our survey shows that 77% of SMEs feel under pressure to sell themselves to millennials. It's worthy of note that 41% of millennials say that they would rather work at a small firm.

With more than half of SMEs feeling that the balance of power when it comes to recruiting has shifted squarely to Generation Y, what exactly are these candidates looking for from an employer and how can you attract them to your firm?

The US study found that the majority of millennials are not looking for the long-term job security that previous generations rated highly, with 58% looking to stay in the same job for less than three years.4 Millennials are a generation characterised by ambition coupled with work/life balance, motivated less by financial reward than by job satisfaction. Three key areas demand attention for those who want to attract – and retain – them:

  1. Culture: 56% of millennials in our survey confirmed that they would turn down a job offer if they didn't like the business culture, regardless of the salary.

    Action: by investing in or enhancing your culture you can make your firm more attractive. One area that sets this generation apart is their desire for inclusion and connection5, so it's worth reviewing how you communicate and whether your business structure supports the flow of information.

  2. Flexibility: 45% of millennials we spoke to look for flexible working hours and 22% want the option to work from home when considering an employer.

    Action: consider existing policies, and approach flexibility with an open mind. According to our results, many SMEs are already aware of this – when asked which two policies they thought would most interest millennials, 51% of SMEs agreed that flexible working hours would make them more attractive as potential employers, and 28% agreed it would be the option to work from home.

  3. Training: our survey shows that 32% of millennials seek additional training as part of their job package.

    Action: it's encouraging that 24% of the SMEs we spoke to have regular training on their agenda for millennial recruitment. And, according to the US survey, 60% of hiring managers find millennials to be quick learners6, so businesses shouldn't have to wait too long to see a return on their investment.

Location, location, location

"Millennials are a generation characterised by ambition coupled with work/life balance, motivated less by financial reward than by job satisfaction."

No, it isn't all about London! In fact, our study shows that less than a tenth of millennials say that they would only work in the capital, which is great news for SMEs based across the UK. Perhaps the growth of regional hubs and expertise is slowing the 'brain drain' to London.

The demand from businesses wanting to recruit millennials is actually pretty universal, with companies based in Wales, Central London and the far South of England most keen to recruit from this demographic within the next five years.

100% of businesses surveyed in the South of England (Southampton, Portsmouth and Bournemouth) state that their future growth is reliant on attracting this new generation of employees, although investment in recruitment is highest in the East Midlands and eastern counties of England.

As more than half of millennials surveyed claimed that they would be happy to move anywhere for the right job, there's good news for regional businesses and for re-balancing the economy.

Is there support available?

With demand for these bright young things running high, 65% of SMEs surveyed consider themselves adequately geared up to attract the best of the available talent. That confidence is particularly strong in the North West of England, Wales and Central London.

For other businesses, additional support in financial (43%) and mentoring (40%) terms is considered helpful in helping them secure new employees.

Tim Hinton, Managing Director, Mid Markets and SME Banking, / Alasdair Gardner, Regional Managing Director, Commercial Banking, Bank of Scotland, says: "SMEs understand that they need to recruit millennials, as the future of their business could depend on it. They can tap in to a range of attributes, from hard skills such as digital and technological know-how, to the softer skills of fresh ideas and new perspectives.

"Although SMEs are beginning to invest and change their business culture to make themselves more attractive, they also tell us that they need guidance to find the right people.

"There is a whole range of support available, including access to experienced mentors and relationship managers, which small businesses can use. Whether it's marketing, financial support or digital expertise, for example, SMEs should seek support to make a success of their millennial recruitment drive for long-term success."

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