How can small businesses reconcile diversity and growth?

How can small businesses reconcile diversity and growth?

Any entrepreneur that has grown a business from scratch will be aware of the challenges involved in building and retaining your dream team.

While hiring talented individuals will be critical to the company’s chances of success, it can be hard to compete for them with larger companies that can afford to pay more and offer substantial benefits.

Add to this challenge the need for female diversity and the plot thickens. Many entrepreneurs may feel passionately about the importance of inclusion, not least because it tends to make for a happy and creative team, but as a small business, just how easy is this to achieve in practice?

I remember the day I recruited my first employee. It was a proud moment and I was grateful for her belief in the company we duly went on to build. Over the years, of course, recruitment has become easier. I now have HR professionals to help, as well as manuals, data, surveys and best practice.

However, most important of all, I now have a buffer in my budget to be able to cope with financial shocks to the business, which includes the elephant in the room for so many small businesses – maternity and (as of April 2015, shared parental) leave.

Legally, employers cannot ask a candidate about his or her plans for children but financially, it’s a consideration that is hard for small businesses to shake off when the margins are tight. In reality, this may mean that companies are still avoiding employing (predominantly female) candidates where they worry that they won’t be able to absorb the additional cost that parental leave would bring or alternatively, would be forced to offer very limited parental leave policies, which would make them uncompetitive and a risky option.


A Norwegian solution

The UK government already reimburses up to 92 per cent of statutory pay, which goes some way to helping but it is a far cry from what is on offer among our Nordic neighbours.

In Norway, for example, the government covers the cost of maternal and paternal leave for a whole year after the baby is born, with universal access to high-quality childcare from the age of one. This investment is repaid in spades by the levels of workforce productivity and female participation in the workforce.

However, with a top taxation bracket of over 50 per cent, Norway’s government can afford to be generous.

But here in the UK, even within the bounds of our existing tax system, I feel that there must be a better way to support both the SMEs who want to attract and retain the right people to work with them and the employees who don’t want to retreat to the safety of a big corporate every time they want to raise a child!

One solution could be to reform the current system of a government statutory pay into a cascaded subsidy model in which all companies cover the cost of statutory parental pay.

Rather like the sliding scales that have been introduced to personal benefits, effectively giving more to those who need the help, the UK could offer far more support to SMEs, covering a worker’s actual salary (and not just statutory minimal pay), while removing the subsidy for those larger companies who can afford to absorb the cost themselves. In doing so, talent could be supported and spread more evenly across the economy.

Given that 99 per cent of the 5.4m companies in the UK are SMEs, this policy could be of huge benefit not only to employees and diversity, but to British economic growth as well.


About the author

Anabel Fielding is the CEO of event management company Quintessentially Events.


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