Hays says that skills shortages and competition from established tech firms are having a significant impact on start-up recruitment.
As we settle into a new year, plenty of time has been spent reflecting on 2019 and what can be learned from it.
Recruitment company Hays has taken a look at how start-ups fared in the last year in the Hays Tech Start-up 2019 Report, which highlighted the challenges that start-ups have faced in Ireland and the UK when it comes to hiring.
For the report, Hays partnered with start-up super connector Empact Ventures. Together, the two firms surveyed 114 founders and employees at start-ups and scale-ups of all stages across the UK and Ireland.
The aim of the report was to highlight the challenges of hiring at a start-up where, in the early days of business, each person who joins the team is crucial, making hiring a critical concern for small and growing businesses.
The report found that 71pc of employers at tech start-ups and scale-ups experienced difficulties when hiring or trying to hire staff over the last 12 months, with 14pc going so far as to label these difficulties as ‘extreme’.
“Workforce planning will always be an important development challenge to overcome at all stages of growth, whether this means finding the right co-founder, building upon a core team or bringing on board the perfect CTO,” the report said.
Salaries and job security
Hays found that the leading cause of these difficulties was that start-ups are unable to offer the same salaries as bigger tech companies that they are competing against in Ireland and the UK.
Around 45pc of respondents to the survey said that they were unable to offer the same salaries as established companies, with 37pc stating that they can’t guarantee the same job security as other employers can, which drives potential workers away from these start-ups.
Additionally, 27pc of start-up employers found they can’t offer the same benefits as the tech titans operating in Ireland and the UK, while 24pc admitted that it could be because they expect potential employees to take on too many roles.
Overall, two-thirds of employers said they have been struggling to find top talent, and 58pc stated that it was particularly challenging to hire developers in 2019.
Business development and sales
There have also been shortages of candidates to take on roles in business development and marketing. Nearly two-thirds (63pc) of employers in start-ups said that sales and business development skills are most necessary to achieve their immediate business objectives.
And yet, 29pc have struggled to hire people with the appropriate business development skills, and 16pc have struggled to find people with the right marketing skills.
After sales and business development skills, front-end and back-end development was cited as most important for achieving short-term business objectives, followed by marketing, branding and public relations skills.
More than a third (37pc) said that they do not currently have the skills needed to expand their business into other markets, 13pc said they don’t have the skills or marketing needed to raise their company’s profile, and 28pc said they need skills to increase sales and build a customer base.
What lies ahead?
The founders and employees surveyed seem to have no illusions about the situation, with more than half (54pc) expecting the recruitment challenges not only to persist, but grow. Still, 93pc of the tech start-ups and scale-ups surveyed said that they have plans to hire within the next 12 months.
What are they looking for? Well, 72pc of those surveyed are seeking permanent employees, 25pc are looking for freelancers, 24pc are looking for contractors and 14pc want external consultants.
Another way that these start-ups and scale-ups are securing labour during difficult hiring periods is by bringing in apprentices or interns, with 20pc saying that they will be seeking these types of workers in the next 12 months.
James Milligan, director of Hays Digital Technology, said: “Recruiting the right talent is a struggle for employers across the whole of the UK under the current skills backdrop, but our findings reveal that it is a particular challenge for employers at tech start-ups and scale-ups.
“However, isolating the skills that will make the biggest difference to your organisation is a vital competency all start-up and scale-up leaders and founders must learn.”