Entry-level hires are vital for the growth and success of SMEs. They bring fresh perspectives, enthusiasm, and a willingness to learn, qualities that are invaluable in driving innovation and propelling the organisation forward. By investing in entry-level talent, SMEs can build a talent pipeline, ensuring a steady supply of skilled individuals who can grow with the company and become future leaders.
Nevertheless, attracting and retaining top talent is difficult. One of the biggest challenges is offering attractive salaries. With the ongoing cost of living crisis, salaries are crucial in attracting and retaining the best talent. In an environment where competition for skilled talent is fierce, understanding salary trends is not just an advantage; it's a necessity.
This article aims to do just that. Through analysing more than 1,000 job postings covering various industries, company sizes, and geographical locations, this article provides practical insights to help you create compensation packages that better attract, retain, and develop your future leaders.
The term 'SME' is broad, encompassing a variety of companies, from smaller startups to well-established businesses. Given this, our study analysed how salaries varied across different company sizes; in this section, we summarise our findings, presenting practical advice for applying these insights to your hiring practices.
Surprisingly, our study found that smaller SMEs (with 11-50 employees) had higher average salaries compared to their medium-sized counterparts (51-500 employees). This could be a deliberate strategy from these smaller firms. Typically growing startups, they may offer higher salaries as a way to attract and retain talent in roles that are essential to the company’s growth.
Moreover, it's important to consider that while smaller companies are often more similar - youthful startups seeking rapid growth - medium-sized companies are likely far more heterogeneous. Not only will this category include VC-funded scaleups, but also mature businesses that are now self-sustainable. This diversity results in a broader range of salaries, so it’s crucial to keep this in mind when setting your own entry-level salaries.
Finally, larger SMEs (with 501-1000 employees) align with expectations, offering the highest average salaries. This is not surprising as these firms typically have more resources, allowing them to offer higher salaries that compete with larger firms to attract and retain top talent.
When evaluating an offer, people often look to comparable companies as a benchmark. Therefore, by understanding salary norms of companies of a similar size, hiring managers can ensure that their offerings are attractive. Below, practical advice is provided based on the study's findings for hiring managers at SMEs of different sizes.
Smaller SMEs: As a smaller business, it may be necessary to offer higher salaries to attract the best talent. These requirements are likely a consequence of a weaker brand and the higher risk of company failure that any new employees will internalise. Obviously, these businesses have more financial constraints than larger firms, so these findings also highlight the importance of only hiring if it's essential; if not, the higher salary to attract the talent won't be worthwhile. Finally, if offering a competitive salary in a crucial role is off the cards, consider alternative strategies, such as performance-based bonuses or equity options.
Medium-Sized SMEs: Generally, the findings suggest that, for medium-sized SMEs, higher salaries are not required to attract the best entry-level talent. While salaries must remain competitive, hiring managers at companies of this size should emphasise additional employee benefits, including career development and company culture. Since direct salary competition with larger firms is likely not feasible, positioning your company as one with superior career progression and job satisfaction is recommended.
Larger SMEs: If you work for a larger SME, then capitalise on your larger resources by offering higher salaries to attract and retain top talent. Nevertheless, don't overlook the importance of other factors. Make sure to also focus on creating a positive workplace culture, offering progressive career opportunities, and providing opportunities for professional growth and development to retain your top performers.
Just as a diverse ecosystem contains a range of unique environments, the location of an SME can significantly impact salary expectations. Each region has its own economic climate, cost of living, and competitive pressures, leading to distinct salary trends. Our analysis, focusing on locations with the most job postings, reveals insights into how entry-level salaries vary across the UK.
Interestingly, London's average salaries were lower than many other locations in our study. This may come as a surprise given the capital’s well-reported higher cost of living; however, this finding may be due to the wider range of job roles on offer, encompassing a range of different industries.
The salary trends across different regions are shaped by various factors, including localised industry demands, economic conditions, and the availability of entry-level talent. For instance, regions with a growing tech sector see higher average salaries for relevant roles, reflecting both the demand for and the competitive pressure to attract the best entry-level talent. Conversely, regions with a more balanced industry mix might exhibit a more even salary distribution. Furthermore, cities with a high concentration of entry-level talent, like London, may have lower average salaries than regions like Leeds, as the latter may have to offer a premium salary to incentivise relocation.
These findings highlight the importance of adjusting your offering based on the location of the role. Understanding the complexities of the local job market, including the types of roles in high demand and the level of competition for talent, is essential. This knowledge will allow hiring managers to create attractive salary packages that resonate with the expectations of talent in that region.
Moreover, in diverse job markets like London, SMEs might need to focus on specific niches or offer unique benefits to stand out. In more specialised markets, however, aligning salaries with industry-specific demands is crucial. For SMEs hiring across different locations, these findings underscore the importance of creating individual salary offerings for each role to better align with the regional norms.
Despite being smaller in stature, every SME will require employees across a wide range of different job roles. Therefore, this section dives into the salary trends of entry-level roles across various job responsibilities.
Our study found that entry-level salaries at SMEs vary significantly across different areas of responsibility. Some roles consistently offer higher average salaries, while others tend to be on the lower end of the salary spectrum.
Certain areas such as Engineering are seen commanding higher salaries. This could be due to the specialised skills required and the scarcity of entry-level talent possessing them.
Meanwhile roles like Customer Relations, while essential, offered a lower average salary. This variance likely reflects the differing levels of technical expertise and market demand for these roles. For instance, Software Engineering roles, while having a high maximum salary, exhibited an average towards the lower end of the spectrum. This could be a result of SMEs preferring senior hires in this area; therefore, the demand for entry-level software engineers is lower compared to Enterprises.
For SME hiring managers, it’s essential that each role has a well-structured compensation package that aligns with its market value, the level of specialised skill required, and the role's impact on the organisation. In roles where salary offerings are lower, SMEs can focus on other aspects like career growth opportunities, a positive work culture, and work-life balance to attract talent.
Nevertheless, it’s important to realise that these salary trends are dynamic. While certain roles may be in high demand currently, this can change. Continued development of AI is likely to be a catalyst for this, since it’s likely that firms, at some point, will be able to replace certain employees with different AI software. As a result, these roles will be less in demand, and the average salary will inevitably decrease.
In the world of SMEs, timing can be as crucial as anything when it comes to hiring. Unlike enterprises who hire on a more regular basis, SMEs tend to hire at points where it is crucial for the business. As a result, salaries, like many other aspects of business, fluctuate at different points of the year. This section takes a closer look at this, and how this knowledge can be leveraged to optimise hiring strategies.
Our study reveals some interesting fluctuations throughout the year. You could say that, just as nature has its seasons, so too do SME salaries.
Throughout late-spring and summer months (May-September), average salaries are at their lowest. This is likely due to the availability of entry-level talent at these times; there will be many recent graduates yet to find a job, meaning that companies will have an easier time attracting, without having to offer premium salaries. In contrast, in months like December, where there is likely a shortage of available entry-level talent, the average salary is much higher. In these months, companies likely offer these premium salaries in order to poach talent from their current employers. In addition to this, across different industries, the intensity of business activity at different points throughout the year can impact the salary at these points since in slower months, the demand for talent will be reduced - it’s simple supply and demand ;).
This knowledge is useful for SME hiring managers in two ways. Firstly, it enables a better understanding of salary norms at different points of the year. For instance, if you’re hiring in December then you’ll likely need to increase your salary offering to make it attractive in comparison to the rest of the hiring market.
Moreover, it highlights the benefit of planning ahead when possible. Of course, there will be times where a hire is impossible to foresee, but If you’re able to plan hires in advance, then it can allow you to capitalise on the salary fluctuations throughout the year to secure the best possible entry-talent at the lowest cost.
Given the fact that all hires cannot be foreseen, SME hiring managers should also try to strengthen their employer brand and build a pipeline to make it easier to attract the right candidate even in periods where talent may be scarce. To do this, hiring managers should partner with different student societies or interact with students directly through their own company events, both of which can be done with Huzzle.
For SMEs, the art of attracting and retaining top talent relies significantly on strategic salary planning. This section distils the essence of our analysis into practical insights for SME hiring managers.
This article provides a comprehensive overview of the SME entry-level salaries, revealing the nuances of how salaries vary by company size, location, job role, and over time. These insights are not just numbers on a chart; they are a reflection of the dynamic nature of the SME sector and its workforce.
Overall, making informed salary decisions is more than a financial strategy; it's a crucial element in the success and growth of an SME. It's about understanding the market, valuing your employees, and positioning your organisation as a desirable place to work. In the end, a well-planned salary strategy can be a powerful tool in not only attracting talent but also in building a committed and motivated team, driving the success of your SME.