Under-25s: a highly valuable asset to SMEs

Tory minister Matthew Hancock’s defence of the Conservative Party’s decision to exclude under-25s from the new national living wage met with outrage.

20/10/2015, blogs

Speaking at the Conservative Party conference earlier this month, the energy and business minister justified his decision, saying that “anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average”.

His speech led to a social media backlash, with hard-working young people tweeting examples of why they deserve wage parity.

While Hancock’s claims are unfounded, there is evidence that his views may resonate among SME owner/managers. CIPD research shows that just 58% of SMEs employ someone aged 16-24 compared to 93% of large organisations.

As SMEs tend to be time and resource-stretched, it’s easy to understand why they could be deterred from investing in younger talent – especially when there’s a perception that they could take longer to find their feet. But SMEs are missing a trick by failing to give young people more opportunities. 

Under-25s can offer great value, so SMEs should be doing more to attract, retain and reward them. Here are a few reasons why:

1.Diversity – much has been written about the business benefits of more diverse teams, and age is one facet of diversity. Younger workers can bring fresh perspectives, new ideas and solutions to business problems. Mature workers also bring a great deal through their knowledge and experience, and this, combined with the energy and enthusiasm of young workers, creates a winning combination.

2.Loyalty – while there are endless articles about job-hopping millennials, research shows that investing in young people by providing opportunities for training and career development tends to increase loyalty and reduce staff turnover. As well as increasing productivity, retaining employees is more cost effective than hiring new ones. Young loyal workers will act as brand advocates for their employer, and with the growing popularity of platforms like Glassdoor, this sends a positive message to potential recruits.

3.Digitally savvy - The second annual UK Business Digital Index by Lloyds Bank showed that over a million small businesses lack basic digital skills. As “digital natives”, under-25s tend to be well versed in digital and social media platforms. Their innate digital “know how” means that they require less training, while their enthusiasm can change the mind-set of those who are reluctant to embrace digital.   

4.Entrepreneurial – research from the Global Entrepreneurship Monitor shows that globally, under-25s are more likely to want to start a business than generation X or baby boomers. Inspired by successful role models like Mark Zuckerberg, young people are increasingly drawn towards entrepreneurship as a career path. While some SME owners could perceive this as a risk – prospective entrepreneurs may show less loyalty – the entrepreneurial mind-set under-25s bring is a significant benefit. Intrapreneurial employees can cultivate innovation by constantly spotting new opportunities for growth, and improving processes to increase the SME’s productivity and efficiency.