Research has shown that many small and medium-sized businesses are finding they cannot recruit the managers they need. The two most common reasons given are lack of suitable skills and inability to match the remuneration packages offered by larger businesses.

Internal recruitment

One obvious solution to both problems is for small and medium-sized businesses to develop strategies for recruiting managers from within. This approach has obvious advantages:

• Candidates will already be familiar with the business, its products or services, and its internal procedures, thus reducing the costs of induction and training
• Employee morale, and therefore productivity as a whole, will improve if there is seen to be a real prospect of career progression within the firm

Of course, appropriate training will still be needed, but if potential high fliers were identified at an early stage they could be given the necessary training in stages as part of a recognition and reward process.

Experience shows that employees acknowledged in this way tend to go the extra mile to prove themselves - and often develop a positive and loyal relationship with the firm.

Incentive schemes

There is also scope for smaller businesses to improve their incentive schemes. The same research shows that in smaller firms there is a much greater tendency for managers' and directors' bonuses to be linked to the overall performance of the business rather than their own individual performance. Businesses wishing to retain or recruit good managers might take note and consider restructuring their bonus schemes accordingly.

These days, even smaller businesses can be quite creative in the remuneration packages they offer. A 'cafeteria plan' that combines salary, bonuses, and other financial incentives with pension provision, insurance schemes, child-care facilities and/or flexible working patterns might prove to be just the formula to retain your star performers and encourage them to grow with the business.