The Brave New World of eHR: Human Resources in the Digital Age

Small firms lose staff to large companies

17 April 2001 - The belief that small companies poach trained staff from large businesses is a myth, it seems. A NatWest Small Business Research Trust (SBRT) Quarterly Survey of Small Business suggests the opposite: small firms lose more staff to large organizations than they gain from bigger companies.

Most small firms get new employees from other small firms and the pool of unemployed. Just 20% of their new recruits come from large organizations, whereas more than 40% of full-time workers recruited by small firms in the survey over the last 12 months came from businesses with fewer than 100 employees. 20% of recruits were unemployed and another 13% were students. This finding is all the more remarkable given that more people work in large than small firms across the economy as a whole.

The survey also shows that more people leave small firms to set up their own businesses than to become small firm employees.

According to Peter Ibbetson, Head of NatWest Business Banking: "These findings yet again underline the considerable contribution small firms make to the UK economy in terms of employment. Overall, small firms appear to recruit from the unemployed and students and then lose them, probably after providing much valuable training and experience, to large firms."