It’s no secret that recruitment issues are at an all-time high for small business. With only 15% of SMEs reporting improved performance last year, it’s clear that current economic pressures are taking their toll. And at the same time, Gen Z – or the workforce of the future – is still navigating their place in the working world.
That got us thinking – could small businesses and Gen Z be the perfect match to revitalise our economy and reshape workplace dynamics? We surveyed 1,000 Gen Z employees and 500 SME business owners. Our research dives into the untapped potential of this partnership and unlocks some secrets to make it a success for both sides.
SMEs under pressure
- Only 15% of SMEs saw performance improvements last year
- Recruitment remains the #1 challenge for small businesses, with skills shortages threatening growth
- Over half of SME owners work with fewer than 10 Gen Z employees, but 73% say Gen Z bring significant value to their workplace
Gen Z’s reality
- 77% of Gen Z employees prioritise a positive company culture
- 60% of Gen Z value remote working options, despite common perceptions
- 31% of Gen Z prioritise a collaborative and inclusive work environment
SMEs and Gen Z: a surprising match
- Just 20% of Gen Z want to work for SMEs but…
- 60% of those working in SMEs report positive experiences
- 18% working for larger businesses report negative experiences
- And just half (51%) say their employer understands their needs
- 79% of business owners are eager to hire more Gen Z employees
SMEs make up 99% of the UK’s total business population – that’s 5.5 million businesses – and provide a remarkable proportion of jobs in the UK.
In fact, in 2024, SMEs employed 16.6 million people, which accounts for three in five people working in the UK private sector.
It’s clear these small but mighty businesses have the power to be an engine for growth in the UK’s economy… but they’re feeling the squeeze.
It’s been a challenging year for many and, with recruitment remaining the number one hurdle, it’s more important than ever for business to find the right match in talent that meets their needs.
Source: Business population estimates for the UK and regions 2024: statistical release – GOV.UK
Gen Z is often painted as a workforce still searching for its place. Younger workers seem to gravitate towards larger corporations, with 25% saying they’d like to work for a large national or international business, chasing perceived security and opportunity.
Yet, for all the promise a big corporation gives, 18% of Gen Z employees in larger organisations report a negative experience, and 51% feel their needs aren’t understood by their employers.
So what does Gen Z really want?
It’s time to forget the stereotypes – our research reveals the truth about what Gen Z prioritises in the workplace, and it’s not all about remote working and ping-pong tables…
Sure, Gen Z appreciates flexibility, but they’re also looking for purpose, inclusion and growth. Luckily for SME owners, these priorities align pretty strongly with what they can offer.
Breaking stereotypes and bridging the gap
When it comes to Gen Z employees, plenty of assumptions and stereotypes have been floating around for a while – they’re glued to their phones, they shirk hard work, they don’t like professionalism…the list goes on. If these notions come to mind when you as an SME business owner think of Gen Z hires, it’s time to take a closer look.
- Myth: Gen Z is lazy and unmotivated
Truth – Gen Z is highly driven, but they’re looking for purpose in their work. Our data shows that 77% of Gen Z prioritise strong company culture, where their contributions make a difference. They value clarity and direction, excelling when given measurable goals that connect to broader aims.
- Myth: they only want remote work and perks
Truth – while flexibility resonates with Gen Z, it’s not all they care about. 60% still place serious value on role-specific opportunities, training and career progression. They’re often drawn to businesses that offer stability and are willing to invest in their long-term development – outweighing trendy office perks.
- Myth: Gen Z struggles with face-to-face communication
Truth – digital natives? Absolutely. But that doesn’t mean Gen Z lacks interpersonal skills. 79% of SME owners say Gen Z contributes significant value to their teams, especially when it comes to collaboration.
- Myth: Gen Z can’t handle criticism
Truth – feedback matters, but only when it’s clear and constructive. Just over 1 in 4 value access to ongoing training and mentorship, and regular, structured feedback works better than vague or sporadic reviews.
SMEs might not be the first choice for Gen Z jobseekers, but the data shows us there’s room to rethink this.
The potential really is undeniable. Gen Z employees can bring fresh perspectives, tech-savviness and adaptability – qualities that SMEs could really harness to thrive in today’s market.
SME career myths debunked – why an SME could be your next big move
When a Gen Z job hunter thinks of an SME, you might think of the stereotypes – there’s no room to grow, diversity isn’t a priority, you don’t want to work with such a small team – but let’s bust some of those myths.
- Myth: SMEs are one-man bands and get pretty lonely
Truth – in the UK, a small to medium-sized enterprise is generally defined as a business with fewer than 250 employees – so they’re not all one-man operations. In 2024, micro-sized businesses (0-9 employees) employed around 8.64 million people, small businesses (10-49 employees) employed around 4.32 million and medium-sized businesses (50-249 employees) employed around 3.68 million.
[Source: https://www.statista.com/statistics/936843/employment-by-smes-in-uk/]
- Myth: there’s no room for career progression in SMEs
Truth – growth opportunities are everywhere in SMEs. Because they’re smaller in size, you’re more likely to work closely with leadership and decision-makers, which gives you the chance to showcase your skills and take on more responsibility. Plus, a flatter organisational structure could mean faster promotions based on performance.
- Myth: SMEs don’t prioritise diversity or inclusion
Truth – SMEs are more adaptable and progressive than you think. Many SMEs create strong, people-first cultures that prioritise inclusion and value individual contributions. Unhindered by bureaucracy, they can also evolve their approach to diversity quickly.
- Myth: only big companies offer stability
Truth – while SMEs do face unique challenges, they often provide stronger job security than you might think. Smaller firms rely heavily on their team members and invest in retaining talent through competitive benefits, training opportunities and a strong sense of belonging.
As we’ve already seen, there’s huge potential for better collaboration between SMEs and Gen Z – and it offers mutual benefits.
For SMEs, it means injecting innovation and digital-first thinking into their operations. For Gen Z, it’s a chance to grow in a supportive, tightly-knit work environment that promotes autonomy, development and visible impact.
Here’s some ways SMEs can attract and retain Gen Z talent:
Highlight company culture during recruitment
With culture ranking high on Gen Z’s wishlist, develop your business values, build your employer brand around them and showcase them
Offer tangible development opportunities
Personalised mentorships and clear growth pathways could help satisfy the hunger for progression seen in younger workers
Showcase the SME advantage
Small businesses provide a community feel and opportunities to make an immediate impact, both of which resonate deeply with Gen Z values
While these recommendations highlight preferences commonly associated with Gen Z, they’re equally valuable for employees of all ages, as they address universal needs in today’s evolving workplace.
Using our insights, we’ve created a best-in-class job description template, along with top tips for onboarding and retention. These resources are designed to reflect the needs of the modern workforce across all generations, helping SMEs build inclusive and forward-thinking workplaces where every employee can thrive.
Part of Gen Z and looking for meaningful work? Here’s a few tips to help you find the right fit and make an impact…
Look beyond the big names
While large corporations may seem appealing, don’t overlook smaller, independent businesses. SMEs often provide a more personal, supportive environment where you can see the direct impact of your work.
Ask about company culture
During interviews, ask potential employers about their values, team dynamics and how they build a positive culture to help you decide whether their values align with yours.
Showcase your strengths
SME business owners are keen to integrate tech-savviness and fresh ideas, so make this shine in your CV and interviews.
Value development opportunities
Look for roles offering mentorship and learning opportunities, and emphasise your enthusiasm for growth. Fewer layers of hierarchy in SMEs could mean a fast-track to professional development.
Be clear about your priorities
Whether it’s flexibility, impactful work or inclusivity, communicate what you’re looking for to potential employers to find a role that truly matches your goals.
Wondering if you’re the right fit for an SME? Take our short quiz to see where you best fit – or, if you’ve already started the job-hunting process, check out our top tips for standing out in each stage, from finding the right places to apply to working out if an offer is the best fit for you.
