Reach: A new initiative to help SMEs tackle digital skills shortages

Small and medium-sized businesses say they need employees who demonstrate adaptability, appetite to learn, accountability and attitude, but a flood of AI-assisted applications and difficult recruitment experiences is making these qualities increasingly hard to identify, according to new LSE research.

The report calls these working behaviours the “4 As”. All 30 employers interviewed described at least one without prompting, while 17 described three or all four. Accountability was identified by 25 employers, attitude by 24, adaptability by 18 and appetite to learn by 14.

Employers said the 4 As often mattered more than formal qualifications once the essential technical requirements of a job had been met. Thirteen businesses used the word “attitude”, with one employer summarising the approach as: “Recruit for attitude, train for skill.”

Yet most employers admitted they had no consistent way of assessing these behaviours. Instead, they relied on gut feeling, informal “vibe checks”, personal networks and referrals, even as some vacancies attracted hundreds of applications within days. The report warns that this reliance on intuition and existing networks may restrict access to employment, with several firms acknowledging that their workforces were predominantly middle class.

In response, Reach, the three-year programme behind the report, led by Dr Grace Lordan at LSE in partnership with Be the Business and supported by JPMorganChase, is now recruiting SMEs across England to test simple, practical ways of recognising the 4 As in real vacancies. These include agreeing the behaviours a role needs before it is advertised and asking every candidate the same questions, so that small firms have a reliable way to see the qualities they value in candidates who do not arrive through a referral.

Employers also reported being constrained by increasingly challenging recruitment experiences, including receiving applications tailored almost word for word to job descriptions, only for candidates to struggle with basic questions about the skills and experience listed. They also reported candidates searching online during video interviews or appearing to read answers from a screen.

One chief people officer estimated that 60 to 70 per cent of applications were being processed through tools such as ChatGPT or Claude. Another employer described the growing use of automated technology on both sides of recruitment as “AI playing with AI”.

Some businesses received between 100 and 500 applications within days of advertising a vacancy, many from people who appeared not to have read the job description. One employer estimated that only around 10 per cent of the applications received might be relevant, while another admitted spending just five to ten seconds reviewing each CV.

The findings are published in Nowhere to Hide: The 4 A’s that SMEs need from the people they hire, the first report from the Reach programme.

Between August and October 2026, researchers interviewed founders, directors, HR leads and senior managers at 30 SMEs across England. The businesses ranged from a two-person diagnostics start-up to a 200-person software company and covered sectors including technology, consultancy, manufacturing, retail, hospitality and the creative industries.

Other difficult recruitment experiences included candidates withdrawing without warning, including failing to attend interviews, dropping out when asked to complete a task, or accepting an offer and later withdrawing. One business said it pays candidates £20 to attend interviews but still experiences no-shows.

Several employers said candidates attempted to renegotiate salary or working arrangements at the end of the process, despite the original terms having been set out earlier. Examples included applicants requesting substantially higher salaries or asking for office-based positions to become predominantly remote.

Employers acknowledged that candidates were entitled to negotiate, but said late changes could leave a small business with an unfilled vacancy after days of senior staff time had been invested.

Businesses also reported a gap between the abilities presented in applications and what some candidates could demonstrate. Employers described recruits who claimed proficiency in Microsoft Excel but lacked the expected skills, applicants unable to explain experience listed on their CVs, and new employees who struggled with tasks they had completed during recruitment. One employer said: “Anyone can say anything.”

Some new recruits reportedly left before businesses could recover their investment in training, moving for higher salaries or being recruited by larger competitors. One in five employers also used the phrases “nine to five” or “not my job”, without prompting, to describe attitudes they considered unsuitable for small teams in which employees frequently cover for one another. The report notes, however, that not every employer shared this view of working hours.

Employers’ views of younger candidates were divided. Some reported reluctance to make telephone calls, limited initiative or a lack of basic workplace skills. Others challenged these generalisations, describing younger workers as capable and well-informed. One employer suggested that economic insecurity and the cost of living were weakening candidates’ confidence and aspirations.

The researchers stress that these findings represent employers’ experiences and perceptions. The study did not observe the recruitment processes described or collect candidates’ accounts of the same events. Employers also acknowledged shortcomings in their own practices, including reviewing applications too quickly, failing to contact unsuccessful candidates and withdrawing vacancies after recruitment had begun.

Dr Grace Lordan, Founding Director of The Inclusion Initiative at LSE and lead author, said:

“SMEs are short of people who will adapt, keep learning, take ownership and stay constructive when things go wrong, and they have no reliable way of spotting those qualities in an interview.

“That matters for social mobility. When you cannot see what you value, you hire who you know. The encouraging part is that these behaviours can be shown by anyone, from any background.”

The stakes are particularly high for small businesses. In a firm of 15 people, one appointment represents around seven per cent of the workforce, and there may be no HR department to help address a poor hiring decision.

As one talent lead told researchers: “I think with SMEs, you’ve got nowhere to hide.”

Anthony Impey MBE, Chief Executive of Be the Business, said:

“Hiring new people has always been a challenge for smaller businesses, which have limited time and resources and often no HR team to fall back on. This research shows why many are now finding it a lot harder.

“And yet, there is a real opportunity to help business leaders identify the qualities and behaviours that matter, spot potential in people from different backgrounds and make better hiring decisions.

“That’s why we’re now recruiting SMEs across England to test practical approaches that make it easier for business leaders to do exactly this.”

The next phase of Reach will test practical, low-burden ways of assessing the 4 As during live recruitment. Researchers will examine who applies, who is interviewed, who is hired and who remains in post, while testing whether more consistent assessment can widen access for candidates from lower socio-economic backgrounds.