The research by employment consultancy Peninsula suggests leaders in small firms are both failing to manage their talent and running the risk of losing it, as ambitious but disgruntled employees leave in search of better positions.
Lesley Uren, CEO of talent management consultancy Jackson Samuel, says this is a classic example of small-business thinking.
"They see talent management as complicated and costly; something that large organisations do. In fact, it can be simple and inexpensive. Great talent development happens on the job, through project work, secondments and by asking people what they are interested in and finding out what they want to do."
Managed properly, this produces internal job candidates who are familiar with the business culture, as well as their own strengths and weaknesses. These people are more likely to be successful in a new role. "The cost of external recruitment is high," adds Uren. "CEOs who jump to that option are spending unnecessarily and risk the loss of valuable skills from the workforce."
But the loss of one person, particularly someone in a key role, can have a major impact on a small business.
"There may be a sense of urgency in terms of finding a replacement," says Simon Mitchell, a director at human resources consultancy DDI. "But that is all the more reason why they should have a talent-management strategy in place to ensure they have the skills and expertise they need for succession."
HR and payroll software provider Snowdrop advertises vacancies internally and externally at the same time. The rate of internal appointments over external ones depends on the role, the skills required and the calibre of applicants, says HR manager Melanie Guy.
As she says: "There will be times when the business needs someone with specialist expertise, or a more vibrant way of thinking. Then it may be more appropriate to look for an external candidate."
The company has a development programme for identifying future management talent, which includes coaching and projects that involve a supervisory role. But even on regular day-to-day activities in the workplace, talent doesn't go unnoticed.
"There will always be someone who shines through when they are working in a group or on a particular project," says Guy.
Some businesses are unclear about what constitutes talent. Is it just the high-flying future leaders, or the workforce as a whole? And who is responsible for managing it?
Ap Eigenhuis, a former senior vice-president of human resources at Unilever, and co-author of High Performance Business Strategy, says: "Talent has to be managed and developed at all levels of the organisation, top to bottom. In a small company it is the responsibility of the business leader, and as the business grows, the line manager; the person who works closest to the staff. Done properly it will secure that talent for the future and can transform a company's performance."
