3. People First
The Talent Puzzle Facing NZ SMEs
Shifting Ground series
This article is part of our Shifting Ground series, where we’re sharing what we’re seeing and hearing from SME owners across Aotearoa in 2025. The landscape is changing fast, and through this series, we’re exploring the key issues and opportunities shaping New Zealand’s small business community right now.
If there’s one topic that gets SME owners leaning forward in conversations with us right now, it’s people. At RegenerationHQ, in our work with businesses around the country, we’re hearing a consistent message - finding great people and holding onto them, is tough going. In fact, many owners tell us it’s become their single biggest source of stress.
The “people puzzle” isn’t new. But what’s shifted is the number of pieces moving at once -
skills shortages in key industries
changing employee expectations
immigration system uncertainty
rising costs of employment
the personal energy it takes to lead through all of this
In this third article in our Shifting Ground series, we’re taking a closer look at what’s driving this pressure, how SME owners are responding and what we can all learn from businesses building great workplaces, even in challenging times.
The Skills Shortage - Still Here
It might not make headlines every week anymore, but the skills shortage is very real across much of the SME sector. In trades, healthcare, hospitality, tourism, manufacturing and parts of the tech world, owners tell us they simply can’t find enough qualified people.
The reasons are well known - pandemic-era disruption, global competition for talent, lagging training pipelines and immigration challenges that are improving, but not yet resolved.
What we’re hearing now is that even when owners can recruit, they’re often having to invest heavily in training, and accept that staff may not stay as long as they once did.
That creates its own dynamic more effort, more uncertainty, more need to build strong, flexible teams that can adapt on the fly.
Employee Expectations Are Evolving
Another shift we’re seeing clearly - what employees want from work has changed.
Flexibility is front and centre. People are asking for (and often expecting) options around where, when and how they work. And it’s not just office jobs, we’ve seen retail and hospitality businesses experimenting with job-sharing, flexible rosters and four-day work weeks.
Wellbeing matters more than ever. Employees want to know that their mental and physical health is supported and that their workplace culture genuinely values people over short-term profit.
Purpose is rising, too. Increasingly, staff, especially younger workers, want to feel that their work contributes to something meaningful, whether that’s community impact, environmental responsibility, or simply being part of a positive team culture.
For SME owners, meeting these expectations is no small task. Many are doing it brilliantly. Others are stretched, trying to balance fairness and compassion with the very real need to keep the business viable.
Leadership Load
What often gets lost in the wider conversation is the personal load all of this places on SME owners themselves. We hear this a lot - “I want to be a great employer. I care about my people. But some days it feels like there’s just nothing left in the tank.”
The emotional labour of leadership, especially in smaller businesses where the owner is also the manager, the mentor, the HR person, is huge. Add in financial pressures and the uncertainty of the current market and it’s no wonder many owners are running close to burnout.
One key message we share often - compassion has to start with yourself. Owners who can set realistic expectations, communicate openly with their teams and take time to recharge are better placed to create the kind of workplaces people want to stay in.
Bright Spots - What’s Working
Despite the challenges, we’re seeing some really encouraging examples of SMEs getting this right, or at least moving in the right direction.
Here are a few practical things we’re seeing work -
Open, transparent communication Being honest about the state of the business and what’s possible goes a long way in building trust.
Small wellbeing actions Even simple things like flexible start times, paid wellbeing days, or regular check-ins can make a big difference.
Purpose-led storytelling Sharing why your business exists beyond making money helps attract values-aligned employees.
Investing in leadership development Owners who take time to develop their own leadership skills are better equipped to lead through change.
Peer learning Connecting with other SME owners to share ideas and challenges, this reduces isolation and sparks innovation.
Building a Fairer, More Compassionate Work Culture
One of the bigger conversations we’re having with SME owners right now is about what a truly fair and compassionate workplace looks like.
It’s not about trying to match corporate perks or overextending your business to meet every new expectation. It’s about building a culture where -
People feel respected and heard
Flexibility is offered where possible
Wellbeing is genuinely supported
Mistakes are treated as opportunities for learning, not blame
Leaders are transparent, human and approachable
Perhaps most importantly, where the owner themselves is able to lead sustainably, not from a place of constant exhaustion.
What We’re Learning
From the conversations we’re having across the SME community, a few key lessons stand out -
The talent puzzle isn’t going away, but businesses that adapt early will be better placed to attract and retain great people.
You don’t need to do everything at once. Small, genuine steps toward a more human workplace are noticed and appreciated.
Building a regenerative business starts with how you treat your people, and yourself.
Peer support matters. Many of the best ideas we see are shared between SME owners, not handed down from big business playbooks.
A Closing Word
Running a small business has always been personal. In 2025, it’s more personal than ever and that includes how you lead and care for your team.
The good news is that a fair, purposeful, compassionate work culture is one of the strongest attractors of great talent and in a shifting landscape, businesses that can offer that will be better positioned to thrive.
We’ll continue sharing stories and insights from across the SME community, because there’s a lot we can learn from each other.
Stay Connected
If you’d like to follow this series and be part of the conversation about building a better SME support system for Aotearoa, or you’d like a quiet conversation about how to impact your business results now, here’s how to get hold of us –
📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact
If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview
🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.