How can small businesses identify the right people when recruiting?

New research from the London School of Economics (LSE) has identified four key behaviours that small businesses value when recruiting: adaptability, appetite to learn, accountability and attitude.

The findings come from Nowhere to Hide: The 4 A’s that SMEs need from the people they hire. Researchers interviewed 30 small and medium-sized businesses (SMEs) across England between August and October 2026. 

All 30 employers identified at least one of the four behaviours without prompting, while 17 described three or all four. Accountability was the most frequently identified quality, mentioned by 25 employers, followed by attitude (24), adaptability (18) and appetite to learn (14). Many employers said these behaviours often carried more weight than formal qualifications.

A number of the employers also acknowledged that relying on personal judgement and existing networks could limit the range of people they considered for roles. The report warns that this may create barriers for candidates from lower socio-economic backgrounds, particularly when businesses have no consistent way of assessing the qualities they value.

The research also highlighted how AI is making it harder for smaller businesses to assess candidates during recruitment. Employers described receiving applications that appeared to have been generated or heavily tailored using tools such as ChatGPT and Claude, with some candidates subsequently struggling to demonstrate the skills and experience outlined in their CVs.

One employer estimated that AI-assisted tools were being used to process 60% to 70% of applications, while another described the growing use of automated technology by both employers and candidates as AI effectively competing against itself.

The volume of applications is adding to the challenge. Some businesses reported receiving between 100 and 500 applications within days of advertising a vacancy. One respondent estimated that just 10% were potentially relevant, while another said they spent as little as five to ten seconds reviewing each CV.

With so many applications to process, smaller employers are liable to have less opportunity to establish whether candidates genuinely possess the skills and behaviours they are looking for. 

Other reported frustrations included candidates failing to attend interviews, withdrawing late in the recruitment process or attempting to renegotiate salaries and working arrangements after receiving an offer.

However, researchers stressed that the findings reflect employers' experiences and perceptions, rather than independently observed recruitment practices. The study did not gather candidates' accounts of the same experiences, and employers also acknowledged shortcomings in their own recruitment processes.

Dr Grace Lordan, Founding Director of The Inclusion Initiative at LSE and lead author of the report, said that relying on intuition to identify desirable behaviours risks limiting opportunities for candidates from different backgrounds. She believes businesses need more reliable ways to recognise these qualities, rather than relying on who candidates know or how well they perform in an informal interview.

The next phase of the research will recruit SMEs across England to test practical approaches to assessing the four behaviours during live recruitment. These include identifying the qualities required for a role before advertising it and asking all candidates the same questions. Researchers will then examine how these approaches affect applications, hiring decisions and employee retention, as well as whether they improve access to employment for people from lower socio-economic backgrounds.

For smaller businesses without dedicated HR teams, more consistent recruitment processes could help them identify promising candidates while reducing the risk of a costly hiring mistake.