Attracting and retaining the right employees will be a top priority for mid-sized companies in the coming months.

This is according to Sage’s annual Business Index, which surveyed nearly 2 000 medium-sized businesses in 17 countries.

The survey showed that the war for talent is heating up as economies start to recover, business confidence rises and companies look to key hires and star employees to drive and sustain growth.

More than a third of mid-market businesses said governments should be doing more to improve skills development and education to boost business confidence (39% across all markets).

And 14% of businesses surveyed said that recruitment and retention were the biggest challenge for them in the next year.

A lack of a skilled workforce to recruit from was also a leading challenge to doing business for many mid-market companies, with 12% of respondents across all markets citing this as one of the biggest challenges.

In South-Africa, the top three challenges for businesses that are growing are recruitment and retention (19%), managing cash flow (19%), expanding in to new markets or geographies (14%).

“Companies are getting squeezed in the war for talent at a time of unprecedented competition,” says Christophe Letellier, CEO of Sage Mid-Market.

“Differentiation between businesses is essential as potential candidates start to focus on what tools and processes an organisation can offer skilled staff members. Now more than ever, businesses in the mid-market space need to ensure they are giving staff access to the latest, smartest, most effective tools and technology.

“Mid-market businesses are the unsung heroes of the global economy, and the bedrock of that success are the people. Businesses need to do everything they can to ensure they attract the right talent, so they can continue to grow and succeed.”

Other problems cited by South African businesses included too much bureaucracy and legislation (24%) and the government’s handling of current economic challenges (17%).

The annual Business Index survey found that optimism among mid-market businesses – defined as those above 100 employees in the survey – found business optimism at a three-year high.

The Index showed that mid-market companies were positive about their own prospects, recording a score of 65,82 out of 100. Mid-market companies were markedly less optimistic about the prospects for their respective country’s economy (53,19) and about the global economy (52,41).