A recent report has revealed that year-on-year employment growth among UK small businesses has fallen significantly from 7.8% in December 2024 to just 2.5% last year. For SMEs already navigating regulatory changes, economic uncertainty and rising costs – from employer National Insurance contributions to increases in the National Living Wage – this slowdown is hardly unexpected.

Rather than expanding headcount, a growing number of SME leaders are exercising caution and focusing on strengthening what they already have; as of September 2025, 48% planned to upskill their existing workforce. While developing current talent is a pragmatic response to a volatile market, recruitment remains an unavoidable part of sustaining, and ultimately growing, a business.

However, with 85% of decision-makers admitting to making a bad hire and one in five unsure of the true cost, the challenge is not simply hiring but hiring well. Recruitment has always been a strategic decision with real financial and cultural consequences, but in an environment where margins are tighter and resources more constrained, the cost of getting it wrong is amplified.

So, how can SMEs improve their chances of getting it right first time?  Dr Megan Seibel, Director of the Center for Cooperative Problem Solving at Virginia Tech and KAI practitioner provides some insight.

One increasingly valuable, yet often overlooked, perspective lies in understanding how people think.

Looking beyond skills and experience

Most recruitment processes are built around assessing qualifications, experience and, increasingly, “cultural fit.” While these factors are important, they rarely capture the full picture of how an individual will perform in a role.

What is often missing is insight into how a person approaches problems.

Research into cognitive diversity – originated as Adaption-Innovation theory by psychologist Dr. Michael Kirton – demonstrates that individuals have innate preferences in the way they generate ideas, apply structure to implement them, and respond to rules and change. These cognitive or problem-solving styles exist along a continuum, ranging from more adaptive – which favour structure, clarity and incremental improvement – to innovative – characterised by flexibility, challenging norms and a willingness to rethink established ways of working.

Neither end of this spectrum is inherently better than the other. However, each lends itself to different types of roles, environments and organisational needs.

When recruitment focuses solely on what candidates have done, rather than how they think, SMEs risk overlooking a critical component of long-term fit.

The real cost of a poor fit

A bad hire is rarely about a lack of capability. More often, it stems from a misalignment between the individual and the role or team.

When someone’s thinking and working style is at odds with what the job demands, friction is almost inevitable. This may initially manifest as slower progress, reduced engagement, or difficulty integrating within a team. Over time, it can contribute to increased stress, particularly where individuals feel they are constantly working against their natural preferences.

For SMEs, the implications are significant.

Smaller teams mean fewer buffers and often broader roles, requiring individuals to flex across responsibilities. In this context, one misaligned hire can have a disproportionate impact that affects productivity, morale and, ultimately, the bottom line.

In a cautious hiring climate, this is a risk many businesses are no longer willing to take.

A more tailored approach to recruitment

If the risk lies in misalignment, the solution lies in finding a greater fit from the get-go.

Tailoring recruitment through an understanding of cognitive diversity and problem-solving style begins with a simple but powerful shift; defining not just what the role requires, but how the work needs to be approached.

Before beginning the recruitment process, SME leaders may benefit from asking:

• Does this role require adherence to established processes, or the ability to challenge them?
• Is success driven by accuracy and consistency, or by originality and change?
• Will this individual be maintaining systems, or rethinking them?

In addition to these questions, there are a number of key steps that SME leaders can take to find the right fit:

• Reframe job descriptions – Move job descriptions beyond generic competencies to reflect the nature of the work itself. Highlighting whether a role involves working within defined structures or navigating ambiguity helps attract candidates whose natural preferences align with expectations.
• Rethink interviews – Traditional interviews often focus on prior experience. While valuable, they can be complemented by scenario-based questions that explore how candidates approach real-world challenges. For example, gauging how they would respond to unclear briefs, tight deadlines, or conflicting priorities can offer insight into their problem-solving style, and therefore whether they would be a good fit.
• Use structured tools – Frameworks such as Kirton’s Adaption-Innovation (KAI) Theory and inventory tool provide a robust, research-based method for understanding cognitive preferences. Rather than relying on intuition or assumption, these tools offer SMEs a more objective way to assess alignment between individuals, roles and teams.
• Consider the wider team – Understanding the cognitive make-up of an existing team can highlight where strengths already lie, and where different perspectives may be beneficial. This allows SMEs to build more balanced teams, rather than inadvertently reinforcing a single way of thinking.

Moving beyond “cultural fit”

The concept of “cultural fit” has long been a staple of recruitment. However, it can sometimes lead to unintended consequences.

When interpreted narrowly, it may favour similarity over difference, resulting in teams that think alike, approach problems in the same way, and ultimately miss opportunities for change.

Cognitive diversity helps SMEs build teams that are both cohesive and complimentary, offering a more nuanced alternative by focusing on how individuals think and solve problems, rather than simply how well they align socially or behaviourally.

As research highlights, these differences influence not only decision-making, but also communication, collaboration and trust within teams. When understood and managed effectively, they become a source of strength rather than tension.

This is particularly important in today’s business environment, where organisations must be able to respond quickly to change, navigate uncertainty and identify new opportunities.

Getting it right, first time

Tailoring recruitment to account for cognitive diversity is not about complicating the process. On the contrary, it offers a way to improve accuracy and make more informed, deliberate recruitment decisions, thus reducing the likelihood of costly missteps. In a market where every hire matters, SMEs cannot afford to rely on intuition alone.

By looking beyond surface-level indicators and considering the deeper dynamics that influence performance, collaboration and satisfaction at work, SMEs can ensure they build teams capable of both stability and innovation to enhance long-term performance and resilience.

In many ways, this approach reflects a broader shift in how we understand talent. Success is no longer defined solely by skills or experience, but by the ability to apply them effectively within a given context.

And in today’s climate, that distinction may make all the difference.