According to the 2026 Eurobarometer, 35% of SMEs in Portugal say they have "great difficulty" recruiting people with the skills they need. That is the third highest rate in the European Union, in a survey of 500 Portuguese companies. The same study shows that 71% of Portuguese companies have never tried to hire from abroad.
This problem has not come out of nowhere. According to INE, Statistics Portugal, average unemployment was 6.0% in 2025, the lowest since 2011, falling to 5.6% in December. In a labour market like that, good people have options. And people with options do not stay with a company simply because they were offered a contract.
In my years as a coach, I often see owners treat recruitment as an emergency: someone leaves, an advert goes up, the first suitable applicant is hired. Six months later, the cycle repeats. Recruiting and retaining people is a system, and like any system it can be designed, measured and improved.
The real cost of a bad hire
When someone leaves, the company loses more than a salary. It loses the time of whoever recruited them, the time of whoever trained them, the productivity of the settling in weeks and, often, the relationships with the customers that person looked after. In an SME, where every person carries real weight, one departure can set back an entire quarter.
Add to that the pressure on pay. The minimum wage rose from 870 euros in 2025 to 920 euros in 2026, according to PORDATA. For many SMEs, competing on salary alone is not sustainable. You also have to compete on clarity, organisation and prospects for growth.
Recruiting with a system
Before posting an advert, it is worth answering five questions in writing:
- What concrete results must this person deliver in their first 90 days?
- Which indicators will measure their performance?
- Which skills are essential, and which can be taught?
- What values and behaviours do we expect from the people who work with us?
- Why would a good candidate choose our company over another?
The last question is the one most owners leave blank. It is also the most important in a market with unemployment at its lowest since 2011. If you cannot answer it, neither can the candidate.
Widening the funnel
Recruitment is, in many ways, like selling. There is a funnel: number of applicants, the share who get through interview, the share of offers accepted. If too few people enter the funnel, no amount of good interviewing will fix it.
A few ways to widen the top:
- Ask your current team for referrals, with a clear process and recognition for those who refer.
- Build relationships with vocational schools and universities in the region.
- Consider people with less experience but the right attitude, and invest in training them.
- Look at hiring from abroad for specific roles. The 71% who have never tried are at least leaving one option untested.
Retaining costs less than recruiting
Retention starts on day one. Someone who joins a company with no defined role, no clear objectives and nobody to guide them immediately starts wondering whether they made the right choice.
A simple onboarding plan makes a huge difference:
- Week 1: an introduction to the company, its main customers and the people they will work with, plus a written role description.
- First month: 30 day objectives, a named mentor and a 30 minute weekly check in.
- First 90 days: a formal review of results, based on the indicators agreed before the hire.
Beyond onboarding, what keeps people, in my experience, is not any particular perk. It is knowing what is expected of them, seeing the results of their work and understanding that there is a path to grow. That calls for leadership: regular meetings, shared indicators and honest conversations about performance.
The team as a lever for the business
In the ActionCOACH 6 steps to business success (Mastery, Niche, Leverage, Team, Synergy and Results), Team comes after Leverage. The order is deliberate. Before hiring, a company needs systems and processes that allow a new person to become productive quickly. Without them, every hire depends on someone to teach them, and that someone is nearly always the owner.
There is a direct link to productivity, too. According to PORDATA, people in Portugal work an average of 39.7 hours a week (2025), the fifth highest figure in the EU. An overloaded team without processes loses people faster. Organising the work is, in itself, a retention strategy.
Your action for this week
This week, book 20 minutes with each person on your team and ask them two questions: what would make them stay with the company for another three years, and what might make them leave. Note the answers without arguing. By the end of the week, you will have a list of retention priorities more reliable than any survey.
In a market where 35% of SMEs struggle badly to recruit, the advantage lies with those who build a company where good people want to stay. If you would like to tackle recruitment and retention with method, through 1:1 Coaching or a Clarity and Alignment Workshop with your team, ActionCOACH Porto is available for a conversation.