According to Statistics Portugal (INE), average unemployment in Portugal was 6.0% in 2025, the lowest since 2011. By December of that year it stood at 5.6%. For job seekers, that is good news. For anyone running an SME who needs to hire, it means something else: capable people have options, and they use them.
Over my years as a coach I have seen one reaction to this again and again. The business owner decides the problem is pay and that the only fix is to pay more. Pay matters, of course. But when every competitor offers roughly the same, what decides whether someone joins, stays and commits is how the business works on the inside. That has a name: culture. And culture is not a poster on the wall. It is a system.
What the numbers say about the labour market
Low unemployment does not come alone. The 2026 Eurobarometer, which surveyed 500 companies in Portugal, found that 35% of Portuguese SMEs report "great difficulty" recruiting people with the skills they need, the 3rd highest rate in the EU. The same survey shows that 71% of Portuguese companies have never tried to hire from abroad.
Add cost to the picture. According to PORDATA, the national minimum wage rose from 870 euros in 2025 to 920 euros in 2026. Every departure costs more: the time spent recruiting, training the new person, the output lost while they learn, the mistakes, and the strain on colleagues who pick up the slack.
The practical conclusion is simple. In an economy close to full employment, keeping people is worth more than finding them. And retention depends above all on culture.
Culture is not a nice atmosphere
When I ask business owners to describe their company culture, the usual answer is "we are like a family" or "we have a good atmosphere". Pleasant phrases, but they say nothing about expected behaviour. A family never lets anyone go for poor performance; a business sometimes must.
At ActionCOACH we see culture as the set of rules, written and unwritten, that govern how people behave when the owner is not watching. If the owner takes two weeks off and quality drops, the culture is dependence. If deadlines slip and nobody says a word, the culture is tolerance of missed commitments. There is always a culture. The question is whether it was designed or simply happened.
In the 6 steps to business success, Team and Synergy come after Mastery, Niche and Leverage. Not because they matter less, but because a strong team needs a business with clear direction and systems to support it. Without those, even the best people eventually wear out.
The leader's role
In an SME, culture is largely the leader's shadow. If the owner turns up late to meetings, punctuality will never be a real value. If they criticise customers in front of the team, respect for customers will stay a slogan. This is not a criticism, just an observation: people copy what they see, not what they read.
So the first step is always the owner. Accountability starts at the top: clear commitments, deadlines met, and a willingness to hear what is not working. This is also where an outside view helps, because our own habits are the hardest thing to see.
Designing culture as a system
A culture that attracts and keeps people rests on a few elements, all of them measurable. This is the route I suggest to the owners I work with:
- Write down the rules of the game. Six to ten concrete behaviours, in the company's own words. Not "excellence", but "we reply to every customer on the same working day".
- Define roles and indicators. Everyone knows what is expected and which number shows whether they are delivering. Ambiguity is the first source of frustration.
- Set a rhythm of conversations. A short weekly team meeting and a monthly one to one with each person. Same time, same structure, every time.
- Praise in public, correct in private. Do both quickly, based on the written behaviours rather than impressions.
- Hire and let go by the rules. If the rules carry no weight in these decisions, nobody will believe in them.
- Show the path. Explain to each person how they can grow over the next two or three years, even in a small company.
Measuring culture with numbers
As an engineer, I distrust anything that is not measured. Culture leaves a trail in the numbers too. I suggest tracking four indicators every month:
- Staff turnover: how many people left in the last 12 months, divided by average headcount.
- Departures within the first six months: a high figure almost always points to a hiring or onboarding problem.
- Absence: unplanned days off per person.
- Internal referrals: how many candidates came recommended by current staff. Nobody recommends a place they do not enjoy working.
Picture a hypothetical company of 15 people that lost 5 staff in a year. That is 33% turnover. If each replacement takes two months to reach the output of the person who left, the business has lost the equivalent of almost a full year of one person's work. No sales plan easily makes up for that.
One action for this week
Gather the team for 45 minutes and ask three questions: what makes us proud to work here, what wastes our time and energy, and which behaviour we would like to see more of. Write down the answers without debating them. By the end of the week, draft a first version of six rules of the game based on what you heard and share it with everyone. Work out your staff turnover for the last 12 months as well, so you have a starting point.
If you would like to tackle this with a clear method, the ActionCOACH Porto team would be glad to talk. The Clarity and Alignment Workshop was designed precisely to get owner and team pulling in the same direction.