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2016 Small Business Hiring: Sharper Tactics for a Tight Market

2016 Small Business Hiring: Sharper Tactics for a Tight Market

By: John Rossheim

Many small businesses, expecting their growth to continue accelerating in 2016, are counting on bringing in more talent to meet the demand. How is that likely to impact small business hiring trends?

Relatively low unemployment as well as skilled workers sensing greater opportunity and leverage in the labor market likely means that start-ups, entrepreneurs as well as more established business owners will need to be more thoughtful and aggressive to recruit successfully in the year ahead. 

“We plan to grow 15 percent in 2016,” says Tricia Emerson, president of 36-employee Emerson Human Capital. In November 2015, Emerson was recruiting for five positions in change management and learning and development. “Talent is a tighter market than it has ever been. Compensation competition is heating up, and the West Coast is the hardest.”

Indeed, many small-business executives are already encountering very challenging conditions on the talent market. “We’re ramping up significantly in 2016, and we’re struggling to find the talent,” says Candace Klein, chief strategy officer at small-business lender Dealstruck.

More workers are seeking new employers. Well into this economic recovery, your next new hire may be more willing to change jobs than they have been for nearly a decade. 

“For years after the recession, the ability of employees to make a move to another employer – that was near zero,” says Phil Noftsinger, president of CBIZ Payroll, which services small businesses. “So that created pent-up demand to move. More recently there’s been widespread employee turnover. But there are still a lot of people wanting to move.”

Hungry part-timers are helping to contain pay increases. Labor is still a relative bargain, because compensation hasn’t kept pace with the stock market, which has nearly tripled in six years. 

“Wages are still not growing much,” says Noftsinger. “We’re not close to full employment,” due in large part to the millions of Americans working part-time for economic reasons, he believes.

A scarcity of qualified talent is hurting small businesses. Job postings in key talent niches are getting harder and harder to fill, especially for companies that lack a marquis employer brand. 

Some 56 percent of small businesses said they plan to hire in 2016, according to a September 2015 survey by Dealstruck. But 70 percent of respondents said they are unable to find the right talent and 15 percent cite the scarcity of qualified staff as the greatest hindrance to growing their businesses. 

Consequently, 26 percent of small businesses have recently been forced to turn away new business, according to Dealstruck’s analysis.

Demand varies by industry sector. In 2016, your peers who run small companies in other lines of business may experience very different recruiting conditions than you will particularly in high-demand staffing industries. “Our most bullish clients are in construction contracting, healthcare, and retail, including ecommerce,” says Klein. 

“Professional services is much more bearish — these firms are slow to hire and slow to grow. You can’t anticipate the next contract, but if you wait it’s hard to find the talent.”

With labor tightening, it’s time to extend your planning horizon. A just-in-time hiring strategy can be appealing to small businesses with tight cash flow. But this approach could backfire in 2016 if opportunities expand more quickly than the labor pool. 

“Typically the small business owner we talk with started as an owner-operator,” Klein says. “So we have to coach them to look beyond the tip of their nose. They’re looking out 60 days rather than 12 to 18 months.” Says Emerson: “We also have contingent labor, and we do long-term forecasts” to anticipate hiring needs.

Speed is of the essence. In-demand talent likely will enjoy even greater career opportunities in 2016. So small businesses that hesitate before making an employment offer will run a greater risk of missing out. “We’ve found that if we don’t make an offer fast, we don’t get the talent,” says Emerson.

What do you do after you’ve plumbed your own connections? “Growing beyond your first 5 or 10 employees is harder because you have to go beyond your personal network,” says Klein. Your firm can grow its talent pipeline by getting in front of target talent communities with job advertising, and with face-to-face appearances on campus and at job fairs and networking events.

Mind the media of those mobile, social Millennials. At a minimum, your web site must pass Google’s mobile-friendly test, and your business should be active on Facebook and Twitter — unless you want to be passed over by Millennial candidates, now the largest generation in the American workforce.

Customize each search to the opportunity. When the hiring gets tough, smart small businesses come up with a specific hiring strategy to fill each opening. 

“We’re doing a lot more spearfishing, more proactive calls” to passive seekers, says Emerson. “We need to have both a substantial social presence and a personal touch.”