Have you heard the term “talent wars”? They are heating up, and most small businesses aren’t well equipped to do battle.
The term reflects a growing shortage in the U.S. labor market of properly trained and educated employees. Since before the latest recession, there has been a mismatch between people seeking jobs and those who hire them. Recent statistics show that employers were advertising to fill 51 million open positions, an all-time record.
Many business owners complain about the lack of talent in the hiring pool – especially in sales, technical jobs and trades. Several factors contribute to this situation, and if you intend to compete in the talent wars, you need to be aware of them.
What’s driving the shortage?
Fewer people. The number of people in the prime age group for experienced employees is shrinking. Those reaching age 65 outnumber the folks hitting their 45th birthday by 4,000 people a day. This overlap of the post-World War II baby boom with the baby bust of the late 1960s and ’70s can’t be changed, and it will continue for the next 10 years.
One strategy to counter the middle-experience gap is to look further up and down the age bracket. You will need to reconsider fixed ideas about what an ideal age is for these positions. Many boomers are healthier than preceding generations and plan to work longer. A new hire in his or her late 50s can be brought up to speed in far less time and still be a productive employee for 10 or 15 years.
Training. Our higher education system is driven more by low-interest, government-guaranteed loans than by the value of a degree. Employers can no longer look at college education as de facto evidence of qualifications, but it still can provide some guidance. How long did it take the applicant to graduate? (Less than 50 percent make it in four years.) What courses did he or she take? A well-rounded liberal arts education still has value, and timely completion still indicates a goal-oriented person. Both, however, require more investigation than merely checking the diploma.
Increasing competition for talent. After years of downsizing, outsourcing and technology upgrades that replaced people, large organizations are now filling the slots left by the wave of retiring boomers. According to a poll of 587 corporate executives in the study “Talent Wars: The Struggle for Tomorrow’s Workforce,” published in The Economist, the top five concerns were:
- Aging population
- Shift of personal values (e.g., stronger focus on work/life balance)
- Lack of investment in training and developing employees
- Increasing gaps between what universities provide and what industries need
- Low or declining standards of education
These issues aren’t surprising. What owners of small and midsized businesses need to realize, however, is that this study was done eight years ago. Since then, corporate America has reacted, offering signing bonuses, guaranteed wage increases, creative benefits packages and more.
Small-business employers are finally becoming aware of the crisis, but they can’t win this battle on the benefits front. Wages are a much higher percentage of their expenses, and they typically aren’t deep enough in any one position to easily swap bodies when necessary. They have to compete with the weapons they have always used against giant competitors: speed, creativity and culture.
TRY THESE TACTICS
Small-business owners can use these techniques, which cost little beyond some time and energy, and they may even reduce employment expenses.
Treat employees as real people. Most small companies take pride in their “family atmosphere,” and that culture is still your biggest advantage. Employee satisfaction surveys consistently rate the importance of social interaction in the workplace far higher than wages.
Tailor jobs and benefits to individuals. Show that you are truly concerned about an employee’s job satisfaction. Some companies have a flexible self-improvement benefit – a few hundred dollars annually for each employee to use as he or she chooses for education, hobby lessons or a gym membership. Consider carefully whether it is really a problem if an employee schedules around family needs, such as taking the kids to school in the morning.
Maintain current technology. Most of us get frustrated if a website doesn’t load in less than five seconds. Don’t make your employees deal with outdated equipment or software. The cost of a second monitor or upgraded workstation is less than most employees’ weekly salaries.
Consider outsourcing. Many smaller companies hire a skilled person and then “fill in” his or her 40-hour week with lower-level tasks – a sales manager producing the customer newsletter, for example. The idea of “We do that ourselves” is impractical when you are overpaying for the function. You can’t afford to pay for full-time talent if it is really only a part-time job.
Invest in skills. Owners often worry that they are training people to get better jobs elsewhere. Let employees know you are investing in them as recognition for their ability. Once they are more qualified, adjust wages to reflect their new value. Gratitude is a short-lived motivation for staying in a job.
Pay market rates. Every small-business owner has lost an employee to an offer “I just couldn’t match,” but if it is happening regularly, you may be out of touch with the wage scale. Those with ability don’t have a problem finding work. You may not be able to match the top of the market, but you need to be in the ballpark.
Market internally. Employees can develop a “grass is greener” attitude when they take for granted all the good things their employer offers. So make a list of all the tangible and intangible benefits your company provides, and schedule regular reminders of them for your workers.
The talent wars are here and will intensify in the years to come. Finding and retaining the right people will depend on your ability to fight back with the inherent advantages of a small business.
