Research shows that most businesses plan to expand their workforce this year, making it tougher than ever to hire the talent necessary to grow.
Expect hiring to be a hot issue in 2018. Our research shows that the vast majority of CEOs from small and midsize businesses (SMBs) say they plan to increase their headcounts this year.
In Vistage’s December 2017 survey of 1,377 SMB CEOs, 71 percent of firms said they planned to hire more employees in the next 12 months, up from 60 percent one year ago. In addition, the Vistage CEO Confidence Index–a measurement of CEO sentiments about economic prospects–reached a 13-year high in the survey.
Altogether, this paints a rosy picture for SMBs–and presents a challenge for SMB CEOs. With unemployment at historical levels and companies looking to hire, talent has emerged as the single-most critical decision facing SMB CEOs in 2018. In fact, 87 percent of the CEOs we surveyed affirmed this.
The upshot: Getting talent decisions right will play a major role in the success of any SMB in 2018. Here are five ways to win the talent war this year.
1. Recognize that talent precedes growth.
Having the right people in the right jobs is foundational to every business. For SMBs, however, it’s a function of survival. That’s because the dependency on a single person is exponentially greater in SMBs than large organizations. An SMB CEO must recruit and hire great talent before the business can grow.
Consider these cautionary tales as examples:
- One SMB CEO recently told me that his company had to turn away business because they didn’t have the talent to fulfill a customer’s request and sustain the quality of their work.
- Another CEO said they wanted to invest in new equipment–and take advantage of today’s low interest rates and access to capital–to grow their business, but had to stall their plans until they found the right people to man the equipment.
2. Retain while you recruit.
The talent wars are not just about finding the best people. They’re also about holding on to the people that you have.
While you’re busy looking outside your company for new talent, other CEOs are looking inside your company for recruitment opportunities. When your people are recruited away, two problems emerge: You lose productivity in your firm, and you lose the institutional knowledge of former employees.
In small businesses, processes tend to be built around the people. So when Susan leaves, the processes she participated in may collapse, and others will have to pick up the slack. Employee retention, therefore, is a prerequisite to adding headcount.
3. Engage and develop your employees.
One of the best ways to retain top talent is also one of the simplest: Invest in your employees’ professional development. Indeed, 37 percent of the SMB CEOs participating in our survey identified developing their existing workforce as a top strategy for winning the talent war.
When you invest in the training of your employees, you effectively boost their productivity, improve their skills and increase the likelihood that they’ll stay with your company. It’s no wonder that employee engagement has emerged as a critical metric for SMBs to measure.
4. Offer better wages to employees.
Offering competitive wages is a classic way to recruit top talent. It’s also a popular technique right now, flagged by 31 percent of CEOs in our survey as a top strategy for 2018.
But don’t forget to also use this strategy for retaining talent. When you present a raise to a well-deserving employee, that employee will feel valued, rewarded and more inclined to stay with your company. However, don’t wait to make an offer until a recruiter comes calling or a resignation letter lands on your desk. At that point, it’ll be too late to offer a salary match because in most cases the employee will feel emotionally checked out.
5. Compete on the basis of benefits.
Like boosting wages, offering great benefits to employees can give companies a competitive advantage in the talent war. For a potential hire considering different companies, perks such as healthcare, vacation and even professional development opportunities can serve as compelling points of differentiation.
Moreover, increasing or improving benefits for your current team is a force multiplier. It’ll make your employees feel greater security in their roles and increase their loyalty to your company.
What happens if you lose?
Losing the talent war can have serious repercussions for SMBs. Extended fulfillment and delivery times will negatively impact customers, resulting in lower satisfaction. Reducing sales or marketing investments will immediately impact top-line revenues.
Your competitors may gain an edge by hiring the people you need — or the people you have.
A good offense begins with great defense. Evaluate the competitiveness of your salary and benefits packages so your people won’t be lured away. Make it a priority to invest in the training and development of your people. And be prepared to go to great lengths for your best people. As you’re reading this, their phones are ringing.
By Joe Galvin – Chief research officer, Vistage