9 Tips to Combat a Tight Labor Market

Common Recruitment Tactics

The current unemployment rate is 3.7 percent (Sept. 2018), its lowest in 50 years.  This information, in addition to our recently sponsored manufacturing survey, continues to indicate our privately held clients are struggling to find quality employees.  Over the years employers have used the following tactics to deal with the shortage:

• Hire through temporary agencies
• Ask current employees for family and friend referrals
• Offer signing bonuses
• Automate processes
• Utilize technology

The list goes on, but now is the time to think differently and control your own hiring destiny.

In addition to the shortage of quality employees, businesses deal with continual challenges of a growing company. Data indicates privately held, middle market companies continue to grow at a greater rate than the top 5,000 companies in the U.S.  When looking at the number of baby boomers retiring, the future of the labor market appears even more difficult¹.

Middle Market Growth Difficulties  

Despite the fact that middle market firms hire more employees and generate more new jobs than any other economic segment—or perhaps because of that fact—middle market executives regularly cite talent management issues, including competing for and acquiring people, training and development, and retention, as a top challenge affecting company performance and long-term growth and vitality.

• 37 percent of middle market executives say that a lack of talent constrains their company’s ability to grow.
• 44 percent say that a lack of candidates with the right skills makes it difficult to recruit.

Clearly, middle market companies struggle to find, hire, develop, and retain people with the right technical and soft skills needed for the jobs they have available, especially managerial, technical, professional, and sales positions. A portion of the problem can be attributed to the following several factors that are unique to the size, scope, and internal capabilities of middle market companies¹.

• Middle market companies tend to be less well known than larger businesses
• Typically attract a smaller pool of candidates to start with
• Less developed human resources infrastructures than their larger peers, which means their talent forecasting, recruiting, and training capabilities are less robust¹.

These issues are compounded by the ecosystem of education, training, and job placement organizations surrounding middle market companies. These workforce development resources may not pay enough attention to middle market companies’ workforce needs. Their services can also be difficult to navigate and access for leanly-staffed middle market companies, making it even more difficult for mid-sized businesses to take full advantage of resources that exist to provide assistance¹.

Practical Solutions For Your business

Other research addresses this issue and indicates employers need to prepare for the shortage and next generation of millennials and gen Z.  The following 9 steps will help you deal with human capital issues:

1. Control the entry level of workforce you are in greatest need for
2. Have a sought after work environment
3. Be an employer of “choice”
4. Your employees need to be highly engaged in the company and its success
5. Assess capabilities and aptitude of prospective employees
6. Develop and invest in your own training programs – i.e. train them your way and don’t inherit past sins
7. Market compensation but have incentives where employees participate in the overall company success
8. Educate your employees on how to build their own personal health & wealth
9. Continually invest in education and lifelong learning

Partnering With Schools 

Hiring quality people is a significant challenge.  Simply finding the right people with the available resources you have – is not an easy solution.  Except for those mentioned above, other common suggestions have included partnering with local community colleges and trade schools.  While this is a reasonable solution trade schools and community colleges may not have the specific type of people you are looking for.  If you do not have community colleges and trade schools available, another route may be high schools. Why is this also a viable option?  Current college education data indicates on average 43 percent of college graduates are under-employed in their first job.  Of those, roughly two-thirds remain in jobs that don’t require college degrees five years later². When you consider this data along with their student debt, it only compounds the problem and partnering with high schools may help them avoid significant debt which can create long-term social and economic problems.

Middle market companies do not have large entry level hiring needs, in this case it truly is quality over quantity.  So how does one get started controlling your own destiny and solving the workforce shortage dilemma?  You must commit to a program dedicating resources and creating a long-term plan.  Develop a written plan encompassing the items enumerated in one through nine above.  Clearly record the skills needed, develop skill assessments, author orientation and training programs, include mentorships and/or buddy programs for long-term success.  Identify local high schools, community colleges, and/or higher education organizations augmented with specific skills training aligned with your needs.  Upon finding the right resource, initiate relationships with counselors and placement personnel. Establishing and maintaining these relationships are just as important as the relationships you have with your vendors and customers.

Contact Us

To find the right employees for your business, start investing in the development of your own programs, hire personnel without being at the mercy of market conditions or inheriting someone else’s sins,  train them your way, and educate them on your organization’s culture. At Barnes Wendling CPAs, we are happy to help with these common struggles and provide solutions to assist with business growth. Contact any of our business advisors today.

(1) National Center for Middle Market Report
(2) Report issued by Burning Glass Technologies