Since the 1990s, the competition for quality talent has slowly heated up. The “war for talent” has become even more of a thing in the wake of the Great Resignation. According to data from the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021 alone. By the end of July, there were 10.9 million open positions.
Recruiters and HR professionals alike have noticed that the number of applications received for any given open job has dropped. It has never been more critical to attract and retain top talent. However, small and medium-sized businesses are at a consistent disadvantage compared to Fortune 500 companies.
To win the talent war, you need to arm yourself with state-of-the-art weaponry, and that weapon is more formally known as a “Professional Employer Organization.”
The talent war is the ongoing battle to obtain top talent. It starts with demographic and social forces. Many baby boomers are taking early retirement. Meanwhile, younger employees have internalized that they need to change jobs frequently to advance their careers. Companies have to go above and beyond to prove that they are loyal to their employees.
The pandemic has also forced many parents, predominantly women, out of the workforce. With schools closed and childcare shortages significantly aggravated, nearly 3 million women have left the labor force, and many will not return.
Additionally, there is a skills shortage. Initially, this was at the executive level, but now it’s across the board. Manufacturers have issues finding workers, there is a national shortage of truck drivers, and even restaurants struggle to find the right people.
Technology has changed the skills needed more rapidly than many people can retrain. Affording to retrain is a challenge for many workers, especially those over 40.
As a small business, you probably feel as if you are losing the war.. .and you may be right!
The positions you post are likely going unanswered by the talent you want. That’s because you face two significant issues:
While many workers find the tight-knit environment of a small business at least somewhat appealing, it’s not enough to make up for what Fortune 500 companies can offer.
Bluntly, they offer better salaries and benefits. Some younger workers are willing to take a lower salary if they can have flexible schedules, work from home, etc. However, even if they do take a position with substandard benefits, they are likely to leave when those benefits become insufficient. For example, they may go when they plan on starting a family to get better dependent coverage. It’s easy for large companies to use benefits to poach your top performers.
Fortune 500 companies have the budgets to do this without breaking a sweat.
There are 31.7 million small businesses in the U.S., although “only” 6 million of them have paid employees. Even if a worker is willing to take a lower salary to work in a small office, what will make them pick your small business out of the noise?
You are likely competing with 100s of other small businesses locally for the same employees who can pick and choose who they apply to carefully. You need to stand out from the crowd. However, you have similar resources to your competitors, so you can typically only offer the same or similar compensation and benefits.
All of this means that you need a new strategy. Many small business owners don’t know that it is possible to compete with the Fortune 500s when it comes to employee benefits.
According to a study from Prudential in 2020, 77% of employees feel benefits are a key part of their compensation, 73% of them consider them a key motivation for staying at a job, and many would take a chance on a new job which offered better benefits. All of these numbers are trending up.
As a small business, you can’t afford these benefits.
Or can you?
Partnering with a PEO can make a difference by allowing you to access Fortune 500 benefits at small business prices.
PEOs are a comprehensive HR outsourcing solution designed to complement (not replace) your existing in-house HR team. But they go beyond other HR outsourcing solutions.
Because the PEO becomes the employer of record through a mechanism called “co-employment,” they can add your employees to their master plan of benefits. This means that instead of buying for a pool of, say, sixty employees, you are able to access rates that were negotiated for thousands of worksite employees.
By offering these improved benefits, you are able to compete more with Fortune 500 companies and stand out from the overall crowd of small businesses. You can also leverage your company culture, improved flexibility, and growth potential.
Studies show that a supportive workplace that promotes respect, appreciation, and interactions will likely have high employee retention. If you hire for character and talent, you should give them the authority and autonomy to perform their jobs while feeling valued.
In most cases, employees cite managerial issues as the cause behind their departure and often connect the company's culture to managers. Part of building an inviting workplace culture is ensuring that your managers are not compelling the employees to leave. Many issues could be affecting your company, from employee burnout to culture toxicity.
It is important to regularly ask current employees about their work and team dynamics to help bring some of these toxic issues into focus. In addition, it is important that you make the company's brand identity clear from the get-go. You can implement the same strategy you use to attract new clients to attract new talent.
You could also fasten your hiring process as part of changing your workplace culture. To be effective in the talent war, you need to focus on a speedy and timely hiring process. It is easy to lose out on hiring top talent due to slow internal hiring processes. World-class talent is like hot real estate property in San Francisco; you shouldn't take long before closing the deal.
Since 2020, the world has been focusing on non-standard work models such as remote and hybrid, thanks to their numerous benefits, especially for employees. The talent pool is very excited about the new models' flexibility and now demands employers keep an open mind and explore creative work solutions. To attract top performers, the key is to offer them flexible work conditions.
There is a significant number of talented people who prefer to be their own bosses through freelance jobs. The number of freelancers in the US stands at around 57 million, and the figure is expected to keep growing.
By leveraging the gig economy, you gain access to a deep and wide pool of world-class talent who are a flexible option for projects that don't require a full-time commitment. On top of high-quality talent acquisition and retention, hiring a freelancer saves you from the unnecessary risks of high overhead costs.
The main objective of any employee is to progress further in their career through professional development. To that end, companies that offer the right employee development and training programs tend to attract more talent.
These companies know such programs will be beneficial to the talent's CVs in the future. If you intend to emerge victorious in the talent war, you need to offer talents a clear path forward for them to achieve their professional aspirations, as well as giving them the right development opportunities at the right time.
Communication has to play a significant role in understanding and retaining your talents. It would be best if you started by having regular meetings/ interviews with your talent where the focus is on their career goals. This shows the talent that you hire for character and skill and that you value them as people.
The most effective and cheapest strategy for attracting top performers is by leveraging your current employee's social network through referral programs. However, while people might want to work with their friends, not many will go all out to secure their friend a job if there are no incentives.
You should create a referral program where employees receive an email about the current openings and the bonus they receive if the hire is successful. Let the talent hear about your company from some of your top employees, which makes the position more attractive.
The referral program can include employees posting openings on their social platforms. It could be set up with a short description of their most compelling features and mentionable achievements during their career with your company. You could also use them as brand ambassadors during campus recruiting events and interviews, giving talents a first-hand preview of how the company operates.
The talent war is not going away. In some industries, it is becoming worse due to fewer college and trade school students.
A PEO gives you a leg up against all of your opponents, regardless of their size and power.
By partnering with a PEO you significantly increase your chance of winning the talent war. You can attract and retain the employees you need with the skills that will help your company thrive.