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.
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.