A recent Wall Street Journal article highlights the hiring challenges small business owners are experiencing. With Amazon and McDonald’s raising wages to $15 an hour and offering signing bonuses, small business owners are feeling increased pressure to compete for labor by raising wages. However, the majority of small businesses run on very slim margins, and increasing wages eats into these margins.
Many small businesses are passing on opportunities to grow because they don’t have the team members needed to fulfill new work. This is particularly painful as many scaled back considerably to survive COVID.
With opportunities to grow at their doorstep, and a lack of labor, these small business owners are feeling increased pressure to stretch themselves and their existing teams even further, at a time when many are burned out from a year of strain managing the stressors from COVID.
“Companies cite several reasons for the struggle to lure Americans back to work, including fear of becoming sick with or spreading Covid-19, lack of child care and enhanced unemployment benefits that exceed what they would be making at available jobs.”
“More than two-thirds of small businesses reported having a hard time finding qualified workers, according to a monthly survey of 611 small firms for The Wall Street Journal by Vistage Worldwide Inc. At the same time, they are planning for their workforces to grow. According to the survey results, 75% of small businesses are expecting their headcounts to rise over the next year.”
“Businesses with fewer than 20 employees saw employment grow 13.5% last month compared with a year earlier, while businesses with between 20 and 49 employees saw it rise 15.9%, according to data from the ADP National Employment Report. Businesses with 1,000 or more employees saw employment growth of 7.3%.”
Yet, our research on the State of Entrepreneurship conducted during the height of COVID (February 2020 – April 2021), indicates the majority of the small businesses do not have systems in place to attract, onboard, and retain team members. Eighty-nine percent report lacking a system for attracting top-performing team members, 70% lack a system for onboarding new hires and 81% are lacking a system for retaining top-performing team members.
If increasing wages is the only tool small business owners have in their tool chest when faced with hiring challenges, this is a losing proposition for the business. It’s not sustainable and it will stifle growth. The reality is competitive wages will be necessary for small businesses to grow. And, traditional hiring practices don’t work.
Those small business owners who are succeeding in hiring A-Players consistently are doing something different. It’s time for fresh solutions to the labor shortage.
It’s time to ask better questions:
How do I design my business to be sustainably profitable?
What opportunities exist to add value to create the margin needed to pay well and attract A-Players?
What is important to the A-Players I want on my team?
How do I become an Employer of Choice to attract a steady stream of A-Players so the business can grow?
What systems will I put in place to consistently attract, hire, onboard, and retain A-Players?
Those small business owners who are succeeding in hiring A-Players consistently are asking these questions and implementing systems to hire the best on their teams. They are figuring out what makes them unique and highly attractive to the A-Players they want on their teams.
Hint: it’s not just competitive wages and benefits.
Those small business owners who invest the effort to discover this and systemize their recruiting, hiring, and retention will thrive post-COVID and beyond.