March 9th, 2020 · 5 min read
The best small-business owners are inveterate trend trackers. They do this both in reference to issues that crop up in their specific industries — wealth management, say, or accounting — and to broader forces at work on the economy and job market. These entrepreneurs understand that by comparing their observations and impressions about workforce issues with those of other business owners they can form a more accurate picture of conditions, and take appropriate action.
With this in view, Oasis, a human-resources outsourcer, recently sponsored a poll of 319 U.S small business owners and managers at companies employing from 10 to 99 staffers. The survey was conducted in mid February 2020. In terms of annual sales, this survey set broke down as follows.
38% $1 million to just under $5 million
19% $5 million and up
16% $300,000 to just under $750,000
14% Under $300,000
13% $750,000 to just under $1 million
But it's important to understand the survey’s findings describe conditions that have been altered by the Covid-19 pandemic.
Against a backdrop of historically low national unemployment, small-business owners are struggling to attract top talent.
Well over half of those surveyed, 62%, find it difficult to fill important roles in a timely manner. In a related finding, 58% say the biggest workforce challenge they face is an “inability to find employees with the right skills to fill key positions.” This view was especially pronounced in the Northeast US, and among business owners nationally with more than one location, office or branch. Meanwhile, the same percentage of small-business owners — 58% — also worry about losing their best people, despite the fact that nearly 60% of them reported unwanted annual turnover of less than 10%.
For Oasis, these results suggest a tight hiring environment is especially challenging to small businesses, particularly those that feel hard pressed to compete with larger companies in the realm of salaries and, especially, benefits.
Thankfully, the arena of online networking sites have driven recent developments in the wealth management job market, thus welcoming the industry to the growing list of online job search sites such as Succession Link.
“The employment market is flooded with good people looking for work, which makes hiring external talent a complex process to find the precise skills and cultural fit needed in a small business,” says Emily Welfeld, a senior manager with Oasis. “Owners and managers who have a clear set of selection criteria and a highly effective candidate-recruitment process will reduce the risk that so many face in spending too much time and resources on finding the right person.”
No less than 40% of small business owners intend to ramp up hiring through the coming 12 months, according to the Oasis survey. One quarter of expect to do more hiring in 2020 to “fill existing gaps in the business,” and another 16% say their hiring in 2020 is all about driving growth. Respondents were more likely to be in the hiring-for-growth category if they operated more than one location and brought in less than $500,000 in yearly revenue.
When it comes to finding candidates, just over half (51%) of the business owners and managers polled rely on “internal employee development and external hiring.” Nearly 20% say they “routinely look externally” to fill job vacancies, and around 30% report having “a good pipeline of developing employees to cover” most of their needs.
Half of the owners surveyed say they “aim to offer competitive compensation,” 13% admit to offering “the basic level of compensation,” and 11% say they “pay above the going rate” but “only to top performing employees.”
In Oasis’ view, the fact that “many” of those paying above the going rates were at companies with less than $1 million in annual sales and had been in business less than 10 years suggests
“they may be trying to gain a competitive edge in the market” by luring in top-rung talent."
Though they reckon time spent on HR and workforce matters is generally time well invested, 31% of small business owners dedicate about 25% of their workdays to tasks such as hiring, payroll, and benefits.
And whatever portion of work time the have to dedicate to staff-related matters, 39% of the business owners polled say they “spend too much time on” them.
“Administering payroll, monitoring employment regulations, designing and executing on strategies to attract and retain talent, and offering competitive health benefits are specialized skills that require time and resources,” says Melissa Ness, head of Oasis’ professional employer association business in the company’s central US region. “These tasks can be a distraction from the work that needs to get done in acquiring customers and growing the business.”
But there’s a slight disconnect in the Oasis survey’s findings. Though nearly 40% of business owners complain staffing tasks are a time drain, no less than 83% consider time expended on HR and workforce issues as a good overall investment.
In other words, business owners know this stuff has to be done, but they’re not too happy about having to do it themselves — a point Oasis eagerly seizes on.
The HR outsourcer notes that “many owners said they would consider seeking assistance from an outside resource for such things as ‘attracting quality employees to join our business’ (49%), ‘improving productivity and efficiency’ (34%), and ‘employee retention and engagement’ (27%).”
An astounding 87% of business owners think their employees are “highly engaged.” The same percentage feel certain their employees “have opportunities to learn and grow.” But this confidence erodes a bit when owners consider staff performance. Just 76% agree they “get the best possible performance” from junior colleagues.
In Oasis’ analysis, this could “be a reflection of the commonly understood challenge that it takes a lot of time to manage and direct people, and this is often time that small business owners don’t have. Further,” the HR and benefits provider says, “engagement can only go so far without the additional support of training and development, so employees can understand what they can do on a daily basis to help in moving the company forward.”
For 52% of business owners, “improving productivity and efficiency” is the biggest workforce-related challenge they face in early 2020 — in this group, owners of firms with more than 50 employees and annual sales between $500,000 and just shy of $1 million. For 41% of the owners polled, the biggest issue is “attracting quality employees to join the business.”
In a tie for third spot on the list of challenges business owners face in the next several months are:
Developing employees to be able to contribute at higher levels (33%)
Keeping employees focused on what’s most important for the business (33%)
This makes perfect sense to Oasis. “An organization’s talent is often a company’s only differentiator,” the company says in its write-up of its business-owner survey. “To attract and retain the best available talent in the market, providing competitive compensation and health benefits packages are just table stakes. Employees are looking for growth opportunities,” as well as “development, purposeful work, and a culture where they feel they fit in.”