Last month, Capital One released their Small Business Growth Index, a biannual survey of 500 small business owners that evaluates attitudes towards individual business growth, industry conditions, and the economy as a whole. Based on the survey, we reported on the most significant issues facing small business owners today.
Last month, we shared with you that small business owners are
●more optimistic than ever,
●concerned about economic policies,
●struggling to hire.
The Struggle to Hire
The struggle to attain and retain employees is one that must be analyzed and discussed. After all, trained, trusted employees (or lack thereof) can make or break a small business.
More small business owners plan to hire than ever before.
●One third (33%) of small business owners plan to hire within the next 6 months (up from 25% one year ago)
●Of the small businesses who plan to hire, 69% plan to hire full-time employees, 44% plan to hire part-time employees, and 21% will hire contractors or freelancers.
While small businesses intend to hire, they are plagued by difficulties in attaining and retaining employees and are challenged by skills gaps and competition from bigger businesses. As tax legislation changes to allow larger corporations to deduct more expenses than smaller businesses, bigger businesses are increasingly able to offer benefits that small businesses are not able to afford. As a result, qualified employees are leaving small businesses for their larger competition that can offer them better benefits and a heftier paycheck, or dismissing small businesses when it comes to job-seeking in the first place.
Thirty-eight percent (38%) of small business owners say their biggest competition when hiring and retaining employees is bigger businesses who can offer more robust benefits packages. \
The Skills Gap
As a result of these hiring difficulties due to competition from larger businesses, it is increasingly difficult to find workers with specific skill sets, and small businesses do not have the same resources to train workers that larger corporations have.
According to small business owners, the top factors impacting their ability to hire are:
● The skills gap (cited by 34% of small business owners)
● Competition from other businesses (cited by 30% of small business owners)
● Financial resources (cited by 30% of small business owners)
● The tight labor market (cited by 28% of small business owners)
Retention and Benefits
In addition to hiring, retention and benefits are top of mind in today’s tight labor market.
While the increase in desire to hire can be partially attributed to company expansion due to increased economic growth, it can also be attributed to an increase in voluntary attrition. Over the past 6 months, 6% of small business owners have experienced an increase in voluntary termination. At the same time, that small businesses are thinking about growing their workforce, they also must replace their depleting existing workforce. As they struggle to hire, fully operate, and expand at the same time, this puts heightened pressure on their existing employees, who then, in turn, are more likely to leave in search of the better benefits larger corporations can offer.
Benefits, or lack thereof, are an important factor when it comes to hiring and retention, especially in an environment in which small businesses are at a disadvantage to larger corporations.
According to small business owners in the Capital One Small Business Growth Index,
● 90% of small business owners with 2 or more employees offer benefits of some kind
● 68% of small business owners who offer benefits are confident that their package is competitive
● The most offered benefit is employee training (67%)
Some other benefits that are frequently offered include:
● paid time off (offered by 57% of small businesses)
● flexible work hours/work from home (offered by 47% of small businesses)
Fifteen percent of small business owners have already changed their benefits packages to be more competitive, while 9% have plans to change them in the near future.
This data raises the question, how can small businesses combat this disadvantage and meet the challenge of hiring and retention head-on?
Don’t Underestimate the Importance of Benefits
Your employees definitely aren’t underestimating the importance of benefits. They’re probably very aware of more competitive packages from your larger competitors.
But the news isn’t all bad!
If they work for you, they’re there for a reason. What is that reason? The culture of a smaller, more comfortable environment? The flexible work hours? If you can pinpoint why the employees you do have are staying, you can lean into that as a strength, and use it to retain your existing employees and attract new, similar employees who are more likely to stay.
Use The Money You Save to Keep Employees Happy
Your employees are the backbone of the company. You might be the driving force behind your operation, but without happy, dedicated workers, your business cannot function.
Read about the Capital One Spark credit cards and how small business owners who saved 2% on all purchases used their savings to offer benefits to employees, here. (insert link)
Give Your Employees Autonomy to Increase Satisfaction
Employee retention is directly correlated to employee satisfaction. Money is not the driving force behind employee satisfaction. If you cannot provide the same monetary benefits as your larger competitors, rest easy.
Instead, give your employees more autonomy. Workers are more engaged and more satisfied when they have more accountability and decision-making opportunities regarding their own responsibilities.
Engage, Respect and Appreciate Your Employees
Company environment is one of the primary reasons employees choose to remain within an organization. Some primary factors that contribute to company culture are engagement, respect, and appreciation.
To keep your employees engaged,
● Foster an emotional connection between your employees and the work they are doing.
● Motivate them by pinpointing their passion, and connecting it with your vision.
To make your employees feel respected,
● Recognize their accomplishments.
● Take every complaint or criticism seriously, and make sure they know you are taking them seriously.
Finally, appreciate your employees on an individual level.
● Make sure they know that you care about them, not just their results.
● Go out of your way to ask about how they are, and offer personal treatment when they need help.
● In a small business, it is important to treat your employees like family in some ways. This is something larger corporations cannot do.
Published in partnership with Capital One.