Small Businesses Face Labor Challenges in Tight Job Market

With record-breaking online sales this holiday season, it might seem like the only concerns facing small businesses right now are with getting shipments delivered on time and dealing with the inevitable onslaught of returns.

But a recent report from the National Federation of Independent Business (NFIB) indicates there is a more pressing issue that has small business owners across the country concerned: finding qualified workers.

According to the NFIB’s monthly jobs report for November, 25% of small business owners cited the difficulty of finding qualified workers as their ‘Single Most Important Business Problem.’ That figure matches the record high set in August 2018.

The report found that 34% of owners had job openings they couldn’t fill, and of the 60% who were hiring or trying to hire, 87% reported few or no qualified applicants.

It’s likely no coincidence that at the same time concern for finding workers has increased, optimism among small business owners has weakened. After reaching an all-time high of 108.8 in August, the small business optimism index dropped for the third straight month to reach 104.8 in November, down 2.6 points from the month prior and the lowest level it’s been since April.

“The labor force is not growing quickly enough to satisfy the current demand for workers,” Bill Dunkelberg, NFIB chief economist, said in a press release. “A successful hire in this market will likely create a job vacancy elsewhere because of the tight labor market. The unemployment rate will likely go lower since the labor demand is still more than the increases in labor supply.”

Attracting Qualified Workers

So what can small businesses do to attract talent in the historically tight job market? While the obvious answer is to increase wages, a high salary isn’t the only thing that workers today are looking for.

Showcase your small business assets

It may initially seem like small businesses are at a disadvantage for finding workers in the limited labor pool, but they actually have many advantages over big companies.

A survey by CNBC found that 27% of workers would prefer a job at a small business compared to 23% favoring a large corporation.

The reason? Unlike large corporations, small businesses usually have a less bureaucratic culture, a closer relationship between management and staff, and can offer employees a more tailored work experience, among other perks.

So use those small business assets to attract qualified workers.

Start by making a list of everything that is unique about your business. Think about what you’re proud of, what makes your business stand out from the competition. What is the business’ culture? Are there opportunities for growth? What is the overall vision or purpose? Has the company been nominated for or won any awards?

And if you have staff potluck lunches on Fridays, jot that down as well.

Then take all that information and use it to create your job posting. Job seekers don’t just want to find out about the open positions; they also want to learn about the business to determine if it’s someplace they could see themselves working.

This isn’t the time to be modest, so don’t hold back on highlighting everything that makes your small business special.

Comprehensive benefits package

Offering a benefits package can go a long way to helping attract as well as retain employees.

In fact, comprehensive benefits can actually entice applicants more than a high salary. The 2016 Aflac WorkForces Report found that 60% of employees would take a job with lower pay but better benefits, while 16% had left or turned down a job in the 12 months before the survey because of the benefits offered.

Aside from medical and dental coverage, also consider offering a retirement plan. If you think your business is too small to provide a retirement package, think again. Research has shown that in nearly half of all small businesses with two to 50 employees, workers who quit cite a lack of retirement benefits as a reason.

Among small business owners who do offer retirement plans, 94% say it helps them attract and retain workers, while 52% report that it helps them find workers who are more qualified.

Flexible work options

Want a sure-fire way to increase your pool of applicants? Offer remote work options.

In fact, not embracing remote work (whether permanent or occasional basis) could put your business at a disadvantage.

That’s because working remotely has gained enormous popularity in recent years, with 70% of global professionals now working from home at least one day a week.

Of course, sometimes you need people to be on site for specific tasks. Working remotely isn’t possible for every industry, but it’s also not the only flexible work option. Flex hours (when workers aren’t tied to starting at a specific time), part-time positions, and compressed work weeks are other flexible work options.

Numerous studies have shown flexible schedules lead to more happiness and improved work-life balance among workers, which in turn leads to increased productivity and fewer sick days, along with better employee retention.

Talk about a win-win for both workers and your business.

There’s no question that finding qualified individuals to fill positions can be a daunting task, especially with the current shortage of available labor.

Use the situation as a chance to reflect on your business, including immediate needs, structure, and how it’s perceived by others. Not only will a little business self-reflection help you attract the perfect candidate, but it can also better position your company for future success.