Small Businesses Face Challenges with Current Labor Market

With the recently tightening labor market, small business owners and entrepreneurs are facing challenges in attracting and retaining talent critical for their business success. Current challenges in the labor market include a record number of job openings, worsening skill shortages, and a tendency among younger workers to move from one job to the next more quickly. All this is forcing business owners to develop more creative ways to attract and hold onto the best talent.

Employee Resignations

One major issue involves employees leaving their jobs. Although private business quit rates didn’t rise in 2015 but rather held steady a just less than prerecession levels, according to the Bureau Labor of Statistics (BLS), the number of employees voluntarily leaving small businesses continues to increase. (BLS data looked at job openings and labor turnover by size of establishment.) According to the statistics:

With businesses with fewer than 10 employees, 1.8 million people quit between January and May 2015, representing a 34 percent increase from the same period in 2014.
For businesses with between 10 and 49 employees, employee resignations increased by 12 percent from 2014.
For businesses with between 50 to 249 employees, employee resignations increased by 9 percent from 2014.

Scarcity of Talent

There is also currently a scarcity of talent in today’s job market, which is posing unique challenges to small business owners. According to another survey conducted by the National Federation of Independent Business (in June 2015), 80 of those employers surveyed reported having difficulty finding or failing to find the talent they needed for their operations. Another similar challenge reported by survey participants involved having the resources necessary to attract the right talent (in terms of higher salaries and attractive benefits).

Limitations of Small Businesses

Money isn’t always the main factor motivating employees to leave small businesses for another job. According to a 2015 survey by staffing company Randstad USA that canvassed 11,000 employees, the biggest reason employees cited for quitting was a lack of a career path or growth opportunities. This particular surveyed also revealed that work-life balance was one of the biggest motivators encouraging them to stay rather than move on.

Small business owners are using a variety of strategies to attract and retain the right employees for their business This includes everything from spending one-on-one time with all staff members to develop a deeper relationship to being generous with titles and promotions to flexible working hours aimed toward improving work-life balance to offering custom-tailored benefits to meet employees unique interests.