Chair roundtable on hiring practices of small and midsize businesses

Our research shows that hiring and retention of employees is a top issue for CEOs of small and midsize businesses. In the Q1 2022 Vistage CEO Confidence Index Survey conducted in March, 65% of CEOs reported plans to increase headcount in the year ahead. In this competitive job market, the proportion of small and midsize businesses that are hiring is even greater as companies strive to replace lost headcount when employees leave.

What is even more concerning is the fact that 72% of CEOs reported that hiring challenges are impacting their ability to operate at full capacity and meet current demand. To help CEOs think about new ways to address this issue, we invited three Vistage Chairs to share what their members are doing.  

Gary Brennglass, Vistage Master Chair from the Los Angeles, California area

Gary Brennglass is a highly accomplished leader, business consultant and executive coach with over 30 years of C-level experience leading for-profit, nonprofit and volunteer organizations. He spent over 15 years as CEO of a multi-factory contract manufacturer of national brand health care and personal care products.

Carolyn Washburn, Vistage Chair from Cincinnati, Ohio

Carolyn helps executives sharpen their focus on their most important issues and unearth issues and opportunities they weren’t thinking about. With a focus on listening deeply, Carolyn creates an environment where top executives share diverse perspectives and experiences in peer groups to help each other grow and achieve lightbulb moments and clarity.

Dennis Howard, Vistage Chair from Dallas, Texas

As an executive coach and facilitator of executive peer groups in the Dallas-Fort Worth area, Dennis leads meetings with many of the most successful CEOs and executives to solve their most challenging problems and opportunities. His honors include being named the 2016 Vistage Southern Chair of the Year, recognized in multiple years for Vistage Chair Excellence.

Some key themes emerged in this dynamic conversation led by Vistage Chief Research Officer Joe Galvin. Here are some highlights from the conversation:

Wages

Our research also revealed that boosting wages is the top way that CEOs are addressing their hiring challenges. The conversation revealed more details on how small and midsize businesses have addressed wages:

• Restructuring wage scales, not just for hiring but for existing employees
• Offering multiple raises in stages in response to wage transparency
• Commissioning market compensation surveys to ensure wages are competitive
• Offering pay differentials for those working weekends and nights

Wages can ensure you are competitive, but will not solve all issues, as Carolyn notes. “If your culture has serious issues coming into this … wages alone are not the answer. You really need to look at the underlying situations and then decide how much you really have to invest to make the change that you want to make.”

Hiring

Refining recruitment has been an approach CEOs have used as well. It starts with focus from the top and includes leveraging the entire organization. With a renewed focus, prospecting for talent is increasingly coming from new sources, and companies strive to differentiate their workplace.

• Adding recruitment capabilities, including dedicated positions
• Using recruiting firms for managers and executives
• Reviewing the process and timing to improve the application and onboarding process
• Hiring out of co-op programs
• Outsourcing and offshoring: looking to other countries for lower cost employment
• Making hiring an issue for the entire organization
• Offering incentives for referrals
• Including flexible options as a differentiator (ex: a 4-day work week)
• Upgrading environmental factors to make the workplace appealing, comfortable and safe
• Investing in apprenticeship programs

Carolyn shares the impact of one member’s long-term investment in their apprenticeship program that started years ago. “It really makes them an employer of choice, creating some stickiness for people who already work there.” As part of the program, the company not only trains participants, “but they also get to observe and see who might be a good fit. It’s the earliest part of career pathing,” says Carolyn. Sometimes the people coming out of the program might not be a great fit, but Carolyn shares that, “they become available to the community, which makes a company a real hero in their community.”

Marketing Discipline

Companies have started to look at attracting new employees much like they attract customers in terms of using marketing tactics and tools. This means aligning HR with marketing and bringing that discipline into recruitment. This starts with a shift in mindset, and Gary shares that when companies realize that they “can use the same techniques that they use to attract customers to attract talent … then all of a sudden it becomes more of a question of whether or not the marketing team is large enough to handle the additional role.“ Those new responsibilities can include: 

• Messaging that focuses on purpose
• Creating online content including videos and employee reviews
• Segmenting prospective employees
• Maximizing existing platforms and leveraging new platforms
• Focusing on reputation management and PR
• Creating fully developed websites and social media tactics specific to hiring
• Developing a campaign approach, leveraging CRM to track contacts and touchpoints

Dennis shares that a trend he has seen is the importance of a company “having a purpose that people want to buy into, that people want to come to work for.” Sharing this purpose in the recruitment and interview process helps people feel like they will be “protecting the legacy, and people buy into that.” They feel valued, Dennis says.

Retention

The ability to expand the workforce starts with retention. The same things that keep your current employees are what will attract new talent as well. Retention starts with onboarding, and those programs are a focus of small and midsize businesses.

Developing first-line leaders is also a significant investment in retention, as Gary notes, “it’s much easier and much more useful to train first-line leaders than it is to replace the people that are quitting because the first-line leaders are terrible.” Ways to improve retention include:  

• Improving the onboarding process and what happens on day one
• Treating employees like customers, offering choice and flexibility
• Upgrading environmental factors in the workplace that make it more appealing, safer and more comfortable
• Reducing repetitive work by leveraging technology and outsourcing
• Conducting stay interviews, especially for at-risk employees
• Developing career paths to “co-create a future”
• Conducting workflow and capacity analysis to look at creative sourcing internally or externally
• Rewarding and recognizing performance

Accountability and performance are critical, says Dennis. “People want to win. When you don’t lay out expectations and people don’t know how to win, then they feel like failures and they move on. Creating an organization of accountability — where you layout expectations — and then reward people for meeting and exceeding those expectations, those become very powerful tools of retention.”

Culture

Culture is a key differentiator that drives retention. When asked about the biggest negative aspect of culture that might drive people away, Carolyn shared “not being seen and heard as an individual with real lives.” She added that businesses are making an effort to create a culture of listening for employees to be seen and heard by: 

• Conducting and responding to engagement surveys
• Honoring and giving space for people’s personal commitments
• Conducting stay interviews
• Improving the workplace environment
• Revisiting the purpose
• Investing in leadership

Investing in Leadership

Not developing leaders and managers is a risk, according to Dennis. “Subpar leaders aren’t going cut it anymore,” he shares, confirming that “people leave leaders, not organizations.” Not only is development important, but having a plan to exit poor managers is critical as well. Dennis encourages businesses to consider whether they are “getting rid of the subpar leaders … because they’re going to drive people away.” Other suggestions include: 

• Investing in a greater span of leadership development programs.
• Investing in learning and development functions
• Filling the leadership pipeline with career pathing
• Setting expectations and accountability
• Moving beyond measuring productivity, reframe and get clarity on what excellent performance looks like

While the conversation started with hiring practices, it moved into retention and then delved into culture and leadership. This suggests there is not a single answer, but rather CEOs have to address hiring in multiple ways simultaneously because the game is always shifting.

And unlike the time following the “Great Recession” when there were five applicants for every job, now there’s less than one person per job today.

People have more choices, and that creates a challenge for CEOs. It’s clear that what businesses have done in the past will not be effective today. And in the future, they have to continue to adapt and embrace more dynamic solutions for how they recruit people, from aligning HR with marketing and being more conscious about the workplaces that they create to focusing on the purpose of their business and, most importantly, the impact of their first-line managers. Leading SMBs is challenging. Learn more about Vistage’s Small Business Program to invest in your leadership development and improve your business.

Related Resources

The CEO Pulse: Hiring Resource Center

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