For at least the past 15 years, business leaders have been talking about a “new normal" in the economy—a long, seemingly permanent period marked by an essentially static job market, with high unemployment, limited turnover and stable compensation. People were willing to accept, and stay in, jobs that were unchallenging, unfulfilling and underpaid, because they felt they had no choice. Well, those days are over, because workers now have an unprecedented amount of choice.
Here's the stark reality: The unemployment rate for March was just 5.5 percent—a seven-year low, for the second straight month. More importantly, the unemployment rate for the most skilled workers, the ones you need the most, is far, far lower than that. For college graduates over 25, it's currently an astonishing 2.4 percent. Companies are hiring.
All this means we're entering into a time I'm calling the “new new normal"—a period when the job market will be a true seller's market for the first time in decades. In the new new normal, employees expect to be treated well, they expect their employers to invest in their career development, and above all, they expect to be paid what they're worth. And if they aren't, they're going to go somewhere else.
So if you want your small business to stay competitive, you're going to need to put some serious effort into recruiting and retaining talent. Here's where you should start:
You're not just building a company, you're building an organizational culture, one that has the right people, with the right skills, the right management—and the right values. That requires a long-term, highly disciplined commitment, one that begins long before the recruitment process does.
To attract employees, you need to be thinking from day one about what kind of company you want to create. Give serious consideration to the qualities that define your company and the work it does. Communicate your values, openly and honestly, to everyone who works for you, and everyone who's thinking about working for you. This is especially critical for small businesses, because everyone's approach and attitude affects the group dynamic, either positively or negatively—and that inevitably affects business outcomes.
And here's another reason to be thinking and talking about your company's values: It will probably help you attract the best, the brightest—and the most committed. In today's job market, you don't just want skilled people, you want people who are completely aligned with your vision for your business. And that means you have to invest your time, right now, in making the right talent management decisions.
It may be the oldest business maxim there is: “You have to spend money to make money." In today's job market, that means understanding what your current and prospective employees are really worth, not just to you, but also to other employers—and not just your direct competitors, either. Don't neglect the great talent you already have. You can't afford to lose their skills, their experience and their knowledge of your company's processes and practices. And replacing them—if you can—will be difficult, time-consuming and costly.
Remember, too, that great talent can attract great talent. Word gets around, and job candidates recognize, and are drawn to, a business with employees who are happy, fulfilled and committed to what they're doing. And in my experience, nothing, absolutely nothing, makes employees happier than being paid what they're worth. You need to make sure you're offering every single employee, current or prospective, a truly competitive compensation package, with salary, bonus, benefits and possibly stock options at least as attractive as what other companies in your area and your industry are providing.
Most small businesses, even those with their own HR departments, don't have the resources to compete effectively for talent in the new new normal. You're definitely going to need help to stay on top of—and create—opportunities to improve your team and attract employees that will improve your bottom line.
If you do have HR personnel, considering refocusing them on talent management, rather than on functions—like administering healthcare benefits—that can increasingly be handled very efficiently using technology. And don't forget to make it easy for prospective candidates to reach you. When someone contacts you about a position, have a real human being reply, promptly and courteously, every single time. If word gets around that your company treats people well, it will be a lot easier to attract strong candidates.
If you don't have your own HR department, you’ll probably want to look for outside help. Look for an executive search professional or HR consultant who knows your area and your industry. Believe me, they'll be more than willing to build a long-term, mutually beneficial relationship with you. Most consultants who specialize in helping build small companies are extremely knowledgeable about the changes in the market over the past few years. They've already adjusted their work product and their fees for this market. Still, there's no question that they cost money—just not nearly as much as the lost-opportunity cost of failing to attract and keep the talent you need to survive and thrive.