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What is the No.1 Challenge Facing Business Owners Right Now?

Nigel Hartley
What is the No.1 Challenge Facing Business Owners Right Now?

This article provides insight at a local level but the ability to attract and retain key talent is one of the biggest challenges being faced in many economies, and the responses highlighted below can apply to any of them.

The business climate is very challenging and uncertain and the biggest hurdle facing business owners right now is:

The ability to attract and retain key employees

In fact, that is likely to be the narrative for the foreseeable future with unemployment below 3% in parts of the Bay Area and wage and salary upward pressure beginning to build. The fact is that there are not enough qualified people to fill the current vacancies and the economy is still growing.

There are macro elements at play as well such as affordable housing and transportation challenges that are beyond my control, but this article is a narrative of some of the changes I see already happening in response to this challenge.

1. Working from home at least one day a week. Flexible working has been around for some time now but mobile and cloud-based technology and an increasing importance being placed on the importance of work-life balance, means it is a critical part of your employee retention strategy. This trend will continue and ultimately you may find people spending more time working from home than in the office.

2. Hiring people out of state and leveraging overseas connections. In certain fields where there are pricing pressures this is a growing trend. I know of at least two book keeping companies locally that maintain a small core staff here and have the majority of their staff working from home in States that have lower salary expectations. Go up the food chain and I see accounting/financial organizations outsourcing some of the more mundane work to places as diverse as India, Malaysia and Latin America.

3. Leveraging technology and let’s stay with financial services to start with. Some accountants and wealth managers offer a concierge service to their wealthy clients taking care of all their bills, banking etc. which traditionally was quite labor intensive, not now with a number of platforms available that can fully automate most of the work. Elsewhere I saw a client spend $30K on software that resulted in the elimination of an AP person costing $80K and a hefty investment in a CRM system dramatically reducing the size and cost of a sales support team in a manufacturing company.

4. The speed and ways with which we respond to job applicants has to change. How often have you set up an interview and the person does not show up, as they already have a job! Traditionally we have taken our time, had multiple interviews with applicants over days, maybe even weeks to be sure we had found the right person. That formula no longer works in many professions. Instead I encourage you to set up interviews with all the major stakeholders at one time, to leverage behavioral tools such as our own Compass Indicators that are not based on personality, but are more practical and show how someone is currently operating in communication style, appetite for Risk, Pace of operation and Leadership Style.

5. How are you making the initial contact with a potential candidate? It might surprise you that email is no longer quick enough or convenient enough! Applicants are open to you texting them and in fact in a recent study I saw of the staffing industry, 72% of the firms are now using text messaging software, so they have moved on to automating their texts. Given the move to mobile communications this should not be surprising even if it feels a little uncomfortable to some. So, are you getting an applicant’s cell number, and would you consider texting them? 

6. How are you onboarding new hires? Do you have any sort of buddy system for the first 90 days? What training are you providing or is the person to just dig in as everyone is so busy. There is no doubt that there is very little free time for training but those companies that make the time will reap the reward of reduced staff turnover.

7. Do you have a strong culture? We regard culture as an asset that needs to be nurtured and fiercely protected. Your culture is your brand internally and your brand when recruiting. It is one of those things that became undervalued in the recession but is front and center now. Embrace it, document it and live it daily or face the consequences.

8. In the last month alone, I have had a couple of clients lose a key employee who quit to go and find themselves. They were burnt out and wanted to recharge their batteries. What would you do if given that news from one of your employees? I am seeing the return of the sabbatical and after a shorter period for unpaid sabbaticals (2 years). It is challenging to give people additional time off but if the alternative is them quitting, which is the better option.

9. Employee Reviews. Historically companies would do this annually, it was very time consuming and often the managers who should be embracing the importance of the review would only play lip service to the process. Today employees want instant feedback or at least regular communications and it does not need to be linked to compensation. As a result, many companies have completely done away with annual reviews. That does not mean to say that there is not some form of evaluation, just different forms. As an example, I was speaking with a business owner the other day who bases a lot of their appraisal on feedback from their clients.

These are just a few thoughts, but it is a fact that virtually every client I talk with, lists staffing as the number one challenge currently and it will only get worse - so let’s embrace the challenge as human capital for most of us is our largest asset.

Nigel Hartley is a Business Advisor with Shirlaws Group. You can contact Nigel on +707 573 7154 or email nigel.hartley@shirlawsgroup.com

Nigel Hartley