Small businesses are growing along with the economy--and with growth comes hiring. The most recent employment report from the Bureau of Labor Statistics marked 97 consecutive months of positive job gains, which is the longest-running period of growth since the 1930s, while the unemployment rate also remains at a 50-year low.
While job growth is good for the U.S. economy, it presents challenges for small business owners who need to hire skilled workers. According to the latest Capital One Small Business Growth Index, more small businesses are interested in hiring new employees: one-third (33 percent) plan to hire in the next six months, an increase from 25 percent one year ago. But the hiring process isn't always easy, as larger companies are also on the hunt for talent.
Small business owners say their biggest hiring competitors are larger businesses, especially those that can offer more robust benefits packages. The survey found the top factors impacting small business owners' ability to hire are the skills gap (34 percent), closely followed by competition from other businesses (30 percent), financial resources (30 percent) and the tight labor market (28 percent).
Rather than bowing to the larger competition, small businesses can reframe their approach to recruiting and retaining employees. Here are four ways to attract top talent.
1. Offer creative perks
Rewarding employees with paid vacation time, parental leave, 401(k) offerings to save for retirement, insurance, sales bonuses or recruitment bonuses promotes positive morale among teams and helps to create an attractive work environment.
While small businesses may not be able to offer robust benefits packages, they should focus on the flexibility they can offer at little to no cost. For instance, smaller, more nimble workplaces often find it easier than their larger counterparts to offer remote work options, better vacation offerings and flexible hours, which today's workers highly value.
The most common benefits that small businesses offer their employees are employee training (67 percent), paid time off (57 percent), surprise bonuses outside of performance evaluations (52 percent) and flexible hours and/or work for home (47 percent).
2. Focus on retention.
Retaining talent is just as important as hiring new team members, and keeping current employees often requires a little out-of-the-box thinking. For example, many Capital One customers use credit card rewards to fund employee parties, send employees and their families on trips, or give gift cards or bonuses. Zapotec Energy in Cambridge, Massachusetts uses rewards to fund annual holiday parties and summer barbecues. Similarly, small business owners may consider using a business savings account with a high annual percentage yield (APY) to set aside funds for spot bonuses, which may make a difference to prospective job candidates when the company can't offer larger benefit packages. They can also look for ways to offer training to ensure current employees have the right skill set.
Beyond the benefits, business owners should focus on culture and work environment. Simply treating employees with respect can go a long way. Some business owners are also making a concerted effort to ask their employees what types of activities, work projects, and incentives they would like to see in order to provide more value. This focus on meeting employees' needs is more common among millennial business owners, who are the most likely of any age group to offer employee benefits, flexible work hours, free snacks or meals, team outings, employee training and other benefits.
3. Consider the gig economy
More small businesses are looking to hire, but these aren't always full-time employees. Forty-four percent of small business owners who plan to hire in the next six months are hiring part-time employees and 21 percent are hiring contractors or freelancers.
While the gig economy might not be right for every business or every role, these part-time workers allow business owners to engage subject matter experts to complete specific work, while offering workers and "solo-preneuers" greater flexibility.
4. Hire carefully
Retention starts with hiring the right people in the first place. It is important for business owners to hire employees who not only fulfill the job requirements, but also love what they do and are compatible with the business culture. Recognize that hard work also plays a valuable role in attracting and retaining talent.
Learn more about the Capital One Small Business Growth Index here.