Since staff accounts for one of the largest segments of IT budgets for small and medium-size businesses, hiring the right staff can be one of the most critical tasks for a small or mid-size business owner or executive. But finding and retaining top talent is not easy -- especially when competing against much bigger companies and public sector organizations that have more resources and more potential for advancement. Consequently, small and mid-size firms are learning to get creative in their hiring tactics.

In addition to paying higher salaries, small and mid-size businesses are trying other tools to woo tech workers. They're offering flexible work schedules and family-friendly work environments. They're willing to pay higher fees to offer employees competitive health and other benefits. And they're offering existing IT staff members more challenging projects, raising the potential for career development.

"We've found that to hire and retain bright people, the work needs to be challenging and engaging," says Len Ott, chief technology officer of Socket Mobile, a mobile computer hardware manufacturer based in Newark, Calif., who acknowledges that competing against larger companies for IT talent can be difficult. "Finding projects that enable employees to work with the latest technologies can be a win-win for both parties."

Perks beyond salary

Small and mid-size businesses must move beyond just offering competitive salaries to bring in good IT employees, says Jack Midgley, vice president of human capital for TriNet, a nationwide provider of human resources outsourcing services. In order to remain competitive, small businesses are increasingly taking on higher costs to offer employees more competitive health and other benefits. Benefit costs for small and mid-size employees are rising more rapidly -- sometimes three to six times as high per employee -- than the national average, according to a TriNet survey of 700 small companies.

At the same time, salaries are rising more quickly in the small and mid-size business tech space than in large enterprises -- sometimes by 15-20 percent annually, Midgley says. But beyond excellent compensation packages, employees are asking for other perks -- flexible schedules, stimulating work environments, and autonomy. "Many IT workers consider themselves [to be] a brand, and ask 'what's in it for me?" Midgley explains.

It's an area Russell Harris, IT director at T3, is all too familiar with. With 215 employees in Austin, New York and San Francisco, this full service, integrated marketing company produces a lot of Web-based collateral. Harris manages six IT employees, but even though he is based in tech-friendly Austin, Texas, it has been difficult to fill open positions. In order to attract top employees, the company offers flexible work schedules and a family friendly work culture. New parents are allowed to bring their non-mobile infants to their offices every day as long as they are caring for the children. The incentives appear to be working. The company has been growing 20 percent year over year.

In addition, Harris says he's able to attract employees by offering the opportunity to experiment with newer Web 2.0 technologies. "At a small business, IT employees must cover more bases since we have less of a budget to spend on people," Harris says. "But they get exposure to a lot of different technologies and they are not coming in here working on the same thing every day."

Looking for a wide-array of skills

As with many mid-size businesses, T3 is looking for tech professionals that support and are familiar with a number of different technologies, as opposed to larger firms that may look for tech professionals that specialize in a specific area like security or networking.

Katherine Spencer Lee, executive director for Robert Half Technology, provider of IT professionals on project and full-time basis, says small and mid-size businesses are looking for technology specialists that are nimble and experienced in several technologies. Specifically, she is seeing requests for professionals with a .NET, J2EE and Web 2.0 track record, as well as experience in development, network security, wireless, and compliance.

Professionals with this experience are rare. So what's a small business to do? Take a closer look at what you're really looking for, she suggests, and then consider breaking the job into two or even hiring a contractor for a portion of the job.