Small businesses have a unique advantage as labor shortage persists
Hiring has remained a persistent concern throughout 2022, which means workers now "see themselves in the driver's seat," according to a new report from Homebase.
In the midst of a nationwide labor shortage, small businesses have a unique tool at their disposal that, if used effectively, could make them more attractive than larger companies to prospective employees.
As small businesses typically have less staff, many of whom work closely with management, they’re better poised to ensure their people feel valued and happy at work. That’s according to a new study from Homebase about the future of local work released Thursday, which surveyed 3,300 hourly and gig workers in June.
The report found hiring and motivating employees is the most pressing issue for small business owners. Labor has remained a persistent concern throughout 2022, trumping supply chain disruptions and shortages.
As a result, workers now “see themselves in the driver’s seat,” according to the report, which said less than a third of employees reported feeling worried about becoming unemployed in the next two years.
That’s meant prospective employees have been more likely to negotiate better pay, more desirable schedules and increased benefits.
‘Emphasizing people’
Although pay remains the key driver for employees, workers are placing greater importance on how their jobs make them feel. That’s where small businesses can shine, according to Homebase.
“The best way to find and keep hourly workers could be leaning into the things they already do well—assets like leadership, learning, respect and culture. In other words, emphasizing people as much as paychecks,” the report said.
More than half of employees at small companies said they strongly agree that they can “be themselves” at work, while only 36% of employees at larger companies felt the same way. Employees were also more likely to feel connected to their employers if they worked for smaller companies, where 81% of staff reported feeling valued and supported at work, compared to 71% at larger companies.
That means, “Even if small businesses can’t pay more, they can compete by paying differently,” Homebase said.
If they can’t pay more, smaller employers may offer other perks, including new skills development, four-day work weeks, more paid time off, better health insurance and 10% larger bonuses. Prospective employees also reported being most drawn to roles that offer leadership opportunities, respect from management, predictable schedules and the freedom of individuality, according to the report.
Small business staff are also more likely to want to become entrepreneurs themselves, particularly if they’re young. That means mentorship, education and development are especially valuable to them.
“Businesses of all sizes are struggling with hiring and retention,” Homebase noted. “By being in tune with employee sentiment—and by investing time and resources to create the benefits and culture workers want—small businesses can set themselves up for success today, tomorrow and for years to come.”
Recession fears
Looking ahead, the labor shortage appears to be easing.
Homebase found that although 80% of small business owners and employees surveyed in July said they were worried about the prospect of a recession, a contracting economy could actually be good news on the hiring front.
“Our research is already bearing this out,” the report said. “In September 2022, small businesses are posting fewer jobs on Homebase than they did in prior months, and the jobs they are posting are attracting more applicants. We are also seeing sharp declines in employee turnover intentions compared to last year.”
Likewise, the number of workers reporting that they plan to look for a new job or who believe they’ll have better job options in 12 months has declined.
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