Biggest Hiring Challenges Facing Small Business Owners This Year

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Is your small business planning to hire employees this year? Doing so might not be easy, according to a new survey from QuickBooks Payroll that polled small business owners and hiring managers at small businesses. The survey revealed ambitious small business hiring plans for 2019: Nearly three-fourths (73.4%) of survey respondents plan to hire more people this year.

Asked about their top hiring challenges, here’s how respondents answered:

  1. Finding qualified applicants: 31.6%
  2. New hires not living up to expectations: 17.3%
  3. High rate of staff turnover: 14%
  4. Competing with other companies: 13.8%
  5. Understanding what skills to look for in candidates: 11.3%
  6. Knowing what compensation/benefits to offer: 8%

Clearly, finding qualified candidates continues to be a challenge for small businesses. However, the problem isn’t that small businesses are fighting with bigger companies for qualified candidates: It’s that qualified candidates just aren’t out there, period. More than 80% of survey respondents say they have seen “some” or “significant” evidence that there is a lack of qualified candidates in the workforce.

How hiring problems are hurting small businesses

The lack of qualified candidates has a major effect on small business hiring, as well as small business operations in general. When asked what areas of their business are most affected by the lack of qualified candidates, survey respondents said:

  1. Productivity: 21.3%
  2. Staff turnover: 19.6%
  3. Cost of hiring: 18.1%
  4. Training burden: 16.7%
  5. Project cost: 11.4%

How long on average does it take small businesses to fill open job positions?

  • Two weeks: 28.3%
  • One month: 30.1%
  • Two months: 17.3%
  • Three months: 13.5%
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However, nearly one-third (29.1%) of survey respondents have had a job go unfilled for four months or longer.

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Are small business owners being too picky?

What are entrepreneurs looking for when it comes to small business hiring? Maybe they’re being too selective, or demanding advanced degrees and credentials that are unrealistic to expect?

Not really. Overall, small business owners and hiring managers are less concerned with degrees and other professional education than they are with experience. Asked to name the most important quality they look for in job candidates, here’s how they responded:

  1. Relevant experience: 42.4%
  2. How well they fit with the rest of the team (culture fit, values, personality, etc.): 36.6%
  3. Relevant degrees/education: 21.1%

When asked why they’ve rejected job candidates, small business owners’ answers highlight the importance of a good resume. More than 20% have rejected an employee because the resume doesn’t highlight their key skills, and 13.5% have rejected candidates because their resume has too much detail or is too hard to read. Almost 10% have rejected a candidate for spelling the company’s name wrong and 9.6% have rejected a candidate for a typo on their resume. (To me, it sounds like small business owners are really just looking for the basics.)

Would a recession help small businesses hire?

Small business owners don’t necessarily feel the same enthusiasm for the economy that they do for hiring. Almost one-fourth (23.6%) feel less confident about the nation’s economic outlook than they did a year ago. When asked how they feel about the possibility of a recession, small business owners had some surprising attitudes:

  • Approximately two-thirds (64.9%) feel that a recession would positively impact their recruitment efforts by adding to the pool of qualified employees available.
  • More than half (56.4%) say a recession would make it easier to recruit employees by reducing wages and salaries overall.
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Of course, a recession would also have negative effects on small business hiring:

  • More than six in 10 (62.4%) say a recession would mean less money to invest in expanding their workforce.
  • Some 61.4% say a recession would make them less competitive as employers because they’d have to reduce the benefits and compensation they offer employees.

If the United States does face a recession in 2019, one thing is for sure: Small business employees would be the first to feel the pain. Some 18.3% of survey respondents say the first thing they would cut would be hiring, 17.5% say employee bonuses would be first to go, and 9% say employee pay would take the first hit.

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