ARTICLE | September 13, 2022
The Great Resignation, in which millions of U.S. workers resigned from their jobs, sent shockwaves through businesses of all sizes and in all industries. The resulting talent gap was especially hard for middle-market organizations that don’t have the resources or appetite to evolve how they hire and retain employees.
RSM recently commissioned a survey of 466 middle-market business leaders across a wide swath of industries to uncover the drivers behind this talent gap and its impact on mid-market organizations. Here are four key takeaways from the survey, plus recommendations for addressing the talent gap.
Hiring challenges are ubiquitous and affect every part of the business.
Survey results show that the majority (94%) of middle market business leaders faced hiring challenges during the past year. However, those challenges aren’t confined to a particular area of the business. They affect everything from HR to finance to operations to IT. Overall, 58% of business unit leaders found hiring “very” or “extremely” challenging. Only 5% said they didn’t face any hiring challenges.
These hiring challenges reverberate throughout middle market businesses, ultimately impacting the bottom line. As one middle marketing business leader noted in the survey, “There will be a significant loss in our clientele because we can’t retain and hire employees.”
Businesses are struggling to find employees with the skills they need.
Fifty percent of all middle market businesses can’t find employees at any career level with the skills they need. Hiring experienced workers is an issue for 67% of businesses. More than one-third (34%) say it’s a challenge to hire entry-level employees, and 40% say it’s a challenge to find qualified middle management employees.
One survey respondent warned, “It will be increasingly difficult to hire new workers with the requisite skills needed to perform their job duties on day one.”
The talent gap is taking a toll on existing workers.
When middle market businesses can’t fill open positions, they look to their existing employees to make up the difference. While these employees often rise to the challenge, 42% of employers says their employees are burdened by increased workloads, and 41% report that their employees struggle with burnout. The results? Morale suffers. Productivity decreases.
Other employees choose to leave rather than put up with the increased workload: 37% of middle market business leaders cite low retention and turnover as a major hiring challenge, which exacerbates the toll on remaining workers.
One survey respondent noted, “Added responsibilities have taken a toll on my mental health.” Another says, “I’ve taken on more and more work for no extra compensation. It’s a kick in the gut at age 61.”
The talent gap is most acute at middle market businesses.
The survey found that more than two-thirds (68%) of middle market businesses struggle to attract experienced talent. In the competition for talent, it’s often difficult for middle market businesses to compete with larger organizations that tend to have more clearly defined career paths and better compensation packages.
“We’ll continue to have difficulty filling positions,” one middle market survey respondent noted. “We’ll need to reassess the income we offer in order to compete with other industries [that] value the skill set our highly qualified employees can provide in less-stressful environments.”
Filling the Talent Gap
Despite the talent hurdles that many mid-market organizations face, there are actions that companies can take to help resolve these issues. The first step is to acknowledge that there are no quick solutions—the talent gap is a long-term challenge that will stretch across all skill levels and industries. It’s one that will need creative thinking as worker expectations for flexibility, remote work and compensation continue to evolve.
The next step is to change your approach to workforce staffing. Instead of focusing on hiring full-time employees for a specific job or because they have a specific skill, build a staffing ecosystem that uses a combination of in-house expertise and external partners. The goal is to create a lean hiring model that’s both agile and flexible.
“One powerful option is to leverage a state-of-the-art managed services provider to handle non-core functions, leaving employees who remain in customer-facing roles,” says Erik Asgeirsson, president and CEO of CPA.com.
For example, you might consider outsourcing labor-intensive, tedious manual processes or repeatable tasks for which maintaining skills in-house doesn’t provide value, like payroll, HR operations, finance, and other operational functions. Then reassign your internal employees to high-touch, high-value activities.
You could also turn to a managed service provider for staff who have more specialized IT skills. Since generalist IT employees often don’t have the specialized expertise required in such areas as cloud or cybersecurity, lean on an experienced partner to provide that expertise on an as-needed basis. The goal is to have access to an easily adjustable pool of resources as your business evolves and market demands change.
The current talent gap isn’t just a passing trend—it reflects a more fundamental shift in the way employees view work, and companies need to respond appropriately. To eliminate your company’s talent gap and get the staff you need to prepare your business for growth, you’ll have to employ creative strategies. An experienced managed service provider like RSM can evaluate your requirements and provide the talent and solutions your business needs when it needs them.
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This article was written by RSM US LLP and originally appeared on 2022-09-13.
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