Microbusinesses Seek Solutions to Help Fill Open Roles

Microbusinesses, those with fewer than 20 employees, are struggling to find candidates and often turn to consultants and technology products to help fill open roles.

According to a study of ADP data by Moody’s Analytics and The Wall Street Journal, headcount at these companies was flat in 2019, while businesses with more than 500 workers increased their workforces by 2.3 percent. It was the first time since 2010 that small companies haven’t expanded their payrolls, the Journal said.

This aligns with other research. Last year, a survey by JazzHR and Verified First reported that SMBs are increasing their use of recruiting software. At the same time, it found vendors have a ways to go if they want to satisfy the market. For example, 60 percent of SMBs use applicant tracking systems, but nearly half are unhappy with theirs, the report said. HRWins’ George LaRocque, who co-authored the report, said more SMBs want solutions that “integrate with other HR systems and offer more streamlined processes and texting capabilities.”

In the Journal’s report, Moody’s Chief Economist Mark Zandi suggested the recruiting challenges that microbusiness faces may portend difficulties for larger companies. The problems “are symptomatic of what all businesses will be struggling with in the not-so-distant future,” he said. “The demographics are overwhelming. Unless we change immigration laws significantly, all businesses will be struggling to find workers.”

Microbusiness Recruiting’s a Juggling Act

As the Journal points out, recruiting can be especially problematic at small companies because owners often run the business hands-on. They look for talent at the same time they’re taking care of the books, scheduling employees, meeting customers and, in general, putting out fires.  

From what business owners told the Journal, the biggest logjam appears to be at the front of the pipeline. One sifted through some 300 resumes over more than two months, then interviewed 50 candidates by phone in her search for a new salesperson. In the end, she hired a consultant to help. “When we found the person, it was a quicker process because we didn’t want to dillydally and lose her,” she said.

Another business owner, who interviewed 40 candidates in order to hire two for his manufacturing firm, said, “The barrier to hiring more people is finding them.”

While small companies offer the right candidates flexibility, autonomy and other perceived advantages, they can’t compete with large organizations when it comes to benefits, perks and pay. Those challenges, layered on top of the snug labor market, make hiring especially difficult for SMBs.

In response, many small companies are turning to consultants, technology and outsourcing to both get things done and reduce their full-time headcount. One pays $15,000 annually for a software package that helps with bookkeeping and administration, the Journal said. Another outsourced all of its accounting last year and plans to outsource other tasks in marketing and logistics during 2020.

HCM technology vendors have begun paying more attention to small and microbusinesses over the last several years. For some, such as ADP, these customers are an extension of their existing business. Others are seeking growth. The freelance marketplace Upwork, for example, last year launched its first packaged service for small business, Upwork Plus.

Some providers, such as Cornerstone OnDemand, have been openly courting SMBs with new packages and content. Others, like SAP SuccessFactors and Ultimate Software, have quietly deepened their penetration into the market although their focus remains on large companies.

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