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Why High-Growth, Middle-Market Companies Struggle to Hire & Keep the Best Talent

And what they can do about it

As the economic outlook in the United States continues to show improvement, growth is a major priority for middle-market companies. A recent American Express survey of Mid-sized Companies confirms this – nearly 60 percent of the financial decision-makers who responded stated that they intend to hire to support expected business volume. 

For those middle-market companies looking to grow, it’s wise to look at how their peer organizations are doing it. The National Center for the Middle Market did just that by researching a small group (9 percent) of middle-market firms – called “Growth Champions” – whose members significantly outperform their peers. Among other qualities, Growth Champion firms tend to have exceptional talent management practices. In fact, Growth Champions are nearly twice as likely as their middle-market peers to place a premium on attracting top talent with valued skill sets. 

Recruiting has long been one of the greatest challenges facing most middle-market companies. With less established employer brands, middle-market companies must try harder to attract the best people, often losing quality employees to bigger businesses. 

Recruiting and talent management tips for middle-market companies to rev up their recruiting and retention efforts:

  1. Build your employer brand.
    An employer brand defines an organization’s value to potential hires and educates them about the workplace culture. With a clearly identified employer brand, companies can attract candidates that are a better cultural fit, which is shown to result in greater employee productivity, increased levels of engagement and higher rates of retention. [Download Hudson’s Employer Brand Guide]
  2. Develop a competency framework for all key roles.
    If a company does not know what it wants, it’s unlikely to recruit the best candidates to fit its needs. That’s why you must understand the core competencies of all positions. A competency is a set of skills, knowledge, abilities, attributes, experience, personality traits and motivators that predict whether an individual will effectively perform in a job. Assess your star performers. What competencies do they have? Competency frameworks provide clarification around the behaviors needed at different levels throughout the organization, and assist in recruiting and selecting employees who match these defined characteristics. 
  3. Get the interview right.
    The truth is that few hiring managers have been trained in effective interviewing techniques. Hiring managers are a critical component to hiring new employees who will shape the success (or failure) of your organization. In many cases, these people lack the skills to assess candidates effectively, so instead they hire people who are like themselves, who may or may not be the fit. In fact, a recent survey asked HR professionals at medium-sized companies if the managers at their companies were strong interviewers. About half of them said no. There’s a definite advantage to helping hiring managers improve their interview skills. Since the interview plays such an integral role in the recruiting process, even small improvements can lead to big increases in effectiveness of the overall process. Formal interview skills training for hiring managers can pay huge dividends in reducing staff turnover and its associated costs.
  4. Develop and keep good employees.
    A recent survey from consulting firm Watson Wyatt showed that more than half of all companies have no employee retention strategy. Middle-market companies often struggle with employee retention, especially of their top performers. An improving economy may only exacerbate this problem. 

Lack of career advancement opportunities is one of the main reasons that desirable, high-potential employees leave a business. According to a recent LinkedIn “exit survey” of 7,350 members across five countries, the top reason workers left their jobs was because they wanted greater opportunities for advancement. 

That’s why it’s important that you offer employees a career path and a career development plan. Doing so not only demonstrates an organization’s commitment to developing its talent, it also allows employees to have a better sense of their opportunities within the company. Gaps in skills or experiences can be addressed by a career development plan, which lets employees know the organization wants to prepare them for the next step. As a result, employees don't feel that their careers are stalled with nowhere to go within the company, problems that are major drivers of turnover and low morale.

Even with smaller HR staffs, middle-market companies can still have the same talent management practices as larger organizations – and reduce recruitment and hiring costs – by partnering with recruitment process outsourcing companies, like Hudson RPO. We’ll work within the existing HR management structure to deliver either a comprehensive HR solution managing the entire recruitment lifecycle or select services where the business needs it most.

In addition, with Hudson RPO, companies have access to a full suite of talent management services, including employer brand/employee value proposition development, recruitment consulting, interview skills training, candidate assessment and testing, and career development workshops. 


Internal Mobility Benefits Employees and the Business

Hiring from the inside

Research has shown that internal mobility, the movement of employees from one position to another within an organization, is good for business – in terms of lower talent acquisition costs, faster time-to-productivity and higher retention rates than external recruiting.  While external recruiting is necessary to brings new ideas and talent to an organization, more and more companies are looking for ways to ramp up their internal hiring efforts. 

Employees, especially Millennials or Generation Y workers, want to stay in a company that provides a range of professional opportunities and career paths where they can grow their careers. Research results from a recent Hudson global report, “The Great Generational Shift,” reveal that those in Generation Y (born between 1980 and 1994) are 32 percent more ambitious than their fellow Baby Boomer workers. Generation Y is also 19 percent more ambitious than their Generation X colleagues (born between 1964 and 1979).

In fact, lack of career advancement opportunities is one of the main reasons that desirable, high-potential employees leave a business. According to a recent LinkedIn “exit survey” of 7,350 members across five countries, the top reason workers left their jobs was because they wanted greater opportunities for advancement. 

Embracing internal mobility also greatly reduces the time and training costs organizations spend onboarding external hires since internal candidates do not need new-hire orientation and tend to only require training on specific tasks related to the responsibilities of the role. Some studies even suggest a link between internal mobility and better financial performance.

Another advantage that internal hires have over external hires is that they have company knowledge and an established network, know the company’s processes and fit well within the culture and values of the organization. Internal hires are often found to have a number of transferable skills that are applicable to various business areas.

Understanding the appropriate mix of skills, personal characteristics, and experience required for employees to step into pivotal roles – through promotion or lateral moves or transfers – is a key element to any internal mobility program.  

As a first step, it’s important that organizations define the competencies needed for different types of roles. Competencies are defined as the measurable or observable knowledge, skills, abilities, and behaviors characteristic of high performance and success in a given job. Identifying the competencies for key roles within an organization allows employers to recruit and select the best employees, manage and train them effectively and develop staff to fill future vacancies.

The next step is to assess current employees against these competencies, usually those identified as “high potential” through current job performance, to determine if they have the aptitude, cognitive ability and personal characteristics to be successful in a particular role or roles – basically, answering the question, “Does this person have potential to do well at this job if provided the right technical training?” 

Professional development in the competencies associated with successful performance can assist in filling any gaps that may exist. Personal development plans geared to an individual’s specific strengths and weaknesses identified through the initial assessment can help prepare the employee for the next level. 

Hudson can assist organizations in developing an internal mobility program by developing a competency framework for critical roles and performing assessments of employees against those competencies using our proprietary tools and methodologies, such as competency-based interviews and psychometric testing, as well as role-play and work simulation exercises. Once the gaps are identified through the assessments, Hudson can create individualized development recommendations for employees, which may consist of coaching, mentoring, and specific instructional learning recommendations.

Clearly, the research indicates that it makes sense for organizations to mine their internal talent pool to fill open positions in addition to external recruitment efforts. Hudson experts can help ensure that companies select the right internal talent, and, if they are not right “right now,” can assist in developing them to be ready in the future.





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Hudson is a global talent solutions company. We help transform the workplace and unleash the full potential of organizations and individuals. Our expert team and proprietary tools provide you with unique insights and services that help you maximize your success. Across 20 countries, we deliver a range of recruitment, talent management and recruitment process outsourcing solutions to get you and your business where you want to be.