IT workers, skilled tradespeople, health care workers and anyone schooled in the STEM disciplines of science, technology, engineering and mathematics are in high demand. And some slots are expected to come under more pressure as baby boomers retire.
Stepping up recruiting is one-half of the solution, but what about the benefits and compensation side? As second-stage businesses grow, owners increasingly find themselves competing for talent with bigger competitors but lacking resources to offer big benefits and pay.
The good news is they don't necessarily have to. Business experts, human resource professionals and business owners say companies should look beyond traditional benefits and compensation to softer — and less expensive — factors such as fringe benefits, career development and flexible schedules.
"You have to understand what the candidate's carrot is," said Cynthia Richardson, manager of talent programs and talent enhancement at the Michigan Economic Development Corp. "It's not always money. It's time to work on a pet project; it's flex time; it's 'I will work at 3 in the morning for you, but I want to be home in the morning to get the kids to school.' "
And if that doesn't work? "Then we attack salaries, but that's secondary," said Chris Beltz, human resources director at Human Capital LLC in Rochester Hills, where he manages HR for 150 client companies.
Smaller companies should look for opportunities to help employees with their work-life balance, said Rose Stanley, total rewards practice leader for WorldatWork, a Scottsdale, Ariz.-based human resources association. "Companies need to think out of that big box of traditional compensation and benefits," she said. "Employees are looking for something. Try to find out what that is."
How does a company put in place the compensation packages that attract and retain talent? For starters, talk with existing staff, do the homework on prevailing salaries for specific jobs — and be creative. Here are 12 tips to guide talent searches and compensation talks:
1. Above all, flexibility
Chris Beltz, Human Capital LLC
The mantra among the experts is flexibility. It is "your No. 1 thing," Beltz said. A company in a talent bind needs to make some concessions, and flexibility is an easy one to make.
Grit Design Inc., a digital marketing firm in Detroit, hasn't had a hard time finding people for its IT-heavy staff of 13. Co-founder Andrea Livingston said this is because of the company's flexibility in hours and its culture in general.
There isn't a set number of personal days for each employee. People can take time as needed as long as deadlines are met and no one else's deadlines won't be hampered.
"It's the respect factor," Livingston said. "People have life needs. That really is the cadence of the office. If people need to call in or work from home, there's not a lot of questions. That's a huge relief for people."
Tech workers like to stay on top of the latest platforms and systems. Giving them opportunities to work on more than one is valuable to them, so Grit rotates people in ways that advances their portfolios.
"Although you should pay people, especially really good people, what they're valued at, it's about letting them have control over what they work on," Livingston said.
Office politics can poison efforts at flexibility as workers "feel they have to be at their seat at 8 a.m. before everyone else gets there," she said.
The antidote: frequent, open communication.
2. Attract younger workers
Rose Stanley, WorldatWork
Flexibility in culture as well as time is in demand among younger workers. Millennials look for opportunities to be involved in community functions and social responsibility events and want the time to do them, Stanley said.
And they don't make it a secret.
"They will come and ask for it," Stanley said. "Me, as a baby boomer, I'm more reluctant to ask."
Active Solutions Group in Dearborn doesn't have trouble maintaining its staff of young tech workers because the culture is loose, President Frank Kadaf said. "The relaxed atmosphere is very attractive to them," he said.
The dress code is loose, there are after-work gatherings, and Active Solutions is generous with chances to work from home or take a day to work on side projects, he said.
"We're not reckless, but they have the ability to do what they want," Kadaf said.
In some cases, those projects turn into side businesses in which Kadaf becomes a partner.
One quality to look for when hiring fresh faces out of college is the ability to figure things out for themselves, Livingston said.
"Folks coming out of college are not always best in understanding a flexible environment," she said.
3. But don't forget older people
It's hard to put a value on experience, and people out there with it are ready to work if a company can offer the right kind of arrangement.
Getting in touch with organizations such as AARP can churn up people ready to work who know what they're doing, Stanley said. Offering part-time work and job sharing might be all that's needed to make it happen.
"They have all this knowledge, and they have a work ethic that's already established," Stanley said.
4. Don't forget the long-term unemployed
Companies do themselves a disservice by writing off people with a recent big gap on their r�sum�.
San Francisco-based Evolv Inc. published a study in April that found the long-term unemployed were no more or less productive than people with more consistent r�sum�s. The report was based on the company's study of almost 20,000 sales and service workers in two groups: those who hadn't worked in five years and those who had.
It's not as if a few years off causes people to revert to being high schoolers again. "They might have to come back up to speed, but the world didn't change that much in five years," Stanley said, noting that large companies make a point of staying in touch with former workers of all stripes because it cost a lot to train them and a lot to replace them.
Employers can gain a trade-off here, too, in the form of a salary discount, she said.
The MEDC runs a program called Shifting Gears to help experienced workers move into new careers at small businesses. See mitalent.org/misg-stakeholders.
5. Offer more vacation
"One thing I think employers are ridiculously skimpy on is vacation time," Richardson said.
Adding extra vacation time to a benefits package can make a company stand out from the crowd. This appeals to workers frustrated at having to restart the clock every time they take a new job — a common occurrence in an era when lifelong jobs are a thing of the past.
"Employers really trip over a nickel to save a penny when they don't offer a competitive package, especially to experienced workers," Richardson said. "You're recruiting experienced talent but punishing them because they're just coming to your company."
Extra time off does have its costs and should be handed out judiciously, said Stanley, who advises companies to use it in one-on-one negotiations. Companies should gather feedback from candidates who turned down a job to see whether time off was a factor. They also should look into variations that are becoming popular, such as workweeks of four 10-hour days or schedules of 80 hours in nine days.
"Survey data shows most Americans don't take long vacations," Stanley said. "They take long weekends."
6. Don't forget about training
President Frank Kadaf, Active Solutions Group
Career development is always a top priority for workers, and it doesn't have to cost a lot. Lateral moves, for example, satisfy the need to develop new skills but don't necessarily mean a pay increase.
Training fell by the wayside during the downturn, Richardson said. And it can get overlooked when a company takes on a new client and automatically starts looking outside for talent — a great way to inspire mutinous worker sentiments.
Before the company starts looking for outside help, employees at Active Solutions are offered company-paid training if a new job comes up that doesn't fit anyone's skills, Kadaf said. Companies shouldn't forget that management training can take place after hiring and that government grants exist for worker training, said Michael Hansen, president of the Michigan Community Colleges Association.
"If there's a training need, call the president of the local community college," Hansen said. "You don't have to go through layers of bureaucracy."
7. Offer one or two benefits for contractors
Companies in a bind between hiring permanent workers and high-quality contractors can offer a few benefits as an in-between option.
Some health insurance companies in Michigan will cover contractors as part of an employer's group, Beltz said.
Employers also can include contractors on voluntary benefit programs such as retailer discounts and pet insurance. "That's a big one," Beltz said.
8. Look for foreign talent
If a company is suffering a talent crunch, it should look beyond its usual talent pools. One such pool: international students.
Employers assume that hiring foreign workers is complicated and expensive, said Athena Trentin (pictured at right), executive director of the Global Talent Retention Initiative of Michigan, funded by the MEDC and New Economy Initiative to keep international students in the state.
"International students want to stay here," Trentin said. "They've already picked up and left their families and created a home."
It generally costs $3,000 to $7,000 and takes a few weeks of paperwork to sponsor a visa, she said. Much of that can be avoided because students already are authorized to work in their field of study for up to 29 months. If the employer and employee want to continue the relationship, they can go through the visa process later.
Employers don't have to pay into Social Security while the worker is on a student visa, and no relocation costs would come with hiring someone straight out of another country.
Companies also can offer flexibility to deal with immigration issues, such as time to leave the country and renew a visa, and it doesn't have to be paid leave. Help with adjusting to the community, finding bilingual schools and assistance for spouses are other extras a company can offer to help workers feel at home.
"These sorts of things get the word out that a company's doors are open to international workers," Trentin said. "They know they can apply to a Microsoft or an Oracle, but who in Michigan?"
9. Make sure job-seekers feel welcome
Showcasing diversity can turn a business into a magnet for talented people who don't want to wait until day one on the job to find out whether the company's culture is going to work for them.
Marketing materials signal a company's inclusiveness, as can visiting support groups and associations to offer hiring support, Stanley said. To back that up, companies can tailor make people new to the workplace feel at home through social meetings and workplace support groups.
A flexible work environment tends to go a long way, Stanley said. For example, workers with disabilities benefit from the ability to telecommute as needed.
10. Don't let pay lag
It's hard to have sympathy for a company that complains of not being able to find workers but hasn't stepped up its starting pay in 10 years.
"Employers can get very complacent with their pay," Richardson said. "They need to really understand what the market is paying — the market changes every day, every month."
Hansen at the community college association talks with college staff who place students in skilled jobs such as machining and welding.
What he hears is that the companies that complain the loudest about not finding talent are the ones that pay the lowest.
"If you peel the onion layer back, it's infinitely more complex than 'we don't have enough machinists and welders,' " Hansen said. "The higher-paying ones never have trouble filling jobs."
Beltz of Human Capital said that when he makes clients aware of their lagging pay, they always make adjustments.
He advises companies to "look in the mirror," especially now that the economy has picked up and workers can pack up and leave again.
11. Do the research. Rinse. Repeat
Compensation data age quickly, and paying downturn-era wages deep into an upturn is not a recipe for success, Richardson said.
Richardson's office at the MEDC can run compensation numbers for a few key positions as long as the jobs are posted at mitalent.org. Online tools available through human resource organizations such as the Society for Human Resource Management can show salary data for specific jobs right down to the ZIP code.
Kadaf of Active Solutions Group said he checks pay scales every three or four months and tries to make adjustments over time. He doesn't have a preset schedule for giving raises but gives them based on how things are coming along — before employees ask for them. He also gives surprise bonuses for doing a good job in a given week.
12. Be careful about playing favorites
When sweetening the pot to attract a certain type of skilled worker, unintended consequences can arise. The employee who has slogged it out over many economically dragging years without a raise isn't going to feel good about newcomers receiving higher salaries.
"Now that you're hiring in a war-of-talent time, you don't want to lose that person who stuck with you the last three years," Richardson said. Some of these employees may prefer more time off to salary increases, she said.
This is another reason to stay on top of compensation data for all job types within a company, experts say.
Employees in a department where a talent crunch hasn't arisen could be getting low salaries simply because no one has bothered to look. Then, when some in-demand workers start filling the ranks, these existing workers feel jilted. HR managers should conduct salary reviews regularly.
"Pay compression" is the HR term for having to hire people in a tight spot, to the disadvantage of staff in the same department hired earlier at lower pay ranges. "Sometimes that range has to change based on what's happening," said WorldatWork's Stanley.
For people in other departments, managers need to have honest talks about market conditions and pay philosophy. Sometimes an understanding of the bigger economic picture at an organization really helps with understanding.
Said Stanley: "Some jobs within an organization just may not be at a premium."
This story originally ran in Crain's Detroit Business.