Three Strategies to Help Your Midsize Company Grow, Part Three

This post follows part one and part two in a series. In this final post, we take a look at another strategy for helping your midsize company grow—attracting and retaining the right talent.

For midsize organizations, attracting the right talent can be a real struggle. According to “Help Wanted,” a report published by the National Center for the Middle Market (NCMM) and Brookings Institution’s Metropolitan Policy Program, while mid-market companies create more new jobs than any other sector of the economy, their “robust appetite for human capital makes the lack of access to it particularly painful.”

Thomas Stewart, executive director at NCMM, has a similar observation. “These are the companies that are growing the most, and if we are in an increasingly full employment economy, the pinch is going to be felt most sharply in the middle.”

In fact, nearly four out of ten mid-market executives say that their companies’ ability to grow is constrained by a lack of talent, with higher shares in the services, construction, and healthcare industries, according to the report. Adding to that challenge, “middle enterprise companies tend not to have the big brand name that attracts the resume,” says Stewart.

This problem is exacerbated by the fact that midsize organizations often don’t have the internal HR infrastructure to develop strong recruitment and retention programs. As a result, HR departments tend to focus more on operational activities, such as onboarding new talent and supporting the day-to-day needs of employees. This leaves less time for active recruitment and retention, which can have a major impact on a company’s growth.

Having retention strategies in place is important, especially as a company’s existing workforce may be the best place to search for talent during high growth periods.

Another area that can impact the ability to grow is lack of training. The report cited that mid-market companies tend to train internally only when needed, with 45 percent of firms reporting they train when necessary but do not have a continuous training program.

Lack of Higher Education Support

The report highlights that mid-market firms also face greater difficulties accessing resources and support for talent from higher education and workforce training programs. According to the report, “traditional resources for recruiting talent—such as universities and trade schools, and public-sector workforce development programs—do not typically focus on the unique needs of mid-market firms, and tend to focus instead on larger firms.”

The reason for this? “Fewer mid-market companies engage with what is sometimes called the ‘workforce system’ because the bridge between supply and demand can be rickety,” says Stewart. “The system isn’t easy for smaller companies to navigate; forms may be complex and agencies may be hard to find or uncoordinated.”

He also pointed to challenges with the system. “On the supply side, incentives are often misaligned. A community college will typically be happy to develop special courses at the behest of a major employer who can promise to hire dozens of students a year, but it’s much harder to coordinate to serve the needs of a group of mid-market companies, even though their total hiring might be greater.”

Improving Recruitment and Retention

There are a number of ways that midsize organizations can overcome these issues and improve talent recruitment and retention, which leads to much greater growth success.

Stewart advises mid-market firms to be more proactive in talent planning, and not wait until a need arises to invest in these efforts. According to the research report “Mastering Talent Planning,” by the NCMM in partnership with Vistage, there is a strong correlation between superior talent planning and overall company growth and performance. “Companies that do talent planning well—specifically those companies that have a formal talent planning process in place, engage in a comprehensive assortment of talent planning initiatives, and encourage involvement in the talent planning process by senior executives and top line executives—tend to be among the fastest growing and best performing companies in the mid-market,” the report says.

Having retention strategies in place is also important, especially as a company’s existing workforce may be the best place to begin a search for talent during high growth periods. Performance management is one area that can help improve retention, especially when it is not just a once-a-year event, but a continuous process that empowers employees.

According to the “Help Wanted” report, midsize firms that excel at performance management “tend to have senior executives who believe in the process and treat it as an integral part of every working day.” They don’t rely just on formal performance reviews and instead create a process in which informal feedback is coming in continuously.

Ongoing training and learning can also help keep employees motivated and engaged, and is a way to develop new skill sets as an organization evolves. Midsize organizations should also consider working more closely with potential outside talent sources. Included in the “Help Wanted” report were suggestions to build relationships with professors at local universities, which could help connect organizations with promising candidates, or offer summer internships to students going into their senior year of high school or college.

Technology Can Help

Developing more formal talent planning and management processes may feel beyond many midsize companies reach. Many work with several obsolete applications across HR, talent, benefits, payroll, and recruiting, which takes considerable time and resources to manage and doesn’t provide the foundation and capabilities needed to support more effective talent management practices.

However, advances in technology are now making it easier for midsize organizations to build out more sophisticated talent capabilities. Cloud-based systems that bring together human capital management, talent, recruiting, and learning in a single system enables companies to streamline these processes, reducing the amount of time spent working manually between systems.

Having a single source of truth across these functions also provides greater visibility into overall costs and performance of people. As midsize organizations grow and expand, they can answer questions such as: are my best people working on my most critical initiatives; where do I find the best talent; who are my retention risks; where are the gaps in the leadership pipeline; and what talent is contributing most to revenue?

Unibail-Rodamco, Europe’s leading listed commercial property company, chose to transition its HR operations to the cloud to support its presence in 12 countries and drive future growth. “As we prepare for the future, it is important that we adopt an HR system that can support fast growth and change while also giving us deeper visibility into our workforce globally,” says Sylvain Montcouquiol, chief human resources officer at Unibail-Rodamco.

The mid-market serves a great need in the world economy, fueling jobs, innovation, and growth. While this group faces unique challenges, advances in technology and evolving approaches to operational efficiency, planning, and talent will help your organization address them in new and better ways. The future is bright with greater support and tools to help you grow and build on your success.

(This blog concludes the three-part series. To start from the beginning, go to “Three Strategies to Help Your Midsize Company Grow, Part One” and “Three Strategies to Help Your Midsize Company Grow, Part Two.”)