Winter 2017
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CTDO Magazine

Mid-Market Challenges, Big Talent Opportunities

Friday, December 15, 2017

Can good talent management create a competitive advantage for mid-market companies struggling with a shortage of skilled employees?

Four in 10 executives for middle market companies say a lack of talent constrains their business' ability to grow. That's the word from Help Wanted, a new joint report from the National Center for the Middle Market (NCMM) and Brookings Institution. In particular, companies struggle with a low number of applications, a lack of candidates who possess the right kinds of skills, limited work experience among those who do apply, and high salary demands among skilled candidates.


The report identifies mid-market companies as those with annual earnings between $10 million and $1 billion. These are "employment powerhouses," says the report, responsible for about a third of U.S. private sector jobs and 60 percent of new hires.

"Middle market companies have added jobs at a 3.7 percent annual clip for the past five years, and the rate is accelerating," notes Thomas A. Stewart, executive director of NCMM. "That makes the talent shortage particularly painful, and makes it difficult for these companies to reach their growth objectives."

Not surprisingly, healthcare has been hit the hardest, with 49 percent of midsized companies responding that lack of talent has had negative effects. Construction and service firms follow closely, with 46 percent feeling the impact.

So, what's the problem? According to Help Wanted, many mid-market organizations usually have lean HR and talent management systems that are more operational than strategic. The report adds that they frequently lack scale or capacity to carry out functions such as skills mapping, succession planning, and recruitment planning.

"Middle market companies typically have more complex workforce needs than small companies but lack the HR capacity of larger companies to recruit, assess, hire, and train the talent they need," says Martha Ross, a fellow with the Brookings Metropolitan Policy Program.

But where some see a bleak outlook, others see opportunity. Deloitte analysts Robert Rosone and Timothy Murphy suggest that mid-market firms are better positioned—because of their size—to redesign hiring practices and human resources infrastructure to better align with human psychology. That can enable greater agility when filling emerging talent gaps.

"Their smaller size could be an asset," write Rosone and Murphy in "Exercising Judgement." "Without the layers of bureaucracy some larger human resources departments may have, these more nimble HR departments could get right to work revamping policies." Specifically, the analysts advocate mid-market firms find innovative ways to explicitly speak to employees' intrinsic motivations.


They suggest that one way to intrinsically motivate candidates and employees is to appeal to their need for mastery. Rosone and Murphy share that some organizations may want to increase efforts to instill a learning culture. Case in point: Google holds a celebrated Tech Talks series where prominent thinkers share leading-edge thinking with its community of employees. "Beyond the economic efficiency of self-training rather than paying for external trainers, enabling employees to gain recognition as teachers who are masters of their domains is a powerful motivator," they write.

On the more practical side, Help Wanted recommends mid-market firms consider developing internship programs and enhancing community outreach. Companies may want to engage with universities, nonprofits, and public sector workforce programs—currently, only 20 percent do this. "There are significant opportunities for universities and others to develop programs for and outreach to the middle market, with great benefit to both parties," says Doug Farren, NCMM managing director.

Middle market companies also can join forces to address their workforce problems collectively. NCMM and Brookings found that only 14 percent work with other companies to deal with workforce needs and skills gaps. Instead, these companies should participate in or create consortia to leverage workforce efforts within their region or industry.

Finally, in the competition for the best people in middle market jobs, a good talent acquisition strategy starts with an effective retention strategy. So a closer look at key predictors of turnover, such as employee engagement and team dynamics, is in order for mid-market companies.

Read more from CTDO magazine: Essential talent development content for C-suite leaders.

About the Author

Ryann K. Ellis is an editor for the Association of Talent Development (ATD). She has been covering workplace learning and performance for ATD (formerly the American Society for Training & Development) since 1995. She currently sources and authors content for TD Magazine and CTDO, as well as manages ATD's Community of Practice blogs. Contact her at [email protected]

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