Middle-Market Challenges: Recruiting and · surveyed (52%) said that their company has a social...

2018 Report | Middle-Market Challenges: Recruiting and Retaining Talent 1

Middle-Market Challenges: Recruiting and Retaining Talent

2018 Report


Table of contents5 Key Findings

6 The Middle-Market Targets Innovation

10 Achieving a Critical Mass of Talent

14 The Middle Market Is Adopting Digital Recruitment and Retention Strategies

18 Conclusion

19 About Us


Introduction

If there is one lesson that middle market companies are taking from disruptors such as Uber, Netflix and Airbnb, it’s that their future depends on continuous innovation. The challenge: reconfigure their corporate cultures to be more entrepreneurial, develop or incorporate new technologies to create more attractive products, and automate and streamline internal processes to reduce costs.

Given the middle-market’s significance to the U.S. economy, this effort is critical. Consisting of companies with revenues between $100 million and $3 billion, the middle market employs more than 30 million people and produces approximately $10 trillion of the $30 trillion annual gross receipts generated nationwide.

To understand how the middle market is responding to this ambitious agenda, Capital One conducted a survey of 300 senior executives to learn what they’re doing to embrace innovation and harness disruptive technologies. In addition, the survey sought to identify obstacles that these leaders perceived as hindering their progress.

$10...More than 30 million people generate approximately $10 trillion in annual gross receipts nationwide.

TRILLION



Continued innovation is the best way to beat the competition

Thomas A. Edison

“

42018 Report | Middle-Market Challenges: Recruiting and Retaining Talent


Key FindingsMost middle-market executives have started taking steps to make their company more entrepreneurial, but they recognize that their ability to sustain innovation long-term depends on being able to recruit and retain the necessary talent.

In addition to incentives such as 401(k) matching plans and performance bonuses, they are increasingly turning to social media and mobile apps to enlarge their talent pool and provide a more satisfying, engaging work experience. Having a financial partner that can provide resources to support these efforts as well as talent acquisition will be a critical element to their success.



The Middle-Market Targets Innovation

For many middle-market executives, business as usual means constantly moving forward rather than standing still. Over half the respondents to our survey (53%) reported that innovation is “somewhat” or “extremely” important to maintaining their competitive edge. This is especially true for technology, telecom, and IT firms (87%) and financial services and insurance (77%), but innovation is also a priority for middle-market professional services firms.

Regardless of industry, all the executives surveyed noted that their companies are taking one or more steps to encourage innovation. For example, they dedicate time to brainstorming new ideas (37%) and streamlining the approvals process for new initiatives (37%).

Importance of innovation

Over half of respondents feel innovation is “somewhat” or “extremely” important to maintaining a competitive edge. A third are neutral.

1%

Not at all important

13%

Somewhat unimportant

33%

Neither important or unimportant

40%

Somewhat important

13%

Extremely important



Regardless of industry, all the executives surveyed noted that their companies are taking one or more steps to encourage innovation. For example, they dedicate time to brainstorming new ideas (37%) and streamlining the approvals process for new initiatives (37%).


The Middle Market Is Looking Inward for Innovation

The survey results reveal that middle-market companies are looking inward for innovation. Only 29% have engaged external consultants to help them build innovation-based strategies while just 24% hired vendors to help.

This internal focus is also underscored by their hiring priorities. About a fifth of middle-market executives (22%) reported that their companies will focus on adding to their research and development staff during the next 12 months, while 18% intend to bolster their strategy teams.

Hiring in the next 12 months

About a fifth of middle-market companies plan to hire the most in R&D and Strategy over the next 12 months.

22%

ch and

Resear

elopmen

t

dev

18%

ategy

Str

15%

ations

Oper

and logist

ics

15%

eting and

Mark

communica

tions

13%

e and

Financ

accountin

g

10%

Informatio

n...

6%

Human

resource

s



Although most middle-market companies are concentrating on developing innovative strategies and talent organically, some firms are seeking to acquire them through mergers and acquisitions. It’s a tactic increasingly evident in apparel and retail where market upheaval is intensifying the need for immediate innovation. Their preference for M&A is confirmed by our findings on R&D. Only 13% of companies in these sectors have substantially increased their research budget over the past year.


Achieving a Critical Mass of Talent

47

Given the general middle-market preference for sourcing innovation internally, a report from the Bureau of Labor Statistics takes on added significance. In March 2018, the number of unemployed individuals equaled the number of job openings for the first time since the bureau began tracking this metric. Although, this indicator reflects a robust economy, it also suggests a fundamental mismatch between skills possessed by workers and those required by employers.

In late 2017, Capital One conducted another middle-market survey of 400 executives that revealed considerable apprehension about another necessity for growth—the ability to attract and retain skilled managers. When asked to name their biggest recruiting challenge in this year’s study, 20% of respondents identified a “lack of skilled applicants,” a view held most strongly by healthcare executives (47%) and, surprisingly, much less strongly by manufacturers (10%).

One-fifth of the executives polled this year said that their biggest recruitment challenge was meeting the salary requirements for qualified applicants. In addition, managers find it difficult to identify qualified applicants because the available talent pool is too small (15%). They also face competition from larger counterparts (17%) capable of offering higher compensation.

Once middle-market companies find the right employees, the next challenge is keeping them. Here too, these companies are wary of larger organizations. Big companies have an advantage in overcoming the retention challenges faced by middle-market executives. They can provide greater opportunities for advancement (30%), better pay (25%), and more generous benefit packages (22%). Not surprisingly, smaller middle-market companies feel a greater sense of vulnerability to large corporations.

%Forty-seven percent of healthcare executives cited the lack of skilled applicants as the biggest challenge to recruiting skilled managers.



Retention challenges

A third of companies find competition from large corporations and lack of mobility to senior leadership positions the biggest challenges to retaining employees.

31%

Competition from large corporations

30%

Lack of mobility to senior leadership

positions

25%

Unable to match competitor

pay package

%

Unwillingness

24

to relocate

%

Unable to

22

match competitor benefit package

%

Company cultur

20e

%

Competition

17

from startups

%

Lack of tr

16aining

and professional development

7%

None


The relative disadvantage that middle-market companies face in recruiting and retaining employees is illustrated by their benefit packages. While slightly more than half offer 401(k) matching programs, the average benefit program falls short when compared to those of larger counterparts. Just 31% of the companies surveyed offer remote work flexibility, and the percentage declines steadily for such perks as healthy living incentives, company equity, and free or subsidized childcare services and gym memberships.

The argument for strengthening benefit packages is straightforward: the substantial costs of recruiting and training new employees might be better spent adding benefits that enable existing employees to thrive. By engaging their employees and consulting industry benchmarks, middle-market companies can find ways to reconfigure their benefit packages to maximize recruitment and retention.

Benefits to employees

Over half of companies offer a 401(k) match program. A third also offer performance-based bonuses and remote work flexibility.


55401(k) match %program

Additional performance- 36%based bonuses

Remote work %flexibility 31

Healthy living 28%incentives

Corporate discount 25%programs

Free snacks or meals 24%

Company equity 23%

Stock 23%options

Educational 21%assistance

Free/subsidized 20%childcare services

Free/subsidized 17%gym memberships


FPO

Once middle-market companies find the right employees, the next challenge is keeping them. Here too, these companies are wary of larger organizations. Big companies have an advantage in overcoming the retention challenges faced by middle-market executives.


The Middle Market Is Adopting Digital Recruitment and Retention Strategies

With budgets under pressure, middle-market companies are looking for creative solutions to help ease their recruitment issues. In addition to traditional methods of enlarging the job pool —partnering with trade associations, universities, and participating in local industry meetups—they are deploying a variety of digital strategies to attract and retain promising employees.

Recruiting channels

Over two-fifths of companies are using LinkedIn or other online job forums to recruit potential employees. Financial services and Technology, Telecom, IT companies are most likely to use LinkedIn or other online job forums, as well as university partnerships; Healthcare companies will also use university partnerships.

Link44%

edIn/Online Job Forums

National Industr32%

y Trade Associaition P

31%University artnership

Local Industr27%

y Meetups

Local Industr26%

y Trade Association

Owned Social17%

Media

2%None



Recruiting and retaining employees

Companies are using mobile apps and social media to both recruit new employees and retain existing ones.

Mobile62%

55%

Social media52%

46%

Retain current employeesRecruit new employees

Middle-Market Companies Are Finding Candidates and Employees on Social and Mobile Platforms

Now ubiquitous social platforms like LinkedIn, Twitter, and Instagram are an effective way for companies to advertise positions, identify quality candidates, and connect with them. Social recruiting also leverages workers’ online networks by establishing employee advocacy programs. Just over half of middle-market executives surveyed (52%) said that their company has a social media recruiting strategy.

Mobile is the next frontier in recruiting. Our survey found that 62% of middle-market companies are already using mobile recruiting channels that simplify the application process and can be integrated with talent acquisition systems. They are also using responsive design to ensure that their career pages look good on small screens from inquiry through application. Firms in commercial real estate, healthcare, and transportation and logistics are particularly aggressive in using mobile.

Social and mobile tools can also reinforce retention keeping employees engaged and informed. Nearly half of the middle-market executives in our survey report their companies are using social (46%) and mobile (55%) for retention. Company intranets and bulletin boards have been replaced by Slack channels, instant messaging, and video conferencing technologies that increase collaboration, productivity, and connection among employees.


Middle-Market Companies Need Banking Relationships that Deliver Insight as Well as Funding

Most middle-market companies either have the financial resources (48%), access to financing (57%), or both (22%) to support their employee recruiting and retention goals. However, given the importance of attracting and keeping talent, it is surprising that close to one in five middle-market companies (17%) lacks the capital to do so. For the smallest companies in our survey, those with revenues of between $100 and $499 million that proportion rises to one in three.

For middle-market companies, it’s important to build a relationship with a financial partner that understands the importance of investing in the recruitment and retention of top talent.


48Financial Resources %

Banking Relationships 57%

None 17%

Sufficient support for recruiting and retention goals

Under three-fifths of companies state they have sufficient banking relationships to support their recruiting and retention goals, while just under half have the financial resources to support those goals.


For middle-market companies, it’s important to build a relationship with a financial partner that understands the importance of investing in the recruitment and retention of top talent.


Conclusion

As the survey makes clear, the majority of middle-market executives understand that continuous innovation is vital to their success—and that in the competition for innovation, talent is a precious commodity.

In their efforts to find and keep talented employees, middle-market companies have demonstrated a willingness to go beyond traditional approaches and employ new digital tools.

A LinkedIn Talent Solutions report found that only 20% of companies of any size are considering investing in mobile recruiting tools for their talent acquisition team, compared to 62% of middle-market companies in our survey that have already committed to mobile recruitment.

Effectively, middle-market companies have recognized that mobile connectivity and social networks are now a fundamental way for people of all ages to interact with their world. As a result, traditional methods for recruiting and retaining employees, while not irrelevant, are no longer sufficient on their own. For at least half the middle-market companies in our survey, financial support will be essential for reaching their talent goals.

As the battle for top talent continues, middle-market companies will need to become more innovative in their recruiting to find and attract performers who can deliver game-changing results.



About Us

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $248.2 billion in deposits and $364.0 billion in total assets as of June 30, 2018. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. AFortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.


Take the next stepsWhether insulating your company from a disruptive event, facilitating an R&D expansion or acquiring new online and mobile payment solutions, a strong banking relationship is key. As a top-10 U.S. bank housing a digital innovation lab, we’re committed to providing you the resources, tools and expertise needed in promoting disruptive innovation across your business.

Let’s discuss the possibilities.Capital One 299 Park Ave., New York, NY 10171

[email protected]

All loans subject to credit approval. Terms and conditions apply. Products and services are offered by Capital One, N.A., Member FDIC. © 2018 Capital One. As of 12/31/2017. Source: SNL, Regulatory Filings.

mailto:[email protected]

Date post:	15-Feb-2019
Category:	Documents
Upload:	trandiep
View:	215 times
Download:	0 times

Middle-Market Challenges: Recruiting and · surveyed (52%) said that their company has a social...

Documents