The third post in a new series focused on insights from the National Center for the Middle Market’s research initiatives, this article explores talent challenges in the middle market and illustrates how colleges and universities can serve as an invaluable partner in sourcing new employees.
According to our estimates, middle market companies account for about 60% of net new private sector jobs. In other words, mid-sized firms are constantly looking to add talent, and the rate of employment growth for these businesses has escalated considerably since the Center began measuring it in 2012. Per the latest Middle Market Indicator, companies increased headcount by a rate of 6.5% between 1Q 2017 and 1Q 2018, and they estimate continued strong growth for the year ahead.
Despite the fact that middle market firms hire more workers and generate more new jobs than any other economic segment—or perhaps because of it—middle market executives regularly cite talent management issues as a top challenge affecting company performance. The 1Q Middle Market Indicator reveals that issues such as acquisition, recruitment, and retention are a growing problem for a majority of middle market businesses (54%), edging out all other internal long-term challenges.
Given the importance of talent and companies’ ongoing struggles with it, the Center has completed several talent-focused research initiatives, including our Building the Top Team report, which illustrates the importance of having a unique employer brand and persuasive employee value proposition. While businesses that have strong employer brands perform better than companies that don’t, additional research completed with the Brookings Institution shows that many middle market companies struggle to get noticed by the best candidates. According to our Help Wanted report, a third of middle market businesses say they contend with a low number of applicants, and four out of 10 cite competition from other firms as a recruiting challenge. Fully 37% of executives at mid-sized companies say that a shortage of talent constrains their ability to grow.
Why building relationships with universities and colleges is smart business.
Our Help Wanted report outlines several steps middle market businesses can take to enhance their recruitment efforts. Among them, we recommend partnering with local educational institutions. Because middle market firms tend to be deeply rooted in their communities, establishing these types of partnerships can be a natural fit. And they can translate into several advantages, including:
- An inside track on promising candidates: Developing relationships with universities and individual professors can give your company access to students who will soon be entering the workforce and who are actively pursuing job opportunities. These students often make ideal candidates for internship programs and entry-level positions.
- A way to match available opportunities with needed skills: Many career management offices at universities and colleges maintain alumni resumes and profiles as well as information on current students. Working with these departments can be an affordable way to find available candidates who meet your organizational needs.
- A chance to influence curriculum. Community colleges, in particular, often develop programs in collaboration with local employers. Middle market companies may not be big enough to get colleges to create courses especially for them, but individually and collectively they can shape course offerings by letting colleges know what they’re looking for.
- Unique opportunities to build awareness of your company: Sponsoring a campus event, hosting an information session for rising juniors/seniors, or serving as a guest speaker in a class are great ways to promote your business to future employees. In addition, more and more business schools are offering courses in which students study real company challenges and make recommendations. Participating in these programs can provide your business with an introduction to talent along with low- or no-cost consulting.
For example, the Middle Market Industry Immersion Program at The Ohio State University Fisher College of Business, now in its fourth year, offers juniors a year-long introduction to middle market companies and provides opportunities for teams of students to work on business projects for the corporate participants. During the 2017/2018 school year, four middle market businesses participated in the course: Columbus Crew Soccer Club, Raising Cane’s Ohio, Columbus Blue Jackets, and Grote Company. Student projects ranged from developing a new slogan for a sports team to exploring opportunities to grow the aftermarket parts business for a food processing equipment company. In addition to receiving creative solutions and fresh perspective from the students, corporate participants built relationships with the business leaders of tomorrow and gave their firms unique exposure to soon-to-be job candidates.
"We get to work with brilliant people who help us make sure we are always sharpening our toolkit and looking at issues through the right lens - and there is incredible benefit from that new perspective across all areas of our business. At the same time, we get to give back to the university and support the students who have supported our growth and success as their go-to spot for quality chicken finger meals. Definitely a win-win."
- Eric Ongaro, President, Fry Cook & Cashier, RCO Limited
Get more talent strategies.
For more ideas on how to better compete for talent, download our Help Wanted and Building the Top Team reports. If you are interested in learning more about the Center’s student education initiatives, contact us to discuss how your organization can connect with emerging talent.
Others in this series
Middle Market Indicator Foreshadows Inflation Concerns
Cyber Attacks: What You Don’t Know Could Already Be Hurting You
The Bottom Line: Mid-Sized Businesses Are Hot Targets for M&A.