Small Centers Face Hiring Pitfalls

By Peter Lindfield, published in the Telegraph-Journal 11th May 2012

Every small geographic centre has a similar problem when it comes to matching people to its labour needs. In many industries, small centres lose out to larger jurisdictions when competing for talent. This problem is most pronounced in “hard-to-hire” positions where there is substantial competition for the most capable and promising employees. And it is not getting easier for small firms to compete with their larger counterparts in the game of employee recruiting and retention.

At one time, there was a substantial compensation advantage to being employed in larger centres, in part because of cost-of-living premiums, but this differential gradually is being eroded. The result is that it has become even more difficult to recruit and retain top employees in smaller centres. There is a greater expectation that compensation packages will measure favourably to those from larger cities.

This problem is profound for smaller centres. In the technology industry, product development is not the main challenge in the same way that it was 20 years ago. Many firms in this industry are undergoing a transition to become service firms. Although these firms continue to hold significant intellectual property, infrastructure and other capital assets, their most valuable and irreplaceable asset has become human capital. At the same time, the main challenge today is recruiting, retaining and managing the best people in the market. Creating loyalty is at the core of retention programs.

Approaches to generating loyalty vary not only by individual but by markets. In markets where there is less long-term stability, people will tend to focus more on short-term incentives rather than on long-term development opportunities. But many highly qualified professionals would prefer to live and work in larger centres, and it is a constant challenge to attract professionals to remain in a smaller region.

The dynamic nature of many industries dictates that firms seek people who are adaptable as well as capable. Today they search out and recruit people with the skills to cope with the boom times and the downturns that follow. The implication of this is that building people capabilities is at the core of the strategy, with programs that identify and nurture high-potential talent.

In practice, this strategy unfolds in two important ways. The first way involves growing the talent pool with the necessary technical skills by partnering with engineering departments at universities and key vendors to develop learning programs. This has the effect of creating graduate development programs for entry-level hires to make up for the gaps in the existing education systems.

The second is providing employees with headroom to grow within the organization. This ensures that the people who have the right technical skills will also have leadership ability. Top firms have created leadership development programs for middle and top management that builds people and business skills and also places them into a talent network. This focus on management skills and expertise is of particular importance to smaller centres. Because large firms have significant revenue and margin targets associated with them, many of the firms in small centres are small and medium sized.

One of the negative attributes associated with joining a small firm is that management may possess fewer skills and less experience, which in turn can contribute to greater company instability. Creating greater management expertise has the effect of spreading the risk more broadly across the industry and to everyone’s benefit.

Company size can contribute to more limited potential career options. Although firms in small centres can exist in sufficient numbers, there may be too few rungs among those firms to constitute a career ladder. If a company fails, a senior or technical professional has a much more limited number of employment alternatives in a smaller centre than a larger one. When creating a labour force plan, we will need to face the increasing limitations associated with smaller centres.

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