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ADP survey finds small businesses struggling with employee hiring, retention

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Business Practices
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ADP Research Institute’s latest small business survey concludes that an increasing number are facing challenges to hire and retain employees.

A representative sample of more than 9,000 respondent answers were pulled from the overall survey results. All of the businesses surveyed were ADP small business clients.

More than half of the respondents with businesses that have less than 50 employees said finding qualified employees to hire continues to be a “key challenge” to their businesses. The current state of the economy and supply chain disruptions are also challenges for the segment of respondents. Larger businesses, with up to 499 employees, cite finding qualified employees as their primary challenge with retention coming in second.

Reasons for hiring challenges range from where to find qualified individuals (57% of businesses with 1-49 employees and 50% of those with 50-499 employees) and candidates not wanting to work (49% and 53%) to candidates not showing up for interviews (37% and 54%), offering a competitive employment package (20% and 19%), and losing candidates to competitors (16% and 30%). A small percentage of employers (8% and 9%) also said not having a way to benchmark the effectiveness of the compensation packages they offer is an issue.

The most common solution businesses are offering when facing employee absenteeism, though not a large percentage of respondents (7% and 16%), is more flexible work schedules. The majority of those that are having the problem say it’s “quite disruptive” and have seen a recent increase in absenteeism.

The majority of clients are not planning to pause hiring – especially larger clients. One-fifth of small clients (1-49 employees) have either paused or are planning to pause due in large part to uncertainty about the economy.

More than half of respondents with 1-49 employees indicate they’ve had to recently raise the prices they charge. Regardless of company size, those who have had to do so said the price increases are permanent. Companies with less than 50 employees are significantly more likely to indicate price increases as being permanent and are planning to raise them again soon, according to the survey results.

When dealing with increased labor costs, 22% of smaller companies and 44% of larger ones are focusing on employee retention as a solution. Eleven percent and 7%, respectively, said they’re scaling back business operations because of increased costs. Most respondents said they’re not planning on making changes to employee wages this year with larger companies even less likely to compared to earlier this year.

Larger companies continue to offer twice as many things to their employees, according to the survey. Smaller clients are still most likely to offer flexible work hours/schedules and retirement plans to employees as well as special bonuses/increased pay.

The majority of respondents from both smaller and larger small businesses cite special bonuses/increased pay (64% and 79%) and flexible work hours (58% and 61%) as their top two ways to retain employees. Offering a retirement plan comes in at No. 3 with 43% and 72%, respectively, citing the benefit as important for retention.


Featured image credit: ADP

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