Speaker #0We are in uncertain times and things are going on that are beyond our control. And I know a lot of you are wondering, is everyone else feeling the same effects? Well, the NFIB, or the National Federation of Independent Business, released their index in March, kind of before all this crazy, but it had some interesting information. Today, we're going to talk about it. Welcome to the Key Hire Small Business Podcast, where we cover the issues that help owners scale their small business. I'm Corey Harlock, creator of Key Hire Solutions, and I'll be your host. Today, you got me. You're stuck with me. So we are talking about this NFIB index report that came out, and essentially what it is, is they ask independent businesses to rate their business on, I think it's up to nine or 10 components. And that index usually sits at around, I think they said 96 points. But it is different than it used to be. Some of the categories have gone up, some have gone down. But there are a few that I thought would really pertain to you, the small business owner. Labor quality was one of the biggest movers on the index and 19%. So 19 out of 100 business owners reported. that their biggest and most important problem is to fill jobs, especially manufacturing, transportation and construction. So 40% of business owners claimed, so 19 said it was their most important, but 40% of the people that took the survey said that filling jobs and manufacturing, transportation and construction were their biggest concern. a correlation another notable was 38 percent of owners reported rising compensation as one of their large concerns now there's a correlation here so let's let's get into this yes the markets are uncertain it doesn't mean we are flush with uh possible candidates people aren't out there uh there are there's not as many people out there as you think that are desperate to find work. In fact, during COVID with a lot of the layoffs and things, especially with the call back to office, one of the big trends we saw were people would rather be unemployed than take a job that required them to do something they weren't prepared to do. I talk to people all the time and I hear things like, unless this job is 100% remote, I'm not interested. Or I'm really looking for a remote or hybrid role where... I can work two to three days a week at home. They're not even entertaining an offer that might not suit the circumstances they're looking for. Sometimes I'll get a caveat saying, unless it pays really good, I'm not interested in going into an office. Another thing we know is the trades are low, low, low on talent. There's a big... I have war on talent. I hate that terminology. But there is a lot of competition for technical work. I work with some fire and life safety and security companies and finding techs is hard. I know that the trades are really struggling to find people. Even the trade schools just aren't as busy as they want to be. So when we look at this correlation of finding people to fill jobs and prices going up, this makes a lot of sense. When we go through mass layoffs now, our unemployment rates are essentially equal to what our employment rate was 10 years ago. And I'm going to throw some numbers out there that they might be a little off, but you know, I think like somewhere in the neighborhood of three to three and a half percent unemployment is meaning the economy is booming and we have lots and lots of people working. And once you get kind of below that three, three and a half percent, you actually get into the unemployable rate, meaning that people with no real skills or experience. So they would be coming into your environment with not a lot. That's what it was during the boom and during this crunch. And. And when we have layoffs, that number might crawl up to four, five. six percent and Matt in fact Matt can you google for me and put it into the chat what is the current unemployment rate I want to see if I'm on track here and while Matt's doing that you know so before back in the day I'm an old guy so when I was younger if it got to six seven eight percent unemployment that was a really bad sign that meant there were a lot of people laid off and that's when people were lining up for work and lining up for jobs and things like that That is in the past. That is gone. It's not going to happen again. So we need to understand. Okay, so our unemployment rate, sorry, our unemployment rate right now is 4.2. And we are kind of in a bit of a weird spot, meaning there's been a lot of layoffs. There's been a ton of government layoffs. There are a lot of companies that are doing big layoffs right now. And we're at 4.2%. So in a strong economy, that number's three to three and a half, probably three and a half. to four. So as you can see, we're still well below five, six, 7%, which means there are a lot of people looking for work. So we need to change the way we think about this. I know a lot of people think, oh, they're laying off. There's going to be a lot of people out there. We can get some good people cheap. Please change that mindset. You're hiring a rental player. If someone's making, for argument's sake, $100,000 a year, and you are able to get them because you're unemployed for 85 or 90, that doesn't mean they're sticking with you. It means as soon as the economy gets better and their company calls them back and offers them 100 or 110 to come back, they're gone. So you're not getting a long-term employee cheap. You're getting an expensive rental player or an inexpensive rental player, however you want to look at that. So let's go back to this. 40% of people that responded said that they're unable to fill jobs. And 38% said that compensation is going up. The workforce knows, especially once we get into these trades, that they are in demand and they are very forthright with that information. They will tell you things like, well, I'm currently making $40 an hour and I probably wouldn't move for any less than $45 an hour. There's nothing wrong with that. The employers to set the market. We as employers used to be able to say, this is what we want to pay. This is the information we see out there. This is the range we want. We want to pay for this role. And because there were lots of people out there looking for work, we could find someone who was happy with that range and they were willing to come to work for that range. Now... the employees are setting the market like it or not i know a lot of you don't like to hear that but that is the fact um we can set a range and we can say this is what we want to pay but the market will tell us if we're on target or not if no one applies for your job that means they're not happy with it they don't want your deal if you're interviewing people and they're coming back and saying uh yeah i make more than that right if we let it get to the final stages and then we make an offer and they say oh wow that's well below what i'm currently making because we didn't ask um they're telling us yeah i'm not i'm not going to move for a pay cut people don't change jobs for a pay cut in very rare circumstances are they willing to take a pay cut to take a new job uh could be closer to home it could be remote work it could be hey you know i've I've done a lot of work in my life and I have enough money in the bank. I'm real close to kind of being able to pack it in and I just want to do something I like so I can pay the bills and keep the lights on without dipping into my savings. Those are rare, rare instances, you know, one or two in a hundred. So that can't be your recruiting strategy. That's not maximizing our probabilities. That's setting a really tight target and making it hard and setting ourselves up to be disappointed. So. When people are competing and they're getting multiple job offers, there are very few things they're considering. The things that they're looking at are, how did you treat me through the interview process? I've always said this, candidate experience in the interview process, your reputation is your best recruiting tool. And there are statistics out there that support, if I'm interviewing for a big company, say Google, and I've always wanted to work for Google. And I go through that interview process and I have a kind of an average experience. If they just kind of say, look, we're Google, do you want to work here or not? And then I went to interview with ABC. IT or software or whatever it is, and they put me through an amazing experience. That experience is enough to sway me away from Google, the company I always wanted to work for, and go work for that smaller, unknown firm. The interview process and the candidate experience are very, very important in the job seeker's decision-making process. So we as small business owners, if we don't think about the process or we have an ad hoc, funky process where people don't feel welcome or they're not connecting to us, it's going to be really hard to sway them. But so there are more factors. That's just kind of getting their interest. But the simple rule is whoever's first and offers the most money usually wins. Efficient process, an efficient hiring process. that is focused on the candidate and the candidate experience with the right offer the first time is usually going to land your person. So how do we get there? Right? How do we do that? Because yeah, you're going to have to pay more if someone's already employed or they're recently unemployed, but they're in a competitive market like the trades. Attention business owners. Are you tired of wasting valuable time hiring for associate level positions only to have them not work out or show up? Let me introduce you to CareerSpring. CareerSpring connects first generation and low-income college students with employers like you for those crucial early career roles. Many of these graduates had to balance a full-time job and a full-time course load to achieve their college dreams. They understand the value of hard work. and overcoming obstacles. And here's the best part. CareerSpring is free for employers. Yes, you heard that right. 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They'll all be offering their best, right? 50 cents here and there for candidate experience might not make a difference, but those dollars do. A good rule of thumb is if you are interested and excited about a candidate, especially in the trades, you can guarantee yourself that someone else is too. You're not competing against, you are competing against someone, you are not competing against no one. So if you think, oh, you know, they're unemployed, we can take our time. I won't call them today. Let's push that to next week. Next week, they'll have an offer in their hand and they will have taken it. I just got off the phone with someone and they were talking about that. You know, when you take someone through the whole process. And then, you know, you want to call them in to bring them in for an on-site interview or even make them an offer and they just stop calling you. That's probably because they've taken another job or they've decided to stay where they are. But if they're unemployed, they've just taken another job and it's not worth their time to call you back and say, yeah, I took another job. Right. So we as employers have to understand we are competing and it's important that we create amazing candidate experience. We have an efficient process that is exhaustive. And those two, I always say, those two can live in the same universe. And we have to make the right offer the first time. Again, another thing to note here is the days of we'll make them an offer and see what they come back with. Those are dead and gone. They don't happen because you'll make them an offer. But keep in mind, you're competing. So your offer is getting laid on a table with two. another one or maybe two or maybe three other offers? And what are they looking at? Who's paying me the most? What company did I like the most? What's their benefit look like? What are their benefits look like? What are all the perks look like? What does the schedule look like? And they're going to make the best decision for them. And they might go back if they have a front runner who they really want to work with. And let's say they were at that $40 an hour and one company offered them $45 and their favorite company offered them $44. They might go back to that person and say, look, as you know, I'm interviewing with some other companies, man, I really like your company and I really want to come and work for you. but I have an offer on the table at 45. If you match the 45, I'll come and work for you. Now, if you went in at 42 or 40 thinking, well, they're unemployed, we'll just offer them 40. You're not even in the conversation at that point. You've lost with the offer. So there's a couple important things to do. And the one I want to focus on today is the offer. So in previous episodes, we've talked about how to improve candidate experience. make sure you stand out in the eyes of the candidate. We've done that. We'll have to go back in the archive. I don't know, Matt, if you can pop that in the chat and tell me what episode we may have done that. Number two, we've talked about, man, I lost my train of thought. So candidate experience is big. Being fast. We've talked about that in the whole interview process as well, being quick and then putting together the right offer. So we at KeyHire do this form. It's called our seven candidate driver comparison. And when you're interviewing a job with a candidate, there are only seven things you can possibly negotiate. So the seven candidate drivers are as follows. You have the title, you can negotiate title. So when I was forgetting, you can negotiate their title, you can negotiate their salary, you can negotiate their benefits, 401k. bonus and incentives, PTO, and their schedule. Those are the only things we can negotiate when we bring someone on board. So if you don't ask them about these things upfront, you're negotiating in the dark. And so part of our process and what I recommend you doing, and if you want a copy of these seven candidate driver comparison, you can always reach out to me, title's easy. But I also Ausha you in a small business, we don't need, if you have a $12 million a year business, you should not have VPs and C-level people. You need managers and directors. But people like to see a progression. And a lot of small business owners say, we don't care about titles. Well, the candidates do because they're trying to build a career and show a progression. So you always want to make sure you're showing them. If I'm going to quit company A, where I'm mostly happy and they treat me okay, and I am a manager. If I'm going to come to your company, I want to be a director. I want to be a senior manager. I want to show I left for a better job. Salary is a big one. So you want to ask them, where are you currently? Or if you're not comfortable with that, I always, something I like to say is, what is, where do you need to be in terms of compensation to have it all make sense for you to take on, to maintain your current standard of living and have it make sense for you to change jobs? Then wait, be quiet. they might give you a range or they might say, I'll just be honest with you. Here's where I currently am. So you know exactly where you need to be. Either way, you're going to know where you need to be. Benefits, you know what your benefits are. Here's the kicker. If they're coming from a company that has amazing benefits, and I've seen this happen a lot, and this is where small business owners are at a disadvantage. If you offer them a $10,000 a year raise, so say I'm at $100,000 at my job, you say, well, I'll give you $110,000 if you come over here. And they say, okay, that's great. Send me your benefits. And their benefits cost them $500 a month more than their current. Well, they're really only getting a $4,000 raise. And is it worth it for them to take on the risk of leaving a company they know, like, and trust to join a company they do not know, they kind of like, but they haven't built that trust yet? that's not enough to get them over the hump. So this is where that increased salary creeps in on you, right? If you have an amazing benefit program and it's kind of net across and they've measured out, they go, yeah, this is kind of where I am now, then it's not an issue. But if it shows up as an issue on the seven candidate driver comparison and you go, oh, we got an asterisk here because here's a dollar value that we might need to level up to have the offer make sense. You can look at bonus and incentives. They might not have bonus, you might have bonus. Or they might be on a bonus program and you might not have one. Well, there's extra money that they're walking away from to join your company. What can you do? Are you planning on putting a bonus in place for your company? I don't know. I recommend you do, especially for your leadership, because it's a great way to incentivize people to come over. But if they have a 10% bonus and they're at 100K, well, that's another $10,000 they're walking away from. How do we level up and how do we make that make sense? PTO is easy. Don't fall into the trap of saying everyone starts at one week PTO or two weeks PTO here. PTO is awarded on experience, not tenure. So if you're hiring a 10, 12, 15 year old veteran who's at four weeks, do not expect them to go back for one week. And we'll put this all together here in a second. And then finally, the schedule. This episode is brought to you by Key Hire Solutions, where we work exclusively with small business owners who need the right team to scale and grow their business. Are you struggling to find the right talent for your business? 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I might have to pay tolls. I have to pay parking now, which I don't do with my job, which is remote or hybrid or whatever. That's an extra cost. So what you need to do at the end of all, kind of getting all this information is saying, okay, are we in line with the title? And then you need to start doing calculations, go across the board. Is the salary we're prepared to offer a move up for them in terms of their salary? Is it exciting? Is it enticing? Is it attractive to them? But then you have to factor in benefits. Are they paying more for our benefits? Are we equal or is that a plus? Is it a plus, neutral or minus for us? And know that number. Maybe it's a plus to them or it's a negative to you for 200 bucks a month. Okay. So that's $2,400 a year that we need to put off to the side. 401k, maybe they have a 3% match. Maybe you don't have any. Okay, well, there's $3,000 that we need to put off the side. Now we're up to $5,500. Now we look at bonuses. They don't have a bonus. Maybe we do. And over the last three to five years, our people on the same program have bonused. $10,000 and they haven't bonused any. So now we're plus, we're kind of plus $5,000. You can see how this goes in a negotiation. And then we look at PTO, we'll match that, no problem, no negotiation needed. Or maybe you might say, hey, can we start yet? Three, four is a lot to have you start at. And most people at that point are okay. But if they push back and say, no, I need the four, match it. Doesn't cost you anything really. I know it costs you something on your back. You think it costs you something, but it's easy. It's an easy throw in. Then you give them the schedule they want. If the schedules align, it's great. So if we go back through this, we're minus $2,400 on benefits. We're minus $3,000 on 401k. And we're plus 10 grand on average on the salary. So we might actually come up. they might actually come up a $10,000 raise. If you're going to offer them $110,000, they're currently at $100,000 plus another $4,500. But they're going to come back and say, yeah, but you can't guarantee that bonus. To which you might respond, I'll guarantee it for your first year. Just to push them over the edge and show here's how committed we are to getting it to you. But if you start nickel and diming here and say, well, the bonus isn't guaranteed, I can't guarantee that. I'm going to give you a $10,000 raise. You can figure out your benefits and your 401k. Really, they're only moving for $4,500 at this time. The raise is truly only a $4,500 raise, and it's probably not going to get it done. It's probably, well, it's not probably, it is, it's not enough to move that. $4,500 isn't enough to get someone excited about changing jobs and moving over. So that's kind of where I land on this labor force. It's tight and the wages go up. They're absolutely correlated. The market is getting smarter. The job seeker knows in a lot of cases that they're in the driver's seat. They don't feel like they need to sell to you to get your job. They really feel like you need to impress them because they do have choice. We've been through this. Do not poo-poo it and say, yeah, whatever, Corey. If you're excited about someone, you're talking to someone and you're very excited about getting them on your team. I can guarantee you they are talking to at least one other employer or they've started and they're getting calls. So always understand we're competing. And that's why crafting that final offer and having the dialogue with someone. You know, we're very involved with the people going into our businesses with our business owners. We negotiate all the all the offers, A, because we're neutral third party. And. We we've been working with the candidate consistently and we've built a relationship. We've built some trust with them and we have trust with our owners. And, you know, many of our companies we work with for two, three, four, sometimes up seven, eight years. And we know the business and we know what they're willing to do to bring someone on board. And so we can sit in the middle and almost. not remove the owner, but remove a lot of stress from the owner by kind of having all those hard conversations. We don't take it personally. We don't get offended. And we can get an honest reaction from the candidate. Oftentimes we can get them to kind of break it down and stop negotiating and just have a conversation about what can we do to make this work? And usually we get there. Not always, because sometimes you just get outbid. or the experience is better, the pay is better, or someone beats it to the punch. So if you want to land talent in this tight market, which will continue to be tight for perpetuity, put together an amazing hiring process. We can help you do that, we have some information kicking around on that. You want to be fast. Taking too long is the biggest sin in hiring. It is free to go quickly. In fact, it costs you less to go quickly than to push interviewing processes out. That should be, depending on the position, anywhere from five to 10 business days to have initial contact to offer. You gotta move fast because you're competing. And then you have to have the offer make sense. You can't blindly throw an offer out there without getting all the information you need, knowing you're competing, unless you're willing to go way over the top, right? You're going to be that person buying the house that's like 20% over asking, take it now, take it or leave it. But if you want to kind of have it make sense for both sides, it takes having conversations about these seven candidate drivers to make sure everyone's aligned and you're presenting the offer. You know, what we always say is, if I can get this written, if I can get that offer written up, like we just talked about, will you sign it? And nine times out of 10, they're like, yeah, I'll sign it right away. Okay, great. Give me, give me a day and I'll get it to you. And then we send it over and back it comes. So if you want to be competitive, you want to take that information. Don't get fooled. Yes, there are layoffs going on, but the market's still tight. 4.2% unemployment. That's not crazy bad. So take that information, make some improvements, and go out and hire the people you know you need and deserve in your business. I'd like to thank you for tuning in to the P.I.R. Small Business Podcast. If you got value out of today's episode and want to keep up to date on our new content, hit the subscribe button, follow us, leave a comment, let us know if there's any topics you want us to cover. If you prefer to listen to your podcast, you can find us on Apple or Spotify, whatever your favorite platform is. Just search up Key Hire Small Business Podcast. Thanks for listening. I'm Corey Harlock. And until next time, stop grinding, start growing.
