The Recruitment Challenges for Small Businesses

Having consulted and coached organizations of all sizes, from Fortune 500 to small and medium-sized businesses (SMBs), I have found a few things to be consistently true. One notable and frustrating observation: recruiting efforts so often fall short within small and medium-sized businesses.

What’s more, because of the size of these organizations, inconsistencies and errors are amplified with a less forgiving margin of error.

Large and small organizations face different challenges when it comes to the talent acquisition process.

As HR consultant and writer Sharlyn Lauby writes in her blog, “There are some instances where smaller companies might have a slight advantage. For example, when it comes to flexible work and work environment, small companies have the advantage. They also fare slightly better when it comes to employee retention. Larger companies tilt the scale when it comes to resources. Obviously, being bigger means they do more volume and get dedicated resources for their efforts.”

Here are a few points on what I’ve learned and how we have advised HR leaders to improve their recruiting processes:

One or two people trying to be all things to everyone. At SMBs, the designated HR folks are often left having to run the search process, manage the searches and still serve in traditional administration roles. There is no shortage of work to be done or fires to be put out, leaving them in a constant state of reaction. They are stretched too thin to develop a deep pipeline for any role — and, as a result, the overall quality of the candidate pool suffers.

No process or infrastructure in place. For this, think in terms of manufacturing. To successfully manufacture a product, you need a plant, machines, tools to work on the machines, people to run the machines and an engineer to keep it all optimized. In recruiting, an infrastructure is also needed to optimize the recruiting process. Many SMBs are lucky to even have an applicant tracking system, while others are left to function with only email and spreadsheets. SMBs also lack a clear brand, careers website, people to source and seek out candidates, any specialization among recruiters or not enough recruiters in the first place. And with no one providing oversight to the process, success is difficult to achieve.

Business leaders don’t think staffing is their job. Given their workload and other priorities, it is easy to understand why SMB leadership doesn’t include recruiting in their purview. They often resign all staffing responsibilities to the designated HR people, thinking the recruiting function will just magically produce people. Often, without the proper infrastructure, HR is forced to go through an outside agency to attract talent. Costs inevitably rise, leading to frustration at the top.

It’s not all doom and gloom, though. With a little planning and focus, SMBs can turn around and tighten their in-house recruiting function and understand where their needs are for outside help. There can be value in retaining an RPO firm for some functions of the process. I’ve written about best practices in engaging an RPO here.

For many companies, the CEO believes that talent is the key to success in growing the company. Therefore, he or she wants to have an in-house recruiting function. I believe it all depends on your company’s core capability. If your CEO has an obsession for talent, then build this core capability in-house — but do it knowing you need to invest in resources to enable not just recruiting, but the processes and technology that are needed to make it work in-house.

Build a clearly divided infrastructure that gives one or a few people the role of recruiter, ensure you have adequate sourcing support and make sure you have technology to leverage in building your candidate pool. Remember, every leader has to see him- or herself as part of the recruiting team.

Also, clear communication and process buy-in from upper management will go a long way to build efficiencies and confidence among the recruiting team. It is likely company leadership just doesn’t understand the delicate nuances of attracting leading talent.

For another resource,’s John Rossheim wrote a great piece on four recruitment strategies to expand your small business hiring.

Have something to share? We would love to hear how your organization has optimized its recruiting function.