Q. I own a small business that is poised for growth, but I’m having problems attracting talented people. How can I convince seasoned executives with the experience I need to come work for my small company?
B. Your small business is competing for talent with the “big dogs” in town―companies such as Capital One, Genworth, CarMax and Altrea. It can be difficult to match the compensation, benefits, and facilities that these behemoths offer. You shouldn’t try. However, your small business has other things it can offer to prospective employees, that your larger competitors can’t match.
Scope of responsibility – A senior human resources manager we know was interviewing at one of the Fortune 500 companies in town. She was also interviewing with a much smaller company. At the smaller company, she would be the VP of Human Resources. She would have responsibility for all aspects of human resources. Further, she would report to the president and sit on the executive committee. She would have input into the strategic direction of the company. At the larger company, she would receive more compensation, better benefits and sit in a nicer office. However, she would toil in one narrow phase of human resources with little opportunity to influence company policy. In the end, she chose to join the smaller company.
Flexibility – A newly divorced, mother of one, left her position with a large hospital to join a small home healthcare company. The compensation and the benefits weren’t as good. However, the home healthcare business was able to give her flexible hours that allowed her to accommodate her daughter’s schedule. The large hospital simply couldn’t offer this kind of flexibility.
Advancement opportunities – Larger companies often grow much more slowly than smaller ones. Fortune 500 companies are so large that it is almost impossible for them to grow 50 or 100 percent per year (other than through acquisition, which brings more people and often results in layoffs rather than opportunity). Smaller companies can often grow at much more rapid rates. When larger companies are growing slowly (or not at all), logjams form in the senior ranks. Advancing can be difficult or impossible. Rapidly growing, smaller companies can often offer significantly better opportunity for advancement.
A share of the upside – A senior executive with a well-established business, left his position for a job with a startup company with a significantly lower base salary and limited benefits. However, the executive negotiated a compensation plan that had significant upside if the startup did well. In fact, the executive stood to make significantly more at the small company if things went well than he would have at the larger business. The owner of the startup was willing to offer the potentially lucrative compensation package because if the executive they were recruiting did well, the owner would do even better.
Offering ownership in a privately held company can be tricky, but done well, it can be an effective way to attract the talent you need. Alternatively, a well-structured profit sharing and/or phantom stock program can accomplish much the same thing while avoiding some of the pitfalls. For smaller companies with significant growth prospects, such programs can offer meaningful upside that can compete with or exceed what larger companies can offer. Structuring these programs can be tricky, but a carefully crafted program can be a powerful tool when competing for talent with larger companies.
Competing for talent with the “big dogs” can be challenging for small businesses. However, with a little creativity and ideas such as the ones above you can find ways to compete and win.