Similar to a buyer’s market, where more people want to sell than want to buy, today’s job market is an employer’s market—there are more people looking for work than there are jobs available. Though not a good situation for Utah—the state’s unemployment rate is now 7.8 percent—this situation can be beneficial for businesses looking to hire. In fact, according to Curtis Trader, a CPA with Bountiful-based Trader Roberts & Associates, now may be the time to start adding to your slim staff. “There is a well-seasoned workforce looking for work and who is willing to work for less than they did before,” he says.
Monica Whalen, president and CEO of The Employers Council, agrees. “The ranks of today’s unemployed don’t just consist of unskilled or unwilling workers. There is top talent available. There are people who are pounding the pavement who could be rare gems who could catapult your organization forward.”
A Compelling Offer
If you think your company can’t compete for top talent due to lackluster compensation or other benefits, you may want to think again. Whalen explains that it’s possible to complement the initial salary by offering deferred compensation, stock options and performance bonuses based on certain profitability goals. Trader adds that employers also now have the luxury of hiring people on a part-time basis to evaluate them before bringing them on full time.
. “Many people who formerly had a sense of long-term stability with their established organization, only to find themselves caught up in a layoff, are now more willing to take a risk and take the job with a startup company or small business,” says Whalen. “If they are having trouble finding a new job, they don’t have much to lose and are more willing to accept a job offer with a company without a long track record. It may also be a golden opportunity to hire very experienced people who are open to new challenges, looking for a change and want to try something different.”
Dave Crenshaw, president of Invaluable, Inc., a coaching and training company, adds that today’s recruiting costs are lower than ever before. “In a highly competitive job market, you may not need to spend money on headhunting services and online job request sites like monster.com. Recently, I just got the most responses from a free craigslist.com listing,” Crenshaw says. “In a tight job market, business owners end up having to pay a high initial wage, and are not able to give salary raises because they are already spending so much money. With a buyer’s market, you can bring people in at a lower salary and then raise them quickly and regularly over time as they demonstrate their value.”
Crenshaw adds that employees hired under the current financial conditions often come in with a better attitude, even if the salary and benefits are lower. “They are more grateful, more humble and willing to work hard,” he says. “There’s an opportunity to hire people who are willing to work to make the company great, rather than people who view the company like a vending machine.”
Tax benefits are another advantage to hiring in today’s economy, according to Trader and Dave Roberts, CPA. “[Recent tax acts] have moved from benefiting Wall Street to benefiting Main Street,” says Roberts.
One example is the Hiring Incentives to Restore Employment (HIRE) Act, which gives employers a “payroll tax holiday” when they hire workers who haven't been employed for more than 40 hours during the 60-day period ending on the date of hire.
“If you retain that employee for at least one year, an additional credit of $1,000 is also available," Roberts says.
Whalen, however, adds a piece of caution: “Don’t let the tax incentives be a determining caveat in who and when you hire. You still must select the best candidate for the job.”
When to Say Goodbye
Questions to ask when considering slimming your staff.
1. Are your employees spending more time chatting than working?
Crenshaw says the biggest indicator that it’s time to slim your staff is when you have employees with excess capacity—employees who only work 50 to 60 percent of their available time. Whalen agrees: “You realize that people are not fully productive for all workday hours. You notice people surfing the web, having long personal phone calls or chit-chatting.”
2. Are your employees aligned with your company’s goals?
If your staff or particular people in your organization are not aligned with the organization’s changing business goals, you have a problem. Many businesses in Utah have dropped a product line, strategically redefined their target market, or restructured their concentrations. “If certain employees are not aligned with those changing organizational goals, that may be a sign that you may need to let those people go,” says Whalen.
3. Do you have employees who are unwilling to learn or adapt?
If you have employees who don’t have the necessary skills and are unwilling or incapable of acquiring those skills, it’s time to part ways.
4. Will outsourcing tasks save you money?
Conduct an analysis to determine whether it would be more cost-effective to outsource some job functions. For example, one restaurant analyzed the cost of providing valet parking and determined it would be most cost-effective to outsource to a valet company. Though outsourcing can save money, Whalen advises, “Be careful about outsourcing critical core functions—we believe that those should remain in-house.”