HR, Clutch Report

The State of Small Business Hiring and Recruitment in 2019

March 6, 2019

by Riley Panko

Marketing Communications Manager

More than half of small businesses plan to hire in 2019, primarily for sales and marketing positions. Overall, Clutch’s data indicates strong hiring activity this year for small businesses. Companies should plan their 2019 recruitment strategy by keeping elements such as culture fit and the needs of different generations in mind.

The end of 2018 saw a 3.9% unemployment rate in the U.S. The last time the unemployment rate sat below 4% was 2000.

Small businesses are benefiting from a strong economy and are boosting their employee rosters accordingly. More than half plan to add employees in 2019, and 57% say it’s unlikely they’ll fire or lay off employees this year.

Clutch surveyed 529 small business owners and managers in the U.S. to understand their recruitment plans for 2019. We analyze how many employees small businesses are planning to hire or fire and what types of roles they’re looking to fill.

Small businesses can use this report to understand how other businesses are hiring and better plan their own 2019 recruitment efforts.

Our Findings

  • More than half of small businesses (51%) are likely to hire new employees in 2019.
  • Small businesses say they are most likely to hire for sales and marketing (39%), customer service (36%), and IT (32%) positions.
  • Nearly one-quarter of small businesses (23%) expect to hire 1-3 new employees in 2019, and 14% will hire 20 or more.
  • More than half of small businesses expect to hire for entry-level (56%) and mid-level (52%) roles.
  • The majority of small businesses (74%) plan to add full-time employees in 2019, while 40% will hire part-time employees.
  • More than half of small businesses (57%) say it’s unlikely they’ll fire or lay off employees in 2019, but still, nearly one-quarter (23%) say it’s likely.

More Than Half of Small Businesses Will Hire in 2019

Small businesses are looking to add employees this year. With the job market tipped in favor of job searchers, small businesses need to ensure they’re taking extra steps to entice coveted candidates.

A little more than half of small businesses surveyed (51%) say they are likely to hire in 2019.

Graph of Small Business Hiring Plans in 2019

It’s likely that more than 51% of small businesses will hire in 2019, according to experts who hinted that the survey statistic seems low.

“[51%] feels a little low to me,” said Rona Borre, CEO at Instant Alliance, an IT and financial staffing firm. “I’ve seen a huge uptick in the fourth quarter of 2018 and going into 2019...We’re probably the busiest we’ve been in several years."

The end of 2018 saw strong job growth, which has continued into the beginning of 2019.

One-fifth of the survey’s respondents (20%) are “unsure” about their 2019 hiring plans, but it’s likely many of these small businesses will end up adding employees.

As of October 2018, there were approximately 1 million more job openings than unemployed people. This means that job seekers have options, and small businesses looking to recruit the top candidates must present themselves as an attractive choice over other companies.

Small businesses may face particular challenges in the hiring market, according to Anja Zojčeska, the human resources and employee happiness manager at TalentLyft, an all-in-one recruitment software. She cited two specific challenges:

  1. Small businesses often lack a dedicated HR professional with extensive hiring expertise.
  2. Small businesses must compete with the higher salaries and extensive benefits that big companies offer.

When it comes to small businesses’ HR resources, a prior survey found that for nearly 72% of small businesses, one person handles both HR and accounting responsibilities, even though these tasks require vastly different skills. 

Small businesses may benefit from using recruiting software or a recruiting firm in their hiring efforts to bolster their in-house HR resources.

Candidates’ Preference for Benefits Differs by Age

Candidates may look for different benefits or perks depending on their age.

In 2016, millennials took over the largest share of the job market, and Generation Z’s portion continues to grow too.

Younger workers expect different of types benefits from their employers, according to Brian Weed, CEO of Avenica, a recruiting firm focused on placing recent college graduates in entry-level careers. Recent college graduates tend to be more focused on work-life balance.

“It used to be that salary and health benefits and some of the more financial-type things were more important,” Weed said. “Now, the emphasis has started to shift to the mix of paid time off versus work days. That’s gotten more generous because balance is an important thing for these younger generations of workers.”

To stay competitive with larger companies, small businesses should think creatively about the benefits they offer by considering what perks candidates want the most.

For example, small businesses should consider non-traditional ways to give employees time off to appeal to younger workers.

“Manage toward having more paid time off versus the traditional framework of starting with two weeks and after 10 years of working there, you might have four weeks,” Weed said. “A lot of companies are starting with much more generous PTO policies these days.”

For example, Philadelphia software company Wildbit shifted to a four-day workweek in 2017 and experiences mostly positive results from the change.

Wildbit employees only work roughly 32 hours per week. Wildbit is also considering other flexible work schedules, such as a five-day workweek with shorter days in the winter. Ending at 3 p.m. daily would allow employees to enjoy more sunlight before winter's early sunsets.

Despite a growing emphasis on PTO and other non-traditional time-off benefits, health insurance is the most valuable benefit to the majority of employees.

Although small businesses with fewer than 50 employees aren’t legally mandated to offer health insurance, doing so may improve employee satisfaction and retention. A survey by AHIP, a political advocacy and trade association of health insurance companies, found that 56% of Americans say health insurance coverage is a key factor that influences whether they stay at their job.

Overall, small businesses should seek comprehensive and creative means to attract qualified candidates of different needs and backgrounds.

Small Business Sales and Marketing Positions Will See the Most Growth

Small businesses seek to fill positions that will help them acquire and maintain new customers.

Nearly 4 in 10 (39%) small businesses that are hiring in 2019 will add to their sales and marketing department.

Which positions will small businesses hire for in 2019?

For Weed, the popularity of sales and marketing roles, followed by customer service roles, makes sense, given how these roles support company growth.

“Over the last few years, it’s been a pretty strong growth market, and those are the types of positions that support growth – either salespeople who are going to create the initial demand or customer service [people] who are going to work with the new demand that comes in,” Weed said.

Tricia Lucas is the owner of Lucas Select Inc., a boutique recruiting firm that specializes in the placement of executives and sales and marketing professionals in startups and small and medium businesses. She said that her firm sees the highest demand for:

  • Digital strategists
  • Marketing automation experts

“People who understand how to execute marketing campaigns with the right strategy ... those are the people who are doing really well in the job market right now,” Lucas said.

These candidates often end up with several job offers, so small businesses must work hard to entice and retain them.

Overall, growing small businesses are looking to fill positions that help meet new customer demands.

Small Businesses Are Hiring for Full-Time Positions

Small businesses plan to hire mostly full-time employees.

Nearly three-quarters of small businesses (74%) that will hire in 2019 say they’re looking for full-time employees.

Graph - Small Businesses Primarily Plan to Hire Full-Time Employees in 2019

Only 40% of small businesses plan to hire part-time employees.

In the years following the U.S.’ Great Recession, the share of part-time jobs in the employment market peaked, while the number of full-time jobs declined. 

Nowadays, part-time jobs are declining – a trend that typically follows an improving economy.

Full-time jobs are especially appealing for international candidates seeking to work in the U.S. and the employers that want to hire those candidates, according to Borre.

“A lot of labor in the tech market comes from people from different countries, like India,” Borre said.  

Employers could be seeking more permanent full-time international employees, as opposed to part-time or contract laborers, given the increasing difficulty of obtaining or changing a work visa in the U.S.

Recent governmental policies make it harder for international candidates to acquire work visas or change jobs under an existing visa. For example, in 2018, the government denied more than double the number of applications for H-1B visas than they did the previous year. H-1B visas allow educated, highly skilled foreigners to work in the U.S.

“Because there’s a bigger squeeze on [visas], employers are trying to hire on a more permanent basis,” Borre said.

Full-time positions offer more stability to both international employees and their employers. Once a company has gone through the effort of hiring a non-U.S. citizen, it likely wants to keep the new employee around.

Borre also said full-time positions work better for what Clutch found to be the most popular positions to hire for in 2019 – sales and marketing, as well as customer service positions.

For these positions, “you want people with stability who are going to be able to tell a story or elaborate on what they produced at an organization,” Borre said. 

Part-time or contract employees may not be around long enough to enact long-term change for a small business.

The popularity of full-time employees indicates a strong economy, the government’s decreased emphasis on foreign labor, and a desire for stability within small businesses.

How to Hire for Entry-Level Versus Senior Positions

More than half of small businesses hiring in 2019 will add entry-level and mid-level employees.

Fifty-six percent (56%) of small businesses will hire entry-level employees, while 52% will hire mid-level employees this year.

What Employee Experience Level will Small Businesses Hire for in 2019?

Only about one-quarter (23%) plan to add senior-level employees, and 14% will hire for the executive level.

Small businesses must keep different criteria in mind when hiring for entry-level roles versus senior-level roles or higher.

Lucas says that for entry-level employees, the most important element to look for is the ability to adapt and grow.

“You want to find the right skillset, but you also need to find that person who’s capable of wearing multiple hats,” Lucas said. “Then, that person, when they are wearing those multiple hats, may evolve to take a bit of a different path as that organization starts to grow.”

Entry-level employees should be able to grow with a business and take on more responsibility over time.

“You want to find the right skillset, but you also need to find that person who’s capable of wearing multiple hats.”

When hiring for a senior-level position, culture-fit is more important because small businesses may have multiple candidates with the requisite skills to complete the job.

To assess whether a candidate fits into a small business's culture, Lucas suggests involving all or most of the organization in selecting a manger or director.

“You want to make sure that the senior-level person is going to fit into the culture,” Lucas said. “By introducing them earlier to the rest of the organization, that senior-level person is going to be able to identify whether it’s going to be a good fit for them.”

By making the hiring of a senior-level employee a team-wide decision, a small business can minimize the complaints or issues that may result from office culture mismatch between a senior-level employee and the teams she manages.

Only One-Quarter of Small Businesses Plan to Fire Employees in 2019

The majority of small businesses are optimistic about their current employees and do not plan to fire or lay off any in 2019. Yet, small businesses that need to fire or lay off employees must consider how to do so clearly and empathetically.

Nearly one-quarter of small businesses (23%) say it’s likely they’ll fire or lay off employees in 2019.

23% of small businesses plan to fire or lay off employees in 2019.

Firing or laying off employees can be intimidating, especially for small businesses. When teams are smaller, employees might know each other more personally, making a firing or layoff emotional. Small businesses also may not have prior experience firing or laying off employees.

Small businesses must be considerate and truthful when firing or laying off employees by considering how to communicate the decision to the company.

“Preparing a consistent message is really important, as is being honest and giving employees as much heads-up as you possibly can,” Borre said.

Small businesses must consider how the remaining employees learn about the firings or layoffs.

“[Make] sure you communicate the right message internally to your organization so everyone knows why the decisions were made ... so they’re not worried about their own job,” Borre said.

Firing or laying off employees can cause stress for all involved. Small businesses must think critically about how they display professional courtesy for both the exiting employees and the ones remaining.

Small Businesses’ Hiring Plans for 2019

More than half (51%) of small businesses will hire in 2019. Clutch’s data is in-line with, or perhaps more cautious than, other reports that signal strong job growth in the U.S. this year.

Given that the job market favors job seekers, small businesses should stay competitive with their benefits and recruitment efforts to entice talented candidates.

Small businesses currently want to hire for sales and marketing and customer service positions. These positions may be popular because they most directly support customer growth.

Small businesses most desire hiring for full-time and entry-level positions in 2019. Recruitment decision-makers should keep different priorities in mind when hiring entry-level versus senior-level employees.

Lastly, a little under one-quarter (23%) of small businesses say it’s likely they’ll fire or lay off employees in 2019. Small businesses should strive for honesty and transparency when letting employees go.

Overall, small businesses should plan their recruitment efforts thoughtfully to get the most out of 2019’s strong job market.

About The Survey

Clutch surveyed 529 U.S. small business owners and managers. We define small businesses as having limited revenue and between 1 and 500 employees, which corresponds to the Small Business Administration’s definition of small business.

Fourteen percent (14%) of respondents’ businesses have 1 employee; 40% have 2 to 10 employees; 24% have 11 to 50 employees; 15% have 51 to 250 employees, and 7% have 251 to 500 employees.

More than half (52%) of survey respondents are male, and 48% are female.

Twenty-nine percent (29%) of respondents are millennials (ages 18-34); 45% are Generation Xers (ages 35-54), and 27% are baby boomers or older (ages 55+).

Respondents are from the South (44%), Northeast (20%), Midwest (18%), and West (18%).

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