Small businesses struggle to hire and retain workers. These tactics can help.

Despite generating more than half of US job creation in the last decade, many small businesses struggled to hire and retain top talent in the turbulent, pandemic-era labor market.

Even as overall hiring and quit rates slowed in 2024, their challenges haven’t let up. Nearly one-third of small businesses that tried to hire last year weren’t able to find employees who were a good fit, Gusto’s latest State of Small Business survey found. Top reasons cited for not finding a good match included lack of skills or education, inability to work desired hours, insufficient applicants, and unaffordable labor costs.

Economic conditions aside, smaller organizations are, in some ways, inherently disadvantaged, especially in comparison to large competitors.

“The disadvantages of a small company are they’re small, and they lack resources, operating rigor, and routine, and frankly, they can be unprofessional,” Chris Timol, president and COO at PuzzleHR, a fractional and outsourcing HR services company, told HR Brew.

But there are approaches they can take to better attract and retain talent.

Capitalize on your advantages

Small businesses can use their “disadvantages” to their advantage. For example, employees at small businesses often take on responsibilities outside of their assigned role, allowing them the opportunity to build skills that they might not have the opportunity to pursue in larger organizations, which usually have more structured functions with stricter scopes of responsibilities.

“When you’re in a large company, you are oftentimes pigeon holed into, like, ‘My task is to do this,’ and you’re just doing those things over and over and over again,” Timol said. “You don’t get the experience or exposure of other parts of the job or other parts of the business.”

Bring in the bennies

Benefits can serve as a cost-effective tactic for improving attraction and retention. Nearly two-thirds of respondents to Gusto’s report said they offer employees benefits, with paid time off being the most popular, followed by retirement plans and health insurance.

While respondents said their primary reasons for offering benefits were personal importance and affordability, they said it can also improve retention.

For example, employees who are offered retirement benefits are 40% less likely to quit within their first year, Nich Tremper, Gusto’s senior economist, said at a recent HR Brew event.

“Employees don’t expect the stars and the moon, right?” Tremper said. “But having something that’s available to them, that’s affordable to the business, shows a lot that the business cares about their overall well-being.”

Always be closing recruiting

Timol drew inspiration from Alec Baldwin’s famous “always be closing” line from Glengarry Glen Ross before offering a last bit of advice to recruiters.

Small businesses, he said, should proactively look for potential talent, in anticipation of a business expansion, or new or open roles. That’s especially important for the latter. Job openings that go unfilled for just a month can cost businesses thousands of dollars, and small businesses owners may feel pressured to hire the first person they can, instead of the best candidate.

“You don’t get the best person, because you’re recruiting from a place of weakness,” Timol said.

Instead, for example, connect and build relationships with potential candidates on LinkedIn who might be a fit in the future.

“Even if you don’t have a role [or] they’re not open to work and you’re not looking…this should be somebody you should connect with and stay connected to and offer them your career advice and help,” he said, “because eventually, who knows, you might have a role or two open that they’re going to fill.”