6 minute read 17 Mar 2020
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Three ways mid-market companies are winning the war for talent

6 minute read 17 Mar 2020
Related topics Capital confidence barometer Entrepreneurship IPO
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Finding and retaining talented employees is a challenge for mid-market companies, but they may have more of an edge than you think.

According to the 21st edition of the EY Global Capital Confidence Barometer (pdf), mid-market companies – those with between US$50m and US$3b in annual revenue – say attracting and retaining talent are among their biggest challenges. But as globalization, changing demographics and new ways of working continue to disrupt the working world, mid-market companies may, in fact, be in a better position to attract and retain top talent than their large organization counterparts.

Mid-market talent concerns

61%

Almost two-thirds of mid-market companies face difficulty in finding and keeping skilled employees.

Typically, large organizations invest substantial resources in employer brand marketing, recruiting and employee experience to lure top candidates. However, mid-market companies are increasingly finding innovative ways to position themselves as alternatives to large organizations; in the process they’re finding and keeping talent that large organizations covet.

The power of purpose

For increasing numbers of younger people in particular, work is not just about financial return, but also about whether the company’s social and environmental values align with their own.

Glassdoor’s Mission & Culture Survey 20191 found that 79% consider a company’s mission and purpose before even applying. Purpose matters. At its most basic level, purpose articulates why a company does what it does and for whom it seeks to create value.

Within large organizations, some executives think their company has gone far enough in its purpose journey. Mid-market companies, with their leaner operating / leadership models and narrower focus, can often articulate and live their purpose with greater ease and more authenticity.

By promoting their purpose externally, and living their purpose across the business, mid-market companies are enhancing the employer value proposition for candidates seeking to join purpose-driven organizations. A logistics company that wanted to drastically reduce the time taken to deliver products while improving the lives of its truck drivers stayed true to its purpose when it developed a completely new operational model for road logistics. It ensured every truck driver returned home every 10 hours rather than being away in his truck for weeks and still improved its margins. And it is now attracting new drivers and consequently solving its issue of driver shortage.

Once mid-market companies discover, articulate and authentically live their purpose, they can expect to attract highly engaged talent who are committed to the organization’s success; thereby reducing staff turnover and enhancing the company’s leadership pipeline.

Mid-market companies, with their leaner operating / leadership models and narrower focus, can often articulate and live their purpose with greater ease and more authenticity.
David Ellis
EY UK & I Rewards Leader

Accelerated advancement, high reward potential

Mid-market companies are using their relative agility to lure talent through internal career development and advancement opportunities. Because mid-market companies are often less straightjacketed by policy, they can offer greater flexibility and discretion with respect to accelerated talent development than large organizations.

Employees may be granted earlier (and more frequent) interaction with clients, diversified and expanded responsibilities, earlier oversight of junior staff and participation in key strategic discussions.

In addition, mid-market organizations with high growth potential can be a magnet for a certain breed of young high-performers who are attracted to the concept of building value over time. This talent band looks for opportunity for financial reward if / when the company makes it big. When the company achieves its financial goals, so do the employees. Such seemingly volatile outcomes are attractive to younger workers who feel there is ample time to recoup, should the venture not pan out. There is limited, if any, opportunity to replicate this earnings profile in the large corporate world.

Potential for rapid advancement and differential financial reward are strong competitive differentiators that mid-market companies are using to attract driven talent. The perceived trade-off of joining a smaller organization is offset by the high potential for advancement, whether it be career-related or financial.

A culture of innovation and technology

There are other opportunities mid-market companies can highlight to effectively compete with large organizations in the war for talent … innovative culture and technology.

While large organizations are typically risk-averse and can be slow to adopt cutting-edge technologies, mid-market companies are more prone to embrace technology as a tool to enable innovation and unlock growth potential. According to the EY Global Capital Confidence Barometer, 50% of survey respondents are leveraging technology and automation to improve workforce productivity.

Online retailers receive thousands of customer emails each day and often miss more urgent customer complaints. Companies are using innovative technology, machine learning algorithms to analyze the content of each email and automatically determine the urgency of the request and minimize the human effort required to sort the critical from the rest.

Other creative businesses include a tech-centric staffing solution for the hospitality sector. It uses technology to source and vet quality, experienced staff in their local area, shortening the time to secure staff from 6 weeks to 3 hours. It’s a win-win for both the business and the talent.

Further, innovation-driven mid-market companies are more akin to agile ways of working and flat management structures. These companies offer some of the most engaging and thrilling opportunities for professionals. 

Mid-market companies in countries that are leading the charge in driving technology innovation are also well-placed to thrive when it comes to attracting talent. Asia is already home to over 40%2 of the world’s unicorns. The US, China, Japan, Germany and South Korea are leading the world in terms of total R&D spending.3 Japan is leading in industrial robot technology; South Korea is a pioneer in 5G communications; China is leading in internet commerce, artificial intelligence, lifestyle and diversified financial services platforms.4

Younger professionals have watched countless innovation-driven start-ups rapidly transform into some of the world’s most valuable companies in relatively short timespans. This has greatly elevated the perception of innovation-driven mid-market companies in the eyes of potential talent.

Winning the talent war

Regardless of geography, mid-market companies effectively implementing these three initiatives are winning and retaining talent. Your business may already tick some of the boxes and others could be within scope.

Leaders should ask themselves, does my company:

  1. Think about the mindset of the top talent I want to hire. Companies must articulate and stay true to a purpose that resonates with talented individuals.
  2. Know what gives me an edge and adopt strategies that make a difference. Create opportunities for diverse, accelerated career paths with exposure to many areas of the business.

    Offer a compensation structure that connects with younger, skilled professionals who are looking for a chance to reap big rewards in the longer term. If you cannot attract top talent with competitive compensation now, consider offering incentives in the longer term.
  3. Enable an exciting, progressive culture. Promote your competitive advantage with top talent; for mid-market companies that's often linked to technology and cultural innovation.

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Summary

Finding and keeping talent is one of the biggest challenges that mid-market companies face. Many struggle to overcome it, but they can gain an edge by showing their agility and adopting strategies focused on purpose, reward, and technology and innovation.

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Related topics Capital confidence barometer Entrepreneurship IPO
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