How entrepreneurs beat the skills shortage

Creating a workplace people want to join is half the battle, top entrepreneurs say. Also, existing staff are likely to know who’s worth hiring. MIKE PRESTON reports.

 By Mike Preston

Each year fast-growing digital entertainment and infrastructure company Destra culls the worst performing 5–10% of its workforce. Destra chief executive Domenic Carosa has been doing this for years, and intends to continue despite the skills shortage.

“It’s just what you need to do to stay competitive,” he says. “Every company has fat in it, so by getting rid of the bad performers you can give more time and energy to the good performers and get new blood into the company.”

In an environment where many businesses are more focused on keeping their current employees than finding new ones, companies like Destra continue to find and attract top staff, allowing them to maintain a competitive and highly motivated workforce.

The experience of Destra and other fast-growing companies shows it is possible to defy the recruiting squeeze and gain a skills advantage over you competitors. SmartCompany asked top entrepreneurs how they make excellent staff want to work for them.

Make every employee a recruiter

Like other fast-growing businesses, advertising agency BoilerRoom Communications is always on the lookout for good new people, but managing director Kelly Addis says it is rare to use a head-hunter.

“We find that our staff are actually the best recruiters for the agency,” he says. “Our staff know who’s around, they talk to old workmates and people they know in the industry and we generally find somebody that way.”

Addis says staff referral is a quick way of finding new employees and it has big advantages in terms of candidate quality. “Hiring that way you have a better chance of someone who fits the existing culture and has a good dynamic between them and existing staff. The bond between people is itself a strength – we prioritise it over and above a particular skill set or experience a candidate may have.”

Addis will interview candidates suggested by staff, but he says there is a big element of trust involved in relying heavily on staff recommendations.

“But if we used professional recruiters it would belittle the people around me as to their judgement, and we’re in the people business. I trust my staff and I think it really empowers them to be involved in the recruiting process.”

The trend towards hiring through staff referral has been noticed by the recruitment industry, so much so that one firm, Job Bounty Hunter, has built its business model around what it calls “social recruiting”.

Job Bounty Hunter provides a forum for employers or recruiters to offer cash incentives of between $200 and $10,000 to people who can successfully refer friends, family or other members of their social network to an advertised job.

Job Bounty Hunter managing director Andrew Stuart says social job referral is a way for SMEs without large workforces to use referrals to widen the recruitment net.

“It means having hundreds of people searching for the perfect candidate for you, rather than just one,” Stuart says.

Culture is king

Entrepreneurs will tell you a strong company culture is the key tool for attracting good staff.

Maintaining an appealing and energetic company culture as your business grows is more important than ever according to Robert Phillpot, managing director and co-founder of construction and facilities document management company Aconex.

“Right from the staff we were very touchy-feely with our staff and people have a fair bit of pride with that; the challenge is to maintain that small-company feeling as we get bigger. You can’t manufacture culture; it comes from heart and you’ve just got to work to keep it,” Phillpot says.

Phillpot agrees that culture is a notoriously hard thing to explain, but he says you know it when you see it. “We think that our culture is quite unique: it’s a vibe, a buzz that runs throughout the whole business. Being young is part of it, the business is growing, it’s an exciting place to be around. Sometimes you’re running to keep up, but that means it’s not boring and people are attracted to that. Word gets around.”

Excited and engaged staff are the backbone of a good business culture, Philpott says. “When people come in they get a feel for the vibe around the place and they come away thinking ‘that looks like a good place to work,’ and I think it’s because people like working here.”

Steal from the competition

Some entrepreneurs say they will poach staff from the competition to get ahead. Destra’s Domenic Carosa says he regularly recruits from competitors.

“Most definitely we do try and get competitors’ top people. In this industry and with the tight jobs market you have to,” he says.

But, Carosa says, it is important to be upfront in the way you approach recruitment from competitors. Word will get out in the industry, and among your own staff, if you don’t.

“If we chase people from competitors, most definitely we will be very upfront about it, not secretive at all. We will just approach them directly and try and meet them for a chat,” Carosa says.

Although Destra pays competitively, Carosa says it is almost never money that attracts someone to leave a competitor.

“We just ask them what they want. If it is in line with what Destra wants to do then that’s the start of their coming across. It’s usually about career progression and getting them involved with a successful company that’s going places that gets them in, rather than money.

Even if employers are not looking at poaching staff from the competition, recruitment firms almost certainly will be, says Kevin Chandler, executive director of recruitment firm Chandler Macleod.

Chandler says the skills shortage has forced recruiters to make more regular use of the kind of aggressive recruitment techniques that had been reserved for the executive level.

“Recruiters are increasingly targeting industry sectors and business functions, mapping the availability and quality of people in that area and then going to those stand-out individuals and tapping them on the shoulder,” he says. “We’re actively chasing candidates rather than running an ad and having an individual reply.”

Chandler says the race to find and attract the best staff has intensified to such an extent that recruiters are now having to decide whether companies should be targeted as possible clients or sources of recruitment.

“We have to make those decisions now that we didn’t a couple of years ago. Companies want to know if they are a source or a client. Poor-quality employers are designated in some areas as sources and we won’t work for them; they’re a source of recruiting and that’s all.”

Don’t skimp on the interview process

Understandably, the intense pressure to find staff can create a temptation to skip lengthy hiring processes and grab any promising candidate who walks in the door.

This is a mistake, SEEK human resources director Meahan Callaghan says. “Like all companies we’re finding it challenging at the moment, but our recruitment process is really thorough. We always go through it no matter what the position or the period we’ve had the vacancy for.”

Callaghan says SEEK generally conducts about five interviews before they hire. “The candidate will have meetings with the manager of the role, their peer group and the people who will be reporting to them, and everybody gets a vote and a say in the selection. That way we can be confident of cultural fit.”

SEEK also uses psychometric testing and will ask for and check three or four references before hiring a candidate. “We try and keep the process short, but hiring is just too important for short cuts,” she says.

It’s up to you

There are resources available to help to businesses recruit in the skills shortage.

Most state governments provide resources. For example, the Victorian Government offers SMEs subsidies of up to 50% for spending on workforce planning and HR management capability though its recently launched My Business, My People initiative.

Industry groups can also provide you with recruiting know-how:  look at these check lists for induction, reference checks and appointments provided by VECCI.

Given the current skills shortage, this presents huge challenges for many SMEs. The experience of top entrepreneurs running business like Destra, Aconex, SEEK and BoilerRoom shows that by focusing on recruiting excellent staff and building your businesses culture, you can create a buzz about your business – and then the job candidates will come to you.