Hiring top talent remains a struggle for small businesses in a tight job market

On a Saturday afternoon in late September, hundreds of young people piled into the parking lot outside the office of CRUEL Inc., in downtown Toronto.

The marketing agency was hosting a block party, not a job fair. But for co-founders Schuyler Mota and Karl Bechmann, hosting parties and attracting talent have become two sides of the same coin. “People get to see who we are,” Mr. Mota says of the clients, partners and other members of their tight-knit community who show up. “Then they ask if we’re hiring.”

He says a recent posting for an accounting role came up “multiple times” that day.

Mr. Bechmann says it took years to crack the code on recruitment. In a small business, every team member shapes both the work and the culture – making each hire critical. “We tried damn near everything,” he says.

Even the most impressive resume proved a poor predictor of success in an events-driven industry, where intangibles – the ability to execute under pressure, to troubleshoot in real-time – can matter more than hard skills. The solution, Mr. Mota says, was to find people already connected to the company’s mission, often through the community it has spent more than a decade building.

“It’s very much a feeling,” he explains.

CRUEL’s experience reflects a broader shift. Over the past year, the labour market has tilted in favour of employers. But for small and medium-sized businesses (SMBs), it has not necessarily made hiring any easier.

Widespread adoption of generative AI tools have reshaped both sides of the hiring equation. ChatGPT, for example, has made it easier than ever to apply for a job by facilitating the fast creation of resumes and cover letters customized for individual job postings, flooding employers with applications.

Employers, in turn, might use their own AI tools to help manage the volume of applicants, which also has limitations – especially when they are not effectively deployed. “It doesn’t matter what the market is like,” says Sandy Scholes, chief people officer at Jane App. “It’s always tough to find top talent.”

Jane screens an average of 2,000 applications a week for every open role. The company has incorporated AI tools, but the approach has not replaced human judgement. “I think [AI] has made us more clear about what exactly we’re looking for,” Ms. Scholes says.

Over the past year, 25 per cent of new hires came through referrals. Ms. Scholes says “a lot” of time is spent identifying people who align with Jane App’s service-based mission of “helping the helpers,” facilitating the administrative side of business for health and wellness practitioners.

Job seekers often turn to small companies when they’re looking to make a more substantial business impact, so it’s critical for hiring managers to be upfront about both the opportunities and the realities.

At Jane, employees are given equity in the business and the flexibility to work remotely. “When you come into Jane, you get an opportunity to solve a lot of problems and work really hard,” says Ms. Scholes. “I think it’s important to paint a clear picture so people know exactly what they’re coming into.”

Smaller companies also have to compete with larger firms that, on average, still pay more. “The norm is pay grows with size,” says Brendon Bedard, a senior economist at Indeed.

But compensation only tells part of the story. According to an Indeed survey of job seekers, pay ranks at the top of their priority lists, but factors such as career alignment, growth opportunities and workplace culture are also important. “Employers have to put in effort so both existing and prospective staff feel good about that value proposition,” says Mr. Bedard.

For smaller businesses, especially those with limited budgets, that means defining who they are, then using that definition as an advantage at every touchpoint during the hiring process.

“People who want to work at a large company have different goals than those who work in a smaller shop,” says Clare Raspopow, CEO of Silverorange, a PEI-based web and app development agency.

Silverorange’s website features a blog offering glimpses into work life and a detailed hiring page that walks candidates through the process. Executives often recruit talent through their community ties.

“It’s the same thing as being honest when you’re on a date,” says Ms. Raspopow. “You’re trying to build something that will last.”

Nora Jenkins Townson, founder of HR consultancy Bright + Early, says she’s seeing companies move away from generalized recruiting approaches to develop more targeted strategies.

She says small businesses may be tempted to approach hiring “casually,” but encourages taking cues from bigger firms to design roles and hiring processes for maximum impact — for instance, by creating thoughtful screening questions to help the right candidates self-select in. “Having to go back to the recruiting drawing board is very expensive,” she says, “and has a big impact on culture and the work that’s getting done.”

While larger organizations may feel safer to candidates navigating economic uncertainty, small businesses can offer less bureaucracy, more flexibility and the chance to level up your career.

Ms. Jenkins Townson urges small businesses to put their stamp on the hiring process by leaning into what makes them different: defining culture, articulating values, and being transparent about expectations, compensation and career progression.

“It’s worth taking the time to do that,” she says. “The folks that are an incredible fit are going to find a spark with what you’re saying.”