It seems that no amount of new technology will ever replace the most influential component of the hiring process – a personal recommendation.
A new nation-wide survey shows that Canadian small business owners are more than twice as likely to make a hiring decision based on word-of-mouth than they are by using online tools. The top three choices are:
- Word of mouth (friends, family, and trusted advisor) – 68%
- Online methods, such as job boards and tools like LinkedIn – 31%
- Outsourced to an HR or a recruiting agency – 8%
The finding comes from a survey conducted by Angus Reid on behalf of Intuit Canada. The survey shows that Canadian small business owners are optimistic that they will grow and create jobs over the next 12 months, but need help overcoming persistent barriers to job creation.
Steady Climb out of Global Recession
Small businesses are continuing to recover from the global economic recession. According to the latest data from Statistics Canada, after losing more than 600,000 jobs in 2009, small business created almost 140,000 new jobs in 2010 and 2011 combined.
"Small business job creation is moving in the right direction, and we believe that with the right economic conditions and tools entrepreneurs can create even more new jobs," says Robert King, Director for Small Business at Intuit Canada. "We also recognize that creating jobs is really tough work. Most entrepreneurs don't have an HR department or a payroll unit to help them. This study is all about understanding how small businesses can ensure their hiring plans are successful."
Reasons for Optimism
The study reveals that many small business owners are feeling positive about their future prospects, with a majority (65%) either actively growing or looking for growth opportunities:
- 32 per cent indicate they are in a "growth stage," with 10 per cent of these saying they are "growing considerably."
- 33 per cent report they are holding steady – but looking for growth opportunities.
There is also a strong appetite for small business job creation in the year ahead:
- Nearly one-third (31%) of small business owners indicated that they will be hiring within the next year.
- The majority (52%) of small businesses in the "growth stage" plan to hire over the next 12 months.
"Intuit's study underscores the importance of entrepreneurs to the fabric of Canadian society with 65 per cent of them actively seeking growth opportunities," says Alex Glassey, the designer of the StratPad family of business planning apps. "We encourage entrepreneurs to think strategically and plan carefully to maximize the potential of the opportunities they uncover. And we remind them of the community that stands ready to support them with tools, money and advice to help them grow and strengthen us all."
Overcoming the Barriers
The survey reveals that there are clear opportunities to accelerate small business job creation by overcoming some persistent barriers to small business job creation. There are three major trends holding small businesses back from creating more jobs:
- A perceived skills shortage in the workforce: 45% of the small businesses who are planning to hire in the next 12 months believe that finding people with right skills will be a barrier.
- Uncertain costs of on-boarding a new employee: 33% small business owners do not know what the costs of hiring employees will be.
- The pain of managing payroll: 42% indicate that they experience a frustration with managing payroll. Top pain points include: dealing with government reporting requirements, and ensuring that cash is on hand come payday.
"Intuit's survey shows that entrepreneurs are making huge contributions to the Canadian job market – and that they are doing so with minimal supports and resources," says Victoria Lennox, CEO of Startup Canada. "At Startup Canada, we are determined to establish a long-term plan for improving the entrepreneurship ecosystem in this country. Intuit's study provides valuable insights for how we can all work together – industry, government and the not-for-profit sector – to better support Canadian entrepreneurs so that they can create even more jobs and prosperity."
Low Awareness of Hiring Credit for Small Business
One example of a positive initiative that can help small businesses overcome the barriers to job creation is the federal government's recent announcement that there will be a one year extension of the temporary Hiring Credit for Small Business.
However, the survey found that the credit is not receiving adequate attention from small business owners.
- Three-in-five (61%) small business owners are not aware of the credit.
- Two-in-five (39%) of small business owners are aware.
The credit would provide up to $1,000 to help a small business cover its Employment Insurance (EI) premiums. According to the government, this will be available to an estimated 560,000 employers, allowing these small businesses to reinvest approximately $225 million in job creation in 2013.
What Every Small Business Should Think About Before Hiring
"Ask yourself if you'll be able to afford paying employees, and the associated payroll expenses. The increased sales you hope to get from having additional help are exciting, but meaningless if you can't pay for the increased expenses," said Esther Friedberg Karp, President, CompuBooks Business Services. "Cash flow and money aside, there are few other business processes that require as much consideration and compliance as running payroll. Consider using accounting software such as QuickBooks instead of a spreadsheet to help you work seamlessly with your accountant, and ensure your accounting records are up-to-date."
