Majority of Small Businesses Plan to Hire in 2011: Survey

Small business owners report the greatest hurdle to hiring is compensation, followed by a limited talent pool.

Despite the latest jobs report that shows employers added fewer jobs in May than expected, a majority of small businesses (57 percent) say they plan to hire this year, according to a survey from Manta, an online community for promoting and connecting small business. Manta's SMB Nation Survey queried 1,016 small business owners--the majority of whom have less than 10 employees (892)--about the unique challenges they face regarding hiring and managing employees.

While small businesses are hiring, the survey found they're struggling to recruit top candidates. Small business owners report the greatest hurdle is compensation (27 percent, larger companies can offer higher salaries), followed closely by a limited talent pool (26 percent, top candidates don't want to work for a small company), and limited advancement opportunities (15 percent, candidates perceive little chance to move up).

Fifteen percent of small business owners said the improving economy works against them when hiring because candidates anticipate more job openings and better opportunities with larger companies. Despite the proliferation of online job boards, the majority of business owners (59 percent) will depend on time-honored strategies such as networking via colleagues, friends and family to find candidates. Forty-one percent reported they would seek direct referrals from current employees.

"The best news revealed in our survey is that small business owners are hiring," said Pamela Springer, president and CEO of Manta. "Managing a staff has always been challenging for SMBs, but it's much more difficult in today's -do more with less' economy. Manta provides a resource to get companies found online, and also makes essential connections with potential customers, partners and even employees, helping make the task of finding job candidates less daunting."

After SMBs find candidates they like, 43 percent said experience is the most important secondary factor when deciding to make an offer, while 24 percent said personality, 12 percent go with their gut instinct and eight percent rely on references. Surprisingly, education is almost a non-factor, with only three percent deeming it an important secondary factor.

Just over half of respondents (51 percent) reported working with family. Of those, 37 percent said they treat them the same as all employees, while 32 percent said they try to treat them the same but that it can be hard. Twenty-seven percent said they are harder on family than other employees. Thirty-four percent said motivation is their biggest challenge when it comes to employee management, followed by training (25 percent), and enforcement of workplace policies (19 percent).

Slightly more than a quarter (28 percent) of respondents said they motivate their employees with rewards, and 27 percent give flex hours. Thirteen percent allow workers to work at home, while 7 percent provide affordable perks and five percent give time off for a job well done. Finally, according to the SMBs surveyed, sloppy grooming is the most annoying personal attribute an employee can have in today's workplace. Talking too much on the phone with a spouse, partner or kids is the second most annoying habit (29 percent), followed by an unkempt work area (9 percent) and reeking of cigarette smoke after a break (8 percent).