Opportunities and Advantages: How Today's Small Businesses Are Recruiting

Small and midsize businesses (SMBs) are like the welterweights of the business world: With their agility and impact, they often punch above their weight. But they face unique challenges when it comes to hiring. 

That’s particularly true now that the workplace is changing so rapidly, with everything from the adoption of generative AI to increased calls for return-to-office. To see how recruiters and hiring managers at SMBs are navigating these changes, LinkedIn took a closer look at our Future of Recruiting report to see how the 600+ SMBs we surveyed (out of 1,453 recruiting professionals) responded.

What we found may surprise you. SMBs, for example, are less likely than enterprise organizations to recruit internally but also more likely to believe in pay transparency. There were other significant differences too. Read on to learn more about how small and midsize businesses are tackling talent issues and how they can come out swinging.

Small businesses are embracing pay transparency — to their benefit

A common belief that many people grew up with is that it’s rude to talk about money — and even ruder to ask about people’s salaries. In the workplace, at least, that’s changing. 

Pay transparency — the practice of openly communicating compensation with employees and candidates — is becoming more and more the norm. In places such as California and New York, it’s the law. And last year, the E.U. adopted the Pay Transparency Directive, which is expected to become national law of E.U. member states within three years of the directive’s passage.

SMBs are ahead of the curve on this one, with 65% reporting that they think pay transparency will be an important topic shaping the future of recruiting. When it comes to attracting talent, this is a place where small and midsize businesses can stand out. Job seekers are more likely to apply for a job that lists a salary range. And most employees who believe that their organization is transparent about how pay decisions are made also say that they trust their organization pays people equally for equal work regardless of gender, race, and ethnicity. 

Smaller businesses are more likely to have fully remote or fully in-office policies 

In the remote versus in-office debate, SMBs tend to be more in one camp or the other and less likely to be hybrid than their enterprise counterparts.

LinkedIn’s research found that 9% of SMBs are fully remote versus 3% of enterprises. And 24% of small and midsize businesses are fully in-office, compared with 17% of larger organizations. Meanwhile, enterprise organizations are more likely to offer flexible hybrid, fixed hybrid, or office-first hybrid options.

This presents an opportunity for SMBs. According to the Future of Recruiting, companies that require employees to be fully or mostly in-office have a tougher time attracting the best candidates. They experience reduced talent pools, fewer applicants, and increased competition. 

When companies allow employees to choose their work location — and hours — it’s easier to attract talent. A flex-work policy results in a larger talent pool, more job applicants, and better employer brand. 

Small and midsize businesses have an opportunity to explore more new technology and GAI

If there’s one area where SMBs are ripe for growth, it’s new technology and GAI. To some extent, this may be a matter of simple economics: Smaller businesses usually don’t have the same budgets as enterprise organizations, which means they have less to invest in new technology. 

A recent McKinsey & Company report found that while small and midsize businesses invest more in telecom and electronic devices than enterprises, they spend less on software. Why? Like many, they’re struggling with inflation and current economic headwinds. LinkedIn’s research showed similar results, finding that almost half (49%) of SMBs think that new recruiting technology will be an important topic shaping the future of recruiting, compared with 62% of enterprises. At the same time, 58% of SMBs are using or exploring GAI in the hiring process, versus 67% of larger organizations.

This budding interest presents an opportunity. To learn more about GAI and how to use it, companies can check out the more than 50 free courses that have been unlocked by LinkedIn Learning. These are introductory and deep-dive courses on how to use GAI for, among other things, the more mundane aspects of recruiting. And when GAI takes some of that work off people’s plates, it frees employees to do more valuable work. 

Smaller businesses can reframe the internal mobility conversation to emphasize skills development 

Meanwhile, SMBs are less likely to think that internal mobility will be an important topic shaping the future of recruiting (64%) than enterprise companies (79%). That puts SMBs at a disadvantage when wooing candidates eager for career growth. But smaller companies can reframe the story, to show a different kind of internal mobility.

While larger corporations often have complex hierarchies and job titles, SMBs usually have simpler organizational structures and titles, meaning that any given employee wears multiple hats. The chief marketing officer, for example, could also be head of public relations. An engineering manager might be overseeing both customer-facing and internal technology. 

Recruiters and hiring managers can emphasize that even though candidates may not receive as many official promotions at a smaller company, they stand to develop a wide variety of skills. And when candidates develop new skills, they can often move into jobs (within or outside the company) that were previously out of reach. 

Final thoughts: By being agile, SMBs can beat competitors to the punch

SMBs have a few exciting ways they can grow to stay competitive in the talent market, including putting a free job posting on LinkedIn. With more than 1 billion members, LinkedIn is a rich source of talent for smaller businesses; in fact, in a given month, over 70% of LinkedIn users don’t visit other leading job sites.

But like the great welterweights throughout history — think Manny Pacquiao or Sugar Ray Leonard — smaller businesses have a built-in advantage they can also lean into. They’re agile and light on their feet. They can make hiring decisions more quickly than larger organizations, beating competitors to the punch. And they’re often more likely to offer collaborative and mission-driven cultures. For many top-notch candidates, this carries a lot of weight.

Methodology

Linkedin Research surveyed 1,453 recruiting professionals in management seniority roles or higher (1,202 recruiting pros, 261 search and staffing pros), in addition to 498 hiring managers. Survey respondents are LinkedIn members who were selected to participate based on information in their LinkedIn profile and qualified based on survey responses. This survey was conducted in six languages across 23 countries in October and November 2023. SMBs were defined as companies with 200 or fewer employees, and Enterprises were defined as those with more than 1,000.