6 Reasons Why Small and Mid-Sized Business Owners Should Rethink Their Talent Pipeline

In today's competitive business landscape, small and mid-sized businesses face unique challenges—one of which is attracting and retaining top talent. There are nuances that come with smaller businesses that make hiring and retention more difficult than larger companies, such as fewer opportunities for elevated positions, tighter budgets, and fluid changes as growth is happening.

Due to the struggles in attracting and retaining talent, many small businesses are reactive with the hiring process, scrambling to fill immediate needs in an effort to maintain workflow. What they often fail to pause and consider is that this can actually hinder long-term growth and progress due to the endless cycle of rehiring and retraining. What is more beneficial to their business is strategically building a talent pipeline that allows for a seamless transition when their workforce experiences a disruption.?

When a growing business builds a talent pipeline, they are securing a steady flow of skilled workers into critical open positions—and vacating entry-level positions that are more easily filled.?

The question is, “With all the pressures of running a business, do they prioritize mapping out a strategic workforce plan for the future?”

The answer is almost always “no.”

While small and mid-sized business leaders are focused on growth and reaching milestones, strategic hiring is often put on the back burner due to a lack of internal resources. Keeping this in mind, let’s explore the top benefits of small and mid-size business owners rethinking their workforce strategy with the goal of putting this priority on the front burner.

1. Ensure Future Success

Building a talent pipeline enables business owners to take a proactive approach to hiring by aligning their recruitment efforts with long-term company goals. By identifying the skills, competencies, and experiences required for future positions, businesses can develop a robust pipeline of potential candidates, reducing the time and effort required to fill vacancies when they happen and already having candidates identified when positions are added. According to the Society for Human Resource Management, strategic workforce planning is linked to better business outcomes and increased profitability.

2. Improved Quality of Hires

Reactive hiring often leads to rushed decisions, resulting in lower-quality hires. In stark contrast, a strategically-built talent pipeline allows businesses to thoroughly evaluate candidates over time, ensuring that the most qualified professionals are selected for vital roles. This comprehensive process significantly increases the likelihood of finding the right fit for the organization, ultimately enhancing productivity, employee satisfaction, and retention rates.

3. Cost and Time Savings

Building a talent pipeline can save small and mid-size business owners both time and money. Reactive hiring requires advertising, recruiting, sifting through resumes, and a considerable amount of time interviewing. For businesses without an internal HR department, this is critical time that is taken away from a company leader’s day-to-day responsibilities. By proactively cultivating relationships with candidates and building a talent pipeline, time spent searching for and recruiting suitable candidates during urgent hiring situations is reduced dramatically or eliminated altogether.

4. Access to a Diverse and Inclusive Talent Pool

Diversity is a vital component of a thriving business, and every company—regardless of size— should have a mission of employing a diverse workforce. Studies show that when workers perceive their employer as diverse and inclusive, they are more engaged, satisfied, and productive. Developing a strategic talent pipeline allows small business owners to attract candidates from diverse backgrounds, ensuring a broad range of perspectives within the organization. Partnering with third-party resources that specialize in diversity recruitment can help businesses in this area and ensure an inclusive talent pipeline.

5. Increased Retention Rates

One of the top benefits of building a talent pipeline is the ability to develop relationships with potential candidates over time. By engaging with candidates before hiring and having meaningful conversations, businesses can better assess cultural fit, alignment of values, and long-term career aspirations. This proactive approach significantly improves retention rates, as candidates understand the organization's values and vision and can make an informed decision about joining the company. Those with a complete picture of the company’s values are more likely to commit long-term than a candidate who was hired through a rushed process and didn’t fully digest the company culture.

6. Succession Planning and Adaptability

Succession planning is crucial for business continuity, and a talent pipeline facilitates the identification and development of future company leaders. Likewise, a well-structured talent pipeline allows small and mid-sized businesses to adapt to staffing and leadership needs as they relate to changing market conditions. By identifying high-potential employees within the pipeline, businesses can proactively develop their skills, ensuring a seamless transition when key positions become vacant.?

As the Harvard Business Review reports, lacking a solid talent pipeline equates to a supply chain disruption and uses leading automobile brand Ford to demonstrate the consequences:?

“With supply chains, you get what you plan for. Think about, say, ball bearings. To ensure a ready supply, Ford coordinates with its suppliers years in advance. How would it work if the company were only to coordinate with those suppliers on a short-term basis, reaching out at the beginning of each month to source only what it needed for the next month? Anybody with even a rudimentary grasp of business will recognize that idea as absurd. On such short notice, Ford’s purchasing agents would have trouble identifying vendors who could meet the required volume and specifications at a competitive price. But here’s the thing: More or less, this ad hoc approach to sourcing is how most companies today are trying to meet their demand for talent.”

This is perhaps the greatest comparison I’ve ever read. Simply put, short-term planning can lead to an abrupt halt in forward momentum.?

While these are all compelling reasons for taking the time to develop a talent pipeline, the question most small and mid-size businesses are left with is, “How?” They have smaller teams and, therefore, limited resources to make this happen. This is where third-party resources that specialize in talent acquisition can step in to get it done for small businesses. Companies such as The JPI Group have vast and diverse candidate networks, ample resources, industry insights, and proven recruitment strategies—saving businesses time and effort while they build a quality and diverse talent pipeline on their behalf. Leveraging external resources ensures that these businesses can compete effectively in the talent marketplace despite not having a dedicated HR department.

Small and mid-size business owners need to prioritize building talent pipelines to drive future growth and success. By shifting from a reactive hiring mindset to proactive talent acquisition strategies, businesses can improve the quality of their hires, reduce recruitment costs, increase retention rates, and ensure a diverse and inclusive workforce. Embracing these strategies will empower businesses to adapt to changing needs, develop future leaders, and thrive in today's increasingly competitive business environment.