Small Business Recruiting Trends and Statistics

By Kelsey McKeon / 28 January 2021

Recruiting new employees may have seemed impossible one year ago, but half of small businesses in the U.S. (51%) plan to hire new employees in 2021. The Manifest’s latest survey of 500 small businesses shows that small businesses plan to hire across all departments using a combination of personnel and digital resources.

“We have a hiring freeze” are five of the most dreaded words for job seekers. 

The COVID-19 pandemic led to stay-at-home orders, remote work, and mass layoffs around the U.S. in the spring of 2020. 

A once-thriving job market quickly deteriorated as unemployment spiked to levels higher than the 2008 recession. Job seekers flooded the market, and most businesses closed their doors to potential new employees.

In the past 6 months, however, the economic outlook has significantly improved. The promise of a widespread vaccine and many employees’ ability to “work from anywhere” mean the pace of hiring has picked up from August 2020, when 46% of businesses reported hiring 10 or more employees

Small businesses hesitant to hire new employees are cautiously optimistic about hiring plans for 2021. The Manifest surveyed 500 small businesses in the U.S. and found that 51% plan to hire in 2021 across a variety of departments. As the economy begins to recover, these top trends will help inform small businesses’ hiring practices in 2021 and beyond.

Top Small Business Recruiting Trends

  1. The small business hiring freeze is beginning to thaw: About half of small businesses (51%) are likely to hire new employees in 2021. Still, one-third of small businesses (33%), are unlikely to hire new employees as the economy remains uncertain.
  2. Hiring plans depend on small businesses’ revenue in the coming year: 63% of small businesses that predict a revenue increase are likely to hire new employees compared to just 39% of small businesses that predict a revenue decrease.
  3. Small businesses plan to hire IT, marketing, and operations professionals: Small businesses that are likely to hire are planning to hire employees to support their IT (35%), marketing and sales (31%), customer service (29%), operations (23%), and production (21%) departments.
  4. Small businesses that plan to hire will use a variety of staffing resources: More than half (58%) will use social media sites, such as LinkedIn, and 41% will leverage in-house human resources employees. About one-third (31%) will use a staffing or recruiting firm.
  5. Small businesses will only hire a few employees at a time: One-third of small businesses planning to hire (34%) will hire fewer than 11 employees over the course of 2021. Most small businesses won’t hire more than 20 employees.

1. The Hiring Freeze Is Over for Half of Small Businesses

The COVID-19 pandemic and resulting economic recession cratered hiring in 2020

With a COVID-19 vaccine rollout underway and economic recovery within reach, the small business hiring freeze has started to thaw.

Half of small businesses (51%) are likely to hire new employees in 2021, despite ongoing challenges from the COVID-19 pandemic.

51% of small businesses plan to hire new employees in 2021

Renewed optimism from the potential for increased government support of small businesses and the looming end of the COVID-19 pandemic means small businesses can invest in expanding their workforce to support critical operations.

A positive economic outlook is not shared across industries, however. One-third of small businesses (33%) are still unlikely to hire new employees in 2021. Some economic uncertainty remains around COVID-19, particularly for hard-hit industries such as hospitality, commercial real estate, and retail.

33% of small businesses don't plan to hire in 2021

Small businesses face unique challenges finding and hiring the right employees. Larger businesses may have an easier time financing a hiring push, but smaller businesses must make sure they are hiring qualified employees who are also the right fit for their business.

According to the Society for Human Resource Management (SHRM), businesses can expect to spend upwards of $4,000 for each new employee they hire. That cost might be a drop in the bucket for enterprise businesses, but small businesses may opt to spend that money by keeping current employees on staff rather than finding and acquiring new talent.

Ultimately, small business hiring is on track to increase. Businesses that predict revenue growth are especially eager to grow and expand their teams.

2. Hiring Plans Depend on Small Businesses’ Growth Projections

An increase in annual revenue means more opportunities for small businesses to invest in future growth. Often, that growth includes hiring new employees.

Small businesses’ revenue predictions determine how likely they are to hire. Small businesses that predict an increase in revenue in 2021 are almost twice as likely to hire new employees as businesses that predict a revenue decrease.

Almost two-thirds of small businesses (63%) anticipating revenue growth say they are likely to hire new employees, versus just 39% of small businesses that don’t expect a revenue increase.

63% of small businesses predicting revenue growth plan to hire new employees in 2021.

This shows that small businesses aren’t relying on positive economic growth alone. Ultimately, their revenue projections will determine hiring nears in the near term. 

Still, small businesses predicting a revenue decline can use the early months of 2021 to create a hiring plan or strategy for later in the year, or invest in cultivating a strong employer brand. They could also explore hiring part-time or freelance workers to supplement their business operations in the near term.

3. Small Businesses Are Hiring for IT, Marketing, and Customer Support Employees in 2021

Small businesses planning to hire new employees are looking for talent to support a variety of business needs and departments.

The most in-demand hires, however, include IT, marketing, and customer support professionals.

IT the most in-demand sector for small business hiring: More than one-third of small businesses (35%) making hiring plans for 2021 intend to hire IT staff.

Top 3 Small Business Hiring Needs in 2021: IT (35%), Marketing & Sales (31%), Customer Service (29%)

 

Small businesses that are hiring are also looking for employees to support:

  • Marketing and sales (31%)
  • Customer service (29%)
  • Operations (23%)
  • Production (21%)

IT departments in particular have been especially strained during the COVID-19 pandemic. With 66% of the workforce shifting to remote and dispersed operations almost overnight in March of 2020, many small businesses were forced to adapt to the challenges of a fully-digital workplace.

A newly dispersed workforce, many working from their home WiFi networks, presented new cybersecurity challenges amid the chaos of the pandemic’s early days.

Employees needed to access virtual private networks (VPNs), conduct remote training sessions using videoconferencing, and solve run-of-the-mill tech issues without the benefits of designated tech support professionals.

For some small businesses, the challenges of the pandemic forced them to explore low-cost marketing techniques and tactics. Shawn Breyer, owner of family law firm The Hive Law, now plans to bring on marketing employees to focus on organic SEO in 2021.

“In 2020, we had to cut paid marketing out completely to be able to afford to stay open. During the lockdown, SEO brought in enough leads to keep our business afloat,” Breyer said. “After that, we shifted our focus to learning SEO and building out content for our website. This year, we are going to hire a small marketing team to develop SEO more. We will be hiring team members who specialize in copywriting and link building.”

Breyer, like other small business leaders, recognizes the importance of a strong marketing operation in 2021.

Still, small businesses may face challenges trying to hire across departments when in-house operations resources are limited.

Operations professionals can help small businesses prepare for future hiring pushes. Operations and human resources professionals help not only with recruiting new talent but also caring for the talent already in place.

Avner Brodsky is founder and CEO of SuperWatches.com, an online watch retailer. He plans to hire employees to support his company operations department in 2021.

“I already have all the marketing and operations experience needed in my current team. If we plan to hire more then we will need a dedicated HR team,” Brodsky said. “I can't take on the extra tasks right now of hiring and onboarding.”

I already have all the marketing and operations experience needed in my current team. If we plan to hire more then we will need a dedicated HR team

Brodsky said the pandemic’s toll on his employees also drove him to hire an HR department over additional sales and marketing professionals.

“HR is more than hiring. They are able to look after all employee administration, the taxes for those employees, and also employee wellbeing and mental health,” Brodsky said. “I want to offer my employees benefits that are competitive and leading in today's workforce. The pandemic has really shown the importance of prioritizing employees' wellbeing, and I wish to be at the forefront.” 

Brodsky, like many small business leaders, will prioritize hiring new employees to support business operations during another challenging year. 

Small businesses should examine business priorities when deciding which departments to support with new hires.

3. Social Media Tops List of Small Business Hiring Resources

The days of job seekers browsing newspaper classifieds are long gone. Small businesses hiring in 2021 will leverage digital platforms and in-person resources to hire new employees.

Most small businesses (58%) that are looking for employees in 2021 will turn to social media platforms such as LinkedIn.

58% of small businesses use social media to hire employees

Almost half of small businesses (41%) plan to hire new employees with an in-house human resources team. About one-third of small businesses (31%) will bring on a staffing or recruiting firm, and 30% will leverage HR software such as ADP or BambooHR to round out the hiring process.

Small businesses working with small in-house staffing teams should use multiple tools and resources to make the hiring process as efficient as possible.

Small business HR teams can use HR software to post new positions to a variety of online job boards, including LinkedIn.

It’s important for small businesses to focus on maintaining an active employer presence on LinkedIn, however.

A report from Jobvite found 87% of recruiters use LinkedIn to evaluate candidates, meaning small businesses could lose out on qualified candidates to companies with a more active presence on the platform.

LinkedIn’s Recruiter features also make it easy for small HR departments to connect with candidates and manage applications that come in through the system.

LinkedIn Recruiter Integrated Search Filters
Source

LinkedIn recruiter allows small business HR professionals to sort and filter candidates that most closely match the needs of the open position.

Still, it can be challenging for small businesses with small HR teams to manage postings across platforms, let alone use advanced filtering features to find and reach out to qualified candidates.

Professional recruiters can help small businesses integrate their search tools and platforms to find the best talent.

How Staffing Firms Help Small Businesses

Staffing firms help small businesses by managing the recruiting process for candidates across a variety of departments and specialties.

31% of small businesses will hire a staffing or recruiting firm

Candidate outreach and screening is a time-consuming process. Recruiting and staffing professionals are responsible for finding and vetting candidates on behalf of the business leaders.

A professional recruiter also operates as an extension of the company’s HR department by managing job postings on third-party job boards and updating positions as they are filled.

Professional staffing firms can help business leaders manage the administrative tasks of recruiting new employees and help find and hire the right talent.

4. Most Small Businesses Will Hire Fewer than 20 Employees

Despite an improving economy, most small businesses will stay small in 2021 and only hire a few employees this year.

Only about one-quarter of small businesses (27%) plan to hire 20 or more employees. Most small businesses (71%) will hire fewer than 20 employees. 

71% of small businesses will hire fewer than 20 employees

Most small businesses don’t have more than a few open jobs posted at a time. Small businesses may choose to hire a few people at a time to fill needs across departments, such as IT and marketing.

Dan Edmonson is the founder and CEO of Dronegenuity, a drone video and photography company. His company has hired 3 marketing employees already this year.

“Digital marketing is way more important than before, and as a small business we need a bigger headcount in our marketing department to catch up,” Edmonson said. “Although 2020 hurt small businesses like us financially, investing in fresh minds in the marketing department has become an urgent need.”

Although 2020 hurt small businesses like us financially, investing in fresh minds in the marketing department has become an urgent need.

Edmonson, like many small business leaders, has chosen to expand his marketing efforts to meet the challenges of 2021.

Many small businesses have small HR departments or have employees work on recruiting candidates in addition to other responsibilities. This makes it challenging for small businesses to hire employees at scale, even in the best economic conditions.

High unemployment means the job market is flooded with qualified candidates looking for work. According to Glassdoor, corporate jobs attract 250 applicants when times are good.

Recruiters, both in-house and external, spend an average of 13 hours sourcing candidates before they even begin the interview process. This is a huge time commitment for small business leaders managing other priorities.

Small businesses can always start 2021 by hiring a few employees to do high-priority tasks, and then ramp up hiring throughout the year as the economy continues to improve.

Small Business Hiring and Staffing Picks Up After a Difficult Year

After the record job and revenue losses in 2020, small businesses are ready to start expanding operations in 2021. 

About half of small businesses plan to hire new employees in 2021, striking an optimistic tone for economic recovery early in the year.

Hiring depends on small business revenue, though. Most small businesses predicting an increase in revenue are likely to hire this year.

Small businesses plan to hire employees across departments and specialties, with IT, marketing, customer service, and operations being the most in-demand.

Small business leaders can use a variety of staffing resources to source and hire new employees, including in-house HR teams, software, and recruiting or staffing firms.

Small businesses don't plan to expand their teams beyond 20 new hires, despite a positive economic outlook. 

Being strategic about hiring decisions will help small businesses maximize profits and prepare for economic recovery in 2021 and beyond.

About the Survey

The Manifest surveyed 500 small business owners and managers at companies in the U.S. with fewer than 500 employees. We define small businesses as having limited revenue and between 1 and 500 employees, which corresponds to the Small Business Administration's definition of small business. The survey ran in December 2020.

Seven percent (7%) of respondents’ businesses have 1 employee; 36% have 2 to 10 employees; 25% have 11 to 50 employees; 18% have 51 to 250 employees; 15% have 251 to 500 employees.

Fifty-three percent (53%) of respondents are female; 47% are male.

Four percent (4%) of respondents are Generation Z (born after 1996); 23% are millennials (1981-1996); 50% are Generation X (1965-1980); and 23% are baby boomers or older (before 1965).

More than one-third (35%) of small businesses are located in the South; 23% are in the Northeast, 22% are in the West, and 20% are in the Midwest.

Respondents are from the South (35%), Northeast (23%), West (22%), and Midwest (20%).

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