According to the annual Business Pulse Survey by SunTrust Banks, Inc., nearly 50 percent of companies say attracting and retaining employees is their top challenge in 2018. Leaders of middle market businesses, with annual revenue of $10-150 million, rank it as their number one concern. These findings come on the heels of the U.S. Labor Department’s February Employment Situation report, where businesses added 313,000 jobs, the most in any month since July 2016.
         
The SunTrust survey found that 62 percent of small businesses, with annual revenue of $2-10 million, and mid-market leaders believe the U.S. economy is strong and are even more optimistic about their own company strength (79 percent). However, they cite employee morale (59 percent), a shortage of skilled labor (54 percent) and higher than average turnover (53 percent) as factors that could impact their businesses’ performance this year. Current job growth is more than double the expansion in the labor force, and a record number of Americans are employed.

“With domestic unemployment continuing to hover just above four percent, one of the lowest levels in a decade, many companies feel they are at a critical point competing for talent,” said Jason Cagle, head of Commercial Banking at SunTrust. “Businesses are looking at all opportunities to attract and retain employees from offering new benefits to sharing tax reform proceeds. Less obvious is the role M&A can play to help secure a skilled workforce. This has become increasingly important as we advise our clients.”

Acquiring skilled talent – “acquihiring” – has become a driver of M&A transactions and a top objective. Whether seeking to fuel growth by adding new products and services or targeting new market segments, company leaders can consider looking outside of their companies to attain new competencies through acquisitions. For the mid-market and small businesses that cite M&A as the top priority over the next five years, finding valuable skilled workers may be an important objective. 

“At SunTrust, we work with companies of all sizes to help them with financial strategies to bridge the gap between the supply and demand of employees. Especially when identifying M&A candidates through SunTrust Robinson Humphrey, we help our clients evaluate company cultures and determine upfront the strategies necessary to retain key talent, which is critical to the long-term success of the deal,” added Cagle. 

The SunTrust survey found one in four companies currently not offering a financial well-being program plan to do so this year. While surveyed business leaders agree it is the right thing to do, more than half said the top reasons to offer a financial wellness benefit were to retain employees and increase loyalty.

Additionally, more than half of decision makers of both mid-market and small businesses believe that the 2017 Tax Cuts and Jobs Act will have a positive impact and plan to invest money back into the company and/or reward employees with bonuses and raises.

Decision-makers representing more than 500 small and mid-size businesses participated in the SunTrust/Radius Global Market Research survey. Survey results have a maximum margin of error of +/- 5 percentage points at a 90 percent confidence level.