How Middle Market Leaders Are Diversifying Talent Pipelines
New survey shows companies are facing major skill gaps—and building a more diverse workforce is a key solution
Middle market businesses are headed into a new phase of the “War for Talent.” According to the 2Q 2021 Middle Market Indicator from the National Center for the Middle Market, 46% of middle market leaders cited talent management as a key challenge through 2022.
A recent survey of 400 middle market executives by Capital One and Morning Consult also uncovered leader perspectives around business outlook and confidence, emerging challenges and investment strategies. Executives identified the top concern keeping them up at night:
- 20% said technology integration
- 14% said implementing and enforcing COVID-19 safety measures
- 11% said employee recruitment
- 10% said employee retention
While 95% said their companies were implementing new technology that would make processes and operations more efficient, they also pointed to the following tech-related skills gaps in their organizations:
- 32% selected management and leadership
- 31% chose data analytics
- 31% selected machine learning
- 30% selected cloud computing
- 30% chose data science
The middle market is taking steps to diversify the talent pipeline
Tapping new talent pools can help narrow these skills gaps, drive innovation and create lasting value.
To address current and future challenges and opportunities, companies are reimagining how they recruit. They’re seeking out diverse talent that is representative of their consumers and other stakeholders. And they’re being intentional to recruit individuals with a variety of perspectives, backgrounds and experiences.
Tapping nontraditional sources like nonprofit and community workforce development programs hold promise. It allows companies to recruit talented individuals who may not possess traditional work experiences or resumes, but who still bring important skill sets to the organization. In this survey, nearly a quarter (24%) of leaders reported plans to invest a quarter of a million or more in the next 6 months to build a talent pipeline, and one-third plan to invest a quarter of a million or more in this area over the next 1 to 3 years.
Businesses are finding ways to remove structural and cultural barriers to entry
In addition to finding new recruiting mechanisms and programs, the survey shows companies are removing structural and cultural barriers to entry that may hinder their efforts to recruit diverse candidates. More than a third of leaders reported they are taking action to:
- Increase flexibility to accommodate working parents and caregivers (41%): Caregiving responsibilities are a major reason professionals leave the workforce—and resumes with gaps due to caregiving may be overlooked even when skills and goals match. Implementing policies that affirm the importance of family responsibilities can improve both recruitment and retention efforts.
- Expand remote work options (36%): The ability to work from home is particularly important when it comes to diversifying the talent pool. Companies can cast a wider geographical net, and it creates opportunities for highly qualified candidates who face a range of logistical barriers from physical disabilities to transportation gaps.
- Implement programs and targeted initiatives to make roles more accessible for individuals with disabilities (34%): Employers are required by federal law to provide reasonable accommodations to individuals with disabilities. But companies are going further to create internal task forces and partner with outside disability employment agencies to recruit a more diverse workforce.
Investments in future talent will drive a return on investment
Not only are leaders recognizing the need for action in developing a more diverse workforce, but they’re also anticipating these efforts will drive a return on investment. Nearly one in five respondents expected investments in the talent pipeline would be a top driver of ROI in the next 6 months and in the next 1 to 3 years.
Middle market companies may be far away from declaring victory in the “War for Talent,” but the good news is that there are effective strategies for narrowing skills gaps by tapping into overlooked talent pools.
The Capital One survey was conducted by Morning Consult among 400 U.S. middle market financial decision-makers representing companies with total annual revenues of $20 million to $500 million. The survey was conducted from an online panel from September 1 – September 9, 2021. The margin of error is +/-5%.
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