Staffing costs on the rise for U.S. private businesses

Among private businesses in the United States, 48 percent are paying significantly more in staff costs than a year ago, according to the Grant Thornton International Business Report (IBR). While this number is noteworthy, it is lower when compared to private companies across the globe, 63 percent of which are paying significantly more for staffing costs as compared to a year ago. In India, for example, 85 percent of employers report seeing a rise in labor costs. With a number of U.S. manufacturers outsourcing non-core services to international markets including India, the rising international human resources costs may have a direct impact on U.S. companies.

Among U.S. private companies, 59 percent are 'more' or 'significantly more' focused on recruitment and retention of staff than they were 12 months ago – slightly less than the global average of 63 percent.

Seventy-seven percent of respondents are working to improve retention by ensuring that all employees understand the company's core values, making this the most common means of engendering employee loyalty. Other retention efforts that companies are focusing on include developing competitive reward systems and benefit packages (71%); training and mentoring top performers for leadership positions (62%); monitoring employee perceptions and acting on results (60%); providing training and development packages for all employees (54%); and having a flexible attitude to various working patterns (e.g. part time, flextime, home working, etc.) (53%).

"Private companies often compete with companies, that have big budgets for staffing and more employees overall. As a result, business leaders are increasingly aware of the need to take creative action on recruitment and retention policies in order to maintain or gain a competitive advantage," said Mike Hall, Midwest regional managing partner and partner in charge of Grant Thornton LLP's private company initiative "Retaining the right employees is important to the long term success of any business but is particularly critical for private companies. Recruitment is an expensive process and an organization that continuously hires while losing talent internally will not be able to prosper and grow."

Private businesses that don't have solid retention strategies in place suffer the consequences. Forty-two percent of companies report increased workload for remaining staff as the biggest consequence of staff attrition. Other problems resulting from staff retention issues include increased operating costs (37%) and a fall in customer service standards (28%). At the same time, 22 percent of companies report loss of business orders to competitors as a consequence of poor staff retention, which is comparatively less than the global average of 32 percent.

You can read the complete Recruitment and Retention report.

About the Survey

Grant Thornton International started a major annual survey of the attitudes and expectations of small and medium-sized businesses in European countries in 1992. In 2003 the research project was given an international perspective covering medium-sized businesses. In 2007, the survey's name was changed from IBOS to the International Business Report (IBR).

Grant Thornton International will donate $5 to UNICEF for every completed IBR questionnaire. In 2008, this will result in a donation of over $39,000.


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