Pay and Skills Gaps Topped SMB Hiring Challenges Heading Into 2025

What Hiring Challenges Did SMBs Face Heading Into 2025?

Small and midsize businesses (SMBs) are crucial to the U.S. economy. Small firms make up 99.9% of all U.S. businesses and account for about 46% of private sector employment, according to Small Business Administration data. Heading into 2025, these businesses faced significant hiring challenges. Research released by Robert Half on November 13, 2024, based on a June 2024 survey of more than 1,700 hiring managers, highlighted the most pressing issues.

The Shortage of Qualified Talent

The top challenge was pay. Nearly half of SMB hiring managers said meeting candidates’ salary expectations was a top hiring challenge through the end of 2025. More than 4 in 10 named finding candidates with the required skills, and more than 4 in 10 expected trouble finding people who fit their company culture. The survey covered roles in finance and accounting, technology, marketing and creative, legal, administrative and customer support, and human resources.

The shortage did not go away. In NFIB’s September 2025 jobs report, 32% of small business owners said they had job openings they could not fill.

In tech, competition for skills remains strong. The Bureau of Labor Statistics projects about 280,000 openings each year in computer and information technology occupations. For SMBs trying to attract tech talent, competing with large firms like Google, Microsoft and Amazon makes the task harder.

Employee Retention and Company Culture

Slow hiring also hurts retention. Nearly 4 in 10 SMB hiring managers worried about losing a top candidate to a competitor during a long process, and nearly half said slow hiring led to higher turnover among existing staff. That gets expensive. Gallup estimates that the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary.

The Great Resignation, a pandemic phenomenon, created a shift in work attitudes. It has pushed many workers to reevaluate their professional lives, seeking workplaces that offer growth opportunities, competitive salaries, and, most importantly, a favorable culture. Businesses that cultivate a supportive environment may have a better chance at retaining staff.

Crafting Effective Hiring Strategies

Given these challenges, Robert Half suggested four strategies for SMBs:

1. Look Beyond Salary: Promote your culture, values, flexible work, paid time off and advancement opportunities on your website, job postings and social media.
2. Hire Quickly: SMBs usually have fewer decision-makers and less bureaucracy, so they can make offers faster than big companies.
3. Be Flexible on Requirements: Train and upskill promising candidates who lack some experience or qualifications, and use contract workers to fill skills gaps.
4. Work With a Specialized Recruiter: A recruiter can market your company to job seekers and help find suitable candidates.

“Small and midsize businesses face unique challenges when it comes to attracting and retaining top talent,” said Dawn Fay, operational president of Robert Half. In a tight market, speed and flexibility are areas where smaller employers can compete.

Additional Insights

Enhancing employee experience through mentorship programs, diversity and inclusion initiatives, and wellness programs will be crucial as businesses look to rise above their competitors.

Moreover, businesses that actively engage in community outreach and local job fairs may benefit from enhancing their local visibility and reputation. Given that many SMBs rely on their regional presence, being known as a desirable place to work can attract talent right in their own backyard.

For small and midsize businesses, understanding this landscape is crucial in navigating hiring challenges. The Robert Half report serves as a call to action for business leaders and HR professionals to focus on innovative tactics and strategies to attract quality talent. The emphasis should be on fostering a culture that values employee well-being, promotes skill development, and embraces flexibility in work arrangements.

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