An Ill Job Wind Blows Small Biz Some Good

With layoffs buffeting corporate ranks, a growing roster of skilled job applicants is starting to show up

The waves of corporate layoffs and dot-com closings finally have started to turn the tide on one of the biggest problems for small-business owners: a scarcity of qualified job candidates. Although many of those recently tossed into the job market aren't a good fit for small companies, a few are, giving some sectors relief after a two-year drought at the labor pool.

"Our clients are actually doing a little more hiring because they feel the people are out there," says Frank Wyckoff, president of Snelling Personnel Services-The Wyckoff Group, based in Eatontown, N.J. His four offices in central New Jersey are "flooded with Lucent people," which means small optical-technology companies and other tech businesses can more easily find the skills they've been looking for. In other areas, too, including support staff and professionals such as lawyers and accountants, the field of candidates available to small companies has grown, Wyckoff says.

National and state small-business associations that regularly poll their members find fewer are having difficulty hiring qualified workers or expecting to pay higher wages in the next year. The number of companies reporting hard-to-fill job openings in March fell to 26%, the lowest level in more than two year and a 6-point drop from the previous month, reports the National Federation of Independent Business.


  The latest survey from the Small Business Association of Michigan shows that in the first quarter, nearly 30% reported they had access to qualified candidates. That compares with 20% in the previous quarter and marks the most positive reading in the last year and a half. Business is especially hungry for Internet technology employees and skilled salespeople -- "anyone who can help make the business more profitable" -- says Michael Rogers, vice-president for communications at the Michigan association.

Employees outside of those arenas may have little choice but to work for small companies, says Wyckoff. "Big companies are hiring at the executive, technical, and sales levels. Everything else is happening at small companies." He predicts that as severance pay and unemployment benefits dwindle, more job candidates will downsize their expectations of getting picked up by one of the Fortune 400.

Maria Thompson is feeling the benefits. As co-owner of T/J Technologies, an Ann Arbor (Mich.) developer of energy devices such as fuel cells and electrodes for batteries, Thommpson is seeing better résumés lately, including some from experienced engineers laid off by larger companies. She's also seeing salaries stabilize: "Because more people are looking, you don't have to pay a premium, although you still need to pay them what they're worth."


 Outside the executive suite and hot fields such as technology and sales, most small companies can't afford the salaries and benefits that corporate refugees are used to. In many cases, the salaries paid in the boom years weren't realistic anyway, say employment experts. They reflected a supply-demand imbalance rather than the talent of the employee, says Scott Dunklee, partner in Lancer Group, an executive-search firm in Menlo Park, Calif. "A lot of the businesses -- and compensation packages -- were unsustainable."

But if smaller and less-glamorous companies offer lower pay, they may offset it by offering job candidates other rewards: more autonomy, greater responsibility, a better work-life balance, and -- of particular importance right now -- stability. "In what is loosely called the dot-com world, a lot of people have come out saying, 'I want a real company with real products and real profits,'" says Dunklee. "Some small companies fill the bill."

Although overall the corporate layoffs are good for small businesses, the job-market math remains tricky. The newly jobless don't always have the right skills, and some will live off union benefits, severance, or unemployment benefits while waiting for the downturn to improve. Others come from the ranks that would fill the thousands of openings at small companies for home health aides and retail clerks. Still others -- those cut loose by the likes of Oracle, AT&T, General Motors and Cisco -- will become small-company competitors.

The Small Business Development Center in Lansing, Mich., is being "flooded by requests" from people wanting to start their own business, says Bo Garcia, regional director. Some are "downsized souls" looking to be master of their own futures, and others are still employed but hedging their bets, he says.


  At the same time, some companies are leery of the expanding labor pool, thinking -- accurately or not -- that if an employee had been top-notch, he wouldn't have lost his job. For this reason, recruiters say, some businesses would still rather lure away someone who's already employed elsewhere. "There might be more good people out there, but it takes time to find them," says Ken Diamond, president of Digital Action Inc., an executive-recruiting firm in Philadelphia who has worked with a number of startups.

Also complicating the layoff-hiring equation is the fact that some small companies also are scaling back spending until the economic outlook becomes clearer. "Instead of trying to hire eight people, like last year, they're just hiring two," says Diamond. But at least they have a better shot at finding those two.

Theresa Forsman in New York

Edited by Robin J. Phillips