Job seekers flocking to small firms

No longer so picky, they don't mind absence of those juicy incentives

April 28, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

When the economy was good, Ravi Aggarwal tried to lure new employees to his computer learning center with fully vested retirement plans and other perks - to no avail.

"They didn't care," said Aggarwal, general manager of New Horizons of Baltimore. "People just wouldn't accept my offers. They said they had too many choices. They were too picky."

But now Aggarwal can't keep up with the job inquiries he's been receiving since the economy slowed last year and downsizing companies dumped a slew of skilled workers onto the market.

For many small businesses such as New Horizon, it's never been a better time to build a work force.

As their options have shrunk, workers that once opted for the higher salaries and better benefits of large businesses are turning to smaller firms for jobs.

It's true in almost every field, though there are a few exceptions. Small health care, construction and mortgage banking companies still have a difficult time finding employees, experts said.

Even as the country pulls itself out of a recession, economists predict that it will be several months before the job market recovers and small businesses lose their advantage. When the last recession ended - the first quarter of 1991- it took five more quarters before companies started hiring again, said local economist Anirban Basu.

"During an economic recovery, employment may lag several months behind," said Basu, director of applied economics for Towson University's RESI research institute.

Those business owners that can afford it are taking advantage of the bloated labor pool as unsolicited resumes land on their desks daily and calls from job seekers fill up their voice mail.

A year ago, Aggarwal's company spent thousands on recruiting and got little response. Now, the 35-person firm spends about $100 a month advertising on the Web and gets at least 100 resumes a week.

"We have no time to go through the resumes we're seeing everyday," Aggarwal said.

Aggarwal's experience reflects the numbers. During the heart of the economic boom in 2000, 35 percent of small businesses had at least one job they couldn't fill, according to the National Federation of Independent Business. So far this year, just 17 percent report having problems finding employees.

The new job prospects also are more experienced and demanding far less in pay, economists said.

"There are going to be more, they're going to be better and they're going to be cheaper," said William Dunkelberg, chief economist at NFIB and an economics professor at Temple University.

The price for entry-level positions has dropped 5 percent to 10 percent, depending on the industry, said John Challenger, the chief executive of Challenger Gray and Christmas, a Chicago-based outplacement firm. Hefty signing bonuses and other incentives have just about disappeared from hiring packages.

"Businesses were using incentive pay and soft benefits in the late '90s and bigger companies in particular had an advantage in some way," Challenger said. "Today, with the increased pool of competition, many small companies have now jumped in."

The market was once so tight for Stanton Communications Inc. that the 18-employee company couldn't afford to compete for recent college graduates, who were demanding high salaries. Now even applicants with lots of experience are being hired at a bargain. The company, with offices in Washington and Baltimore, has hired two public relations executives since the downturn in the economy.

"For a while, we found ourselves in a position where qualified candidates were hard to come by and people really wanted top dollar," said Ray Weiss, Stanton executive vice president. "In the last six months to a year, things have changed tremendously. We found ourselves suddenly receiving a number of unsolicited resumes from people who had very impressive backgrounds but were suddenly finding themselves out of work."

Some small companies are even promoting turnover to upgrade their work forces before the larger companies start hiring again.

That's the strategy Internet service provider Toad.net has used in recent months.

"We're not exactly on a firing spree or anything like that, but we have tried to make sure we have the best fit for the task," said David Troy, the company's president and chief executive officer. "If someone is thinking about doing something else, we'll encourage them to do that."

One of those whom Severna Park-based Toad.net was able to pick up is Francine Cyganiewicz. Cyganiewicz was laid off in August from her job in Boston as marketing director for billion-dollar Primus Telecommunications. After a five-month job hunt - and lots of rejections - she took a pay cut to come work for the much smaller Toad.net in January.

"The company has been very savvy and picked up people with industry experience," Cyganiewicz said of Toad.net. David Troy "is drawing on several new hires with a wealth of experience to try and grow Toad.net to the next level."

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