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BUILDING THE TOP TEAM
FINDINGS FROM THE NCMM / NOVO
GROUP TALENT STUDY
T h o m a s A . S t e w a r t , E x e c u t i v e D i r e c t o r
T h e N a t i o n a l C e n t e r f o r t h e M i d d l e M a r k e t
ACG CINCINNATI | NOVEMBER 18, 2015
1
THE NATIONAL CENTER FOR
THE MIDDLE MARKET
www.middlemarketcenter.org
ABOUT THE CENTER
Founded in 2011 in partnership with GE Capital and located at The Ohio State University Fisher
College of Business, the National Center for the Middle Market is the nation’s first and foremost
expert on the U.S. middle market. The Center’s mission is to serve as the leading source of
knowledge, leadership, and innovative research on the U.S. middle market economy.
MIDDLE MARKET RESEARCH & DATA EXPERTISE & OUTREACH
EDUCATION
Quarterly Middle Market Indicator
Research and Expert Perspectives
Interactive Benchmarking Tools
Executive Programs
Webinars
Share Research & Discuss Trends
2
THE MIGHTY MIDDLE MARKET
3
THE MIGHTY MIDDLE MARKET IN OHIO
4
OHIO’S MIGHTY MIDDLE MARKET DEFINED
ANNUAL REVENUE
$10MM—$1B
NEARLY
5,400
BUSINESSES
MORE THAN
$225B
IN ANNUAL REVENUE
REPRESENTS
0.9%
OF ALL OHIO
COMPANIES
EMPLOYS
28%
OF THE OHIO
WORKFORCE
GENERATES
19%
OF ALL OHIO
BUSINESS REVENUE
SOURCE: 2014 D&B DATA
5
THE MIDDLE MARKET INDICATOR
6
Q3'15 MIDDLE MARKET INDICATOR
EXECUTIVE SUMMARY
• BY A SUBSTANTIAL MARGIN, THE MIDDLE MARKET CONTINUES TO
LEAD THE U.S. ECONOMY IN REVENUE GROWTH AND JOB
CREATION; P.E.-OWNED COMPANIES ARE PERFORMING STRONGLY
• WHILE YEAR-ON-YEAR GROWTH IS HIGH AND JOB CREATION
REMAINS STABLE, THE MIDDLE MARKET APPEARS TO HAVE
ENTERED A PERIOD OF DECLINING ACCELERATION
• EXPECTATIONS FOR GROWTH ARE AT THE LOWEST LEVEL
MEASURED IN THE PAST YEAR; INVESTMENT APPETITES ARE
MUTED
• CONFIDENCE IN U.S. AND LOCAL ECONOMIES REMAINS HIGH, BUT
SOME CAUTION IS EVIDENT
Source: 3Q’15 Middle Market Indicator Report
1
2
3
4
7
Q3'15 U.S. MIDDLE MARKET
EXECUTIVE SUMMARY
CAPITAL INVESTMENT
63%WILL INVEST
CONFIDENCE
49%GLOBAL ECONOMY
72%NATIONAL ECONOMY
81%LOCAL ECONOMY
REVENUE GROWTH
7.2%PAST 12 MONTHS
4.7%
S&P 500
PAST 12 MO.
4.1%NEXT 12 MONTHS
EMPLOYMENT GROWTH
4.1%PAST 12 MONTHS
3.2%NEXT 12 MONTHS
2.4%
SMALL
BUSINESS
1.7%
LARGE
BUSINESS
Source: 3Q’15 Middle Market Indicator Report
8
Q3'15 MIDDLE MARKET INDICATOR
REVENUE GROWTH TREND, PE-OWNED
8.5%
9%
8.8%
9%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
US MIDDLE MARKET S&P 500 PE-OWNEDSource: 3Q’15 Middle Market Indicator Report
PAST 12 MONTHS
7.2%
U.S. MIDDLE MARKET
4.7%
S&P 500
9%
PE-OWNED FIRMS
8
6.2%
4.8%
5.85%
5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
US MIDDLE MARKET
LARGE BUSINESS
SMALL BUSINESS
PAST 12 MONTHS
4.1%
U.S. MIDDLE MARKET
5%
PE-OWNED FIRMS
Q3'15 MIDDLE MARKET INDICATOR
EMPLOYMENT GROWTH TREND, PE-OWNED
2.4%
SMALL
BUSINESS
1.7%
LARGE
BUSINESS
Source: 3Q’15 Middle Market Indicator Report
10
CAPITAL INVESTMENT CONFIDENCE
53%GLOBAL ECONOMY
64%NATIONAL ECONOMY
77%LOCAL ECONOMY
REVENUE GROWTH
5.6%PAST 12 MONTHS
7.2%NEXT 12 MONTHS
EMPLOYMENT GROWTH
4.0%PAST 12 MONTHS
3.9%NEXT 12 MONTHS
60%WILL INVEST
Source: 4Q 2014 Middle Market Indicator
Q3'15 MIDDLE MARKET INDICATOR -- OHIO
11
DRIVING GROWTH: FIVE WAYS TO TAKE
GROWTH INTO YOUR OWN HANDS
Find New Worlds
to Conquer
Sharpen Your
Innovation Tools
Lift Your
Vision Higher
Win on the Basics:
Run a Great Shop
1
2
3
4
5
Manage Your
Talent Better
12
TALENT: THE OVERALL PICTURE
13
TALENT IS TOP OF MIND
FOR MIDDLE MARKET LEADERS
Source: 3Q’15 Middle Market Indicator Report
Short-Term Internal Challenges
(Next 3 Months)
Long-Term Internal Challenges
(Next 12 Months)
Staff / Employees 49% Staff / Employees 39%
Business Growth 28% Business Growth 16%
Finances 19% Costs 12%
Costs 16% Finances 10%
Government 16% Government 5%
14
OHIO’S MIDDLE MARKET
SAYS TALENT IS HARD TO FIND
TAKE CHARGE OF YOUR GROWTH
9% 9% 6% 6% 5% 3% 1%
17% 22% 26% 23%
14% 19% 24%
30%
47% 38%
32%
32% 27% 22%
44%
22%
30%
39%
49% 51% 53%
IT Distribution Human
resources
Finance Manu-
facturing
Marketing
& sales
Operations
Extremely Easy
Somewhat Easy
Neither Easy nor
Difficult
Somewhat/Extremely
Difficult
Ease of Finding Qualified Candidates for Open Positions
1%
14%
18%
68%
Source: NCMM Ohio Middle Market Study 2014
15
OHIO STEM WORKER PROGRAMS
WORK BEST AT ADVANCED LEVELS
Source: NCMM Ohio Middle Market Study 2014
TAKE CHARGE OF YOUR GROWTH
8%
4%
21%
16%
31%
38%
34%
35%
27%
42%
30%
14%
Excellent Very Good Good Fair/Poor
K through 12 Schools
Community Colleges
University Programs
Quality of STEM Education in Area Institutions
16
TALENT: BUILDING THE TOP TEAM
17
WHEN LOOKING FOR TOP TALENT
THE MIDDLE MARKET IS FEELING THE PINCH
25%
45%
14%
7%
9%
Source: Middle Market Indicator, 3Q2015
Of middle market executives
consider the ability to attract,
train, and retain talent
somewhat/highly
challenging.
77%
Of middle market executives
feel they do not have a
sufficient number of people
to fill key leadership
positions.
49%
Of middle market executives
struggle to attract people for
top-level management
positions.
31%
18
IN ATTRACTING TOP TALENT
IT’S NOT ABOUT THE MONEY
COMPELLING & ATTRACTIVE COMPONENTS OF COMPANY’S EVP
Source: Building the Top Team
70%
70%
64%
30%
28%
22%
The quality of
people within our
company
75%
Meaningfulness
of work
The culture of our
company
74%
73%
36%
29%
33%
The benefits we offer
(health, retirement, etc.)
The mission &
purpose of our
company
Our base pay &
salary structure
Very Attractive Very Attractive/Attractive
Non-financial attributes (such as intellectual and personal growth,
cutting-edge and meaningful work) are particularly important to accelerate
innovation and attract “creative-class” employees and candidates
19
FEW MIDDLE MARKET COMPANIES HAVE
STRONG EMPLOYER BRANDS AND EVPs
HOW STRONG IS
YOUR EMPLOYER BRAND? YOUR EMPLOYEE VALUE PROPOSITION?
25%
45%
14%
7%
9%
We have a clear one that we are satisfied with and that works for us
We have one but it is something we need to continue to work on to
make it most effective
We have started work on it but have not yet made much progress
We have not yet started working on it but have plans to do so
We have no current plans to work actively on it
Source: Building the Top Team
23%
42%
14%
8%
13%
20
“PASSIVE” CANDIDATES –
THE OVERLOOKED MAJORITY
2015 CANDIDATE MARKET
Source: Building the Top Team
Not employed & looking
Not happy with job &
looking
ACTIVE CANDIDATES
Happy with job & open
to other opportunities
Happy with job & not
looking
PASSIVE CANDIDATES
A strong brand and EVP are especially
crucial to get the attention of “passive
candidates” who are 60% of the potential
talent pool.
17%17%
20%
46%
A strong financial offer is usually necessary
to attract passive candidates’ attention, but is rarely sufficient
to pry them loose from the jobs they have
21
ESTABLISHED EMPLOYER BRANDS & EVPS
CORRELATE W ITH COMPANY PERFORMANCE
REVENUE AND PAYROLL GROWTH BY STRENGTH OF EMPLOYER BRAND
Source: Building the Top Team
Clear Employer
Brand
27%71%
Employer Brand
Needs Work
41%55%
Less Developed
Employer Brand
45%
20.1%
12.3%
Mean Revenue
Growth
Employment
Growth
7.9%
4.4%
Mean Revenue
Growth
Employment
Growth
6.0%
3.0%
Mean Revenue
Growth
Employment
Growth
REVENUE AND PAYROLL GROWTH BY STRENGTH OF EMPLOYEE VALUE PROPOSITION
Clear EVP EVP Needs Work Less Developed
EVP
32% 35%58% 43%46%
17.4%
9.9%
Mean Revenue
Growth
Employment
Growth
9.6%
5.5%
Mean Revenue
Growth
Employment
Growth
6.5%
3.8%
Mean Revenue
Growth
Employment
Growth
22
6 STEPS FOR ESTABLISHING AN
EFFECTIVE EMPLOYER BRAND & EVP
1. Recognize that all firms
have employer brands,
whether they know it
or not.
2. Brainstorm ways to
strengthen and
differentiate your brand
and EVP.
4. Create an authentic
and genuine brand and
EVP.
3. Involve your marketing
people in the process.
5. Clearly articulate your
to all managers and
employees internally.
6. Make use of your
brand and EVP in your
recruiting efforts.
Source: Building the Top Team, 6 Steps To A Successful Employer Brand & Employee Value Proposition
23
TESTING YOUR BRAND AND EVP
TEN QUESTIONS TO ASK YOURSELF
Source: Building the Top Team
1
2
3
4
5
6
7
8
9
10
Do you know what your employer
brand is?
Is it differentiated?
Is it strong in your industry?
In your region?
Does it map back to
your corporate brand?
Does it have a strong
element of purpose?
Do you regularly reexamine your
employee value proposition?
Does your EVP set your company apart?
Does your EVP appeal to passive candidates?
Would current and former employees validate
the authenticity of your brand EVP?
Are you effectively promoting your
brand and EVP?
24
MIDDLEMARKETCENTER.ORG25

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Talent crisis in middle_market_tom_steward_ncmm

  • 1. BUILDING THE TOP TEAM FINDINGS FROM THE NCMM / NOVO GROUP TALENT STUDY T h o m a s A . S t e w a r t , E x e c u t i v e D i r e c t o r T h e N a t i o n a l C e n t e r f o r t h e M i d d l e M a r k e t ACG CINCINNATI | NOVEMBER 18, 2015 1
  • 2. THE NATIONAL CENTER FOR THE MIDDLE MARKET www.middlemarketcenter.org ABOUT THE CENTER Founded in 2011 in partnership with GE Capital and located at The Ohio State University Fisher College of Business, the National Center for the Middle Market is the nation’s first and foremost expert on the U.S. middle market. The Center’s mission is to serve as the leading source of knowledge, leadership, and innovative research on the U.S. middle market economy. MIDDLE MARKET RESEARCH & DATA EXPERTISE & OUTREACH EDUCATION Quarterly Middle Market Indicator Research and Expert Perspectives Interactive Benchmarking Tools Executive Programs Webinars Share Research & Discuss Trends 2
  • 3. THE MIGHTY MIDDLE MARKET 3
  • 4. THE MIGHTY MIDDLE MARKET IN OHIO 4
  • 5. OHIO’S MIGHTY MIDDLE MARKET DEFINED ANNUAL REVENUE $10MM—$1B NEARLY 5,400 BUSINESSES MORE THAN $225B IN ANNUAL REVENUE REPRESENTS 0.9% OF ALL OHIO COMPANIES EMPLOYS 28% OF THE OHIO WORKFORCE GENERATES 19% OF ALL OHIO BUSINESS REVENUE SOURCE: 2014 D&B DATA 5
  • 6. THE MIDDLE MARKET INDICATOR 6
  • 7. Q3'15 MIDDLE MARKET INDICATOR EXECUTIVE SUMMARY • BY A SUBSTANTIAL MARGIN, THE MIDDLE MARKET CONTINUES TO LEAD THE U.S. ECONOMY IN REVENUE GROWTH AND JOB CREATION; P.E.-OWNED COMPANIES ARE PERFORMING STRONGLY • WHILE YEAR-ON-YEAR GROWTH IS HIGH AND JOB CREATION REMAINS STABLE, THE MIDDLE MARKET APPEARS TO HAVE ENTERED A PERIOD OF DECLINING ACCELERATION • EXPECTATIONS FOR GROWTH ARE AT THE LOWEST LEVEL MEASURED IN THE PAST YEAR; INVESTMENT APPETITES ARE MUTED • CONFIDENCE IN U.S. AND LOCAL ECONOMIES REMAINS HIGH, BUT SOME CAUTION IS EVIDENT Source: 3Q’15 Middle Market Indicator Report 1 2 3 4 7
  • 8. Q3'15 U.S. MIDDLE MARKET EXECUTIVE SUMMARY CAPITAL INVESTMENT 63%WILL INVEST CONFIDENCE 49%GLOBAL ECONOMY 72%NATIONAL ECONOMY 81%LOCAL ECONOMY REVENUE GROWTH 7.2%PAST 12 MONTHS 4.7% S&P 500 PAST 12 MO. 4.1%NEXT 12 MONTHS EMPLOYMENT GROWTH 4.1%PAST 12 MONTHS 3.2%NEXT 12 MONTHS 2.4% SMALL BUSINESS 1.7% LARGE BUSINESS Source: 3Q’15 Middle Market Indicator Report 8
  • 9. Q3'15 MIDDLE MARKET INDICATOR REVENUE GROWTH TREND, PE-OWNED 8.5% 9% 8.8% 9% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% US MIDDLE MARKET S&P 500 PE-OWNEDSource: 3Q’15 Middle Market Indicator Report PAST 12 MONTHS 7.2% U.S. MIDDLE MARKET 4.7% S&P 500 9% PE-OWNED FIRMS 8
  • 10. 6.2% 4.8% 5.85% 5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% US MIDDLE MARKET LARGE BUSINESS SMALL BUSINESS PAST 12 MONTHS 4.1% U.S. MIDDLE MARKET 5% PE-OWNED FIRMS Q3'15 MIDDLE MARKET INDICATOR EMPLOYMENT GROWTH TREND, PE-OWNED 2.4% SMALL BUSINESS 1.7% LARGE BUSINESS Source: 3Q’15 Middle Market Indicator Report 10
  • 11. CAPITAL INVESTMENT CONFIDENCE 53%GLOBAL ECONOMY 64%NATIONAL ECONOMY 77%LOCAL ECONOMY REVENUE GROWTH 5.6%PAST 12 MONTHS 7.2%NEXT 12 MONTHS EMPLOYMENT GROWTH 4.0%PAST 12 MONTHS 3.9%NEXT 12 MONTHS 60%WILL INVEST Source: 4Q 2014 Middle Market Indicator Q3'15 MIDDLE MARKET INDICATOR -- OHIO 11
  • 12. DRIVING GROWTH: FIVE WAYS TO TAKE GROWTH INTO YOUR OWN HANDS Find New Worlds to Conquer Sharpen Your Innovation Tools Lift Your Vision Higher Win on the Basics: Run a Great Shop 1 2 3 4 5 Manage Your Talent Better 12
  • 13. TALENT: THE OVERALL PICTURE 13
  • 14. TALENT IS TOP OF MIND FOR MIDDLE MARKET LEADERS Source: 3Q’15 Middle Market Indicator Report Short-Term Internal Challenges (Next 3 Months) Long-Term Internal Challenges (Next 12 Months) Staff / Employees 49% Staff / Employees 39% Business Growth 28% Business Growth 16% Finances 19% Costs 12% Costs 16% Finances 10% Government 16% Government 5% 14
  • 15. OHIO’S MIDDLE MARKET SAYS TALENT IS HARD TO FIND TAKE CHARGE OF YOUR GROWTH 9% 9% 6% 6% 5% 3% 1% 17% 22% 26% 23% 14% 19% 24% 30% 47% 38% 32% 32% 27% 22% 44% 22% 30% 39% 49% 51% 53% IT Distribution Human resources Finance Manu- facturing Marketing & sales Operations Extremely Easy Somewhat Easy Neither Easy nor Difficult Somewhat/Extremely Difficult Ease of Finding Qualified Candidates for Open Positions 1% 14% 18% 68% Source: NCMM Ohio Middle Market Study 2014 15
  • 16. OHIO STEM WORKER PROGRAMS WORK BEST AT ADVANCED LEVELS Source: NCMM Ohio Middle Market Study 2014 TAKE CHARGE OF YOUR GROWTH 8% 4% 21% 16% 31% 38% 34% 35% 27% 42% 30% 14% Excellent Very Good Good Fair/Poor K through 12 Schools Community Colleges University Programs Quality of STEM Education in Area Institutions 16
  • 17. TALENT: BUILDING THE TOP TEAM 17
  • 18. WHEN LOOKING FOR TOP TALENT THE MIDDLE MARKET IS FEELING THE PINCH 25% 45% 14% 7% 9% Source: Middle Market Indicator, 3Q2015 Of middle market executives consider the ability to attract, train, and retain talent somewhat/highly challenging. 77% Of middle market executives feel they do not have a sufficient number of people to fill key leadership positions. 49% Of middle market executives struggle to attract people for top-level management positions. 31% 18
  • 19. IN ATTRACTING TOP TALENT IT’S NOT ABOUT THE MONEY COMPELLING & ATTRACTIVE COMPONENTS OF COMPANY’S EVP Source: Building the Top Team 70% 70% 64% 30% 28% 22% The quality of people within our company 75% Meaningfulness of work The culture of our company 74% 73% 36% 29% 33% The benefits we offer (health, retirement, etc.) The mission & purpose of our company Our base pay & salary structure Very Attractive Very Attractive/Attractive Non-financial attributes (such as intellectual and personal growth, cutting-edge and meaningful work) are particularly important to accelerate innovation and attract “creative-class” employees and candidates 19
  • 20. FEW MIDDLE MARKET COMPANIES HAVE STRONG EMPLOYER BRANDS AND EVPs HOW STRONG IS YOUR EMPLOYER BRAND? YOUR EMPLOYEE VALUE PROPOSITION? 25% 45% 14% 7% 9% We have a clear one that we are satisfied with and that works for us We have one but it is something we need to continue to work on to make it most effective We have started work on it but have not yet made much progress We have not yet started working on it but have plans to do so We have no current plans to work actively on it Source: Building the Top Team 23% 42% 14% 8% 13% 20
  • 21. “PASSIVE” CANDIDATES – THE OVERLOOKED MAJORITY 2015 CANDIDATE MARKET Source: Building the Top Team Not employed & looking Not happy with job & looking ACTIVE CANDIDATES Happy with job & open to other opportunities Happy with job & not looking PASSIVE CANDIDATES A strong brand and EVP are especially crucial to get the attention of “passive candidates” who are 60% of the potential talent pool. 17%17% 20% 46% A strong financial offer is usually necessary to attract passive candidates’ attention, but is rarely sufficient to pry them loose from the jobs they have 21
  • 22. ESTABLISHED EMPLOYER BRANDS & EVPS CORRELATE W ITH COMPANY PERFORMANCE REVENUE AND PAYROLL GROWTH BY STRENGTH OF EMPLOYER BRAND Source: Building the Top Team Clear Employer Brand 27%71% Employer Brand Needs Work 41%55% Less Developed Employer Brand 45% 20.1% 12.3% Mean Revenue Growth Employment Growth 7.9% 4.4% Mean Revenue Growth Employment Growth 6.0% 3.0% Mean Revenue Growth Employment Growth REVENUE AND PAYROLL GROWTH BY STRENGTH OF EMPLOYEE VALUE PROPOSITION Clear EVP EVP Needs Work Less Developed EVP 32% 35%58% 43%46% 17.4% 9.9% Mean Revenue Growth Employment Growth 9.6% 5.5% Mean Revenue Growth Employment Growth 6.5% 3.8% Mean Revenue Growth Employment Growth 22
  • 23. 6 STEPS FOR ESTABLISHING AN EFFECTIVE EMPLOYER BRAND & EVP 1. Recognize that all firms have employer brands, whether they know it or not. 2. Brainstorm ways to strengthen and differentiate your brand and EVP. 4. Create an authentic and genuine brand and EVP. 3. Involve your marketing people in the process. 5. Clearly articulate your to all managers and employees internally. 6. Make use of your brand and EVP in your recruiting efforts. Source: Building the Top Team, 6 Steps To A Successful Employer Brand & Employee Value Proposition 23
  • 24. TESTING YOUR BRAND AND EVP TEN QUESTIONS TO ASK YOURSELF Source: Building the Top Team 1 2 3 4 5 6 7 8 9 10 Do you know what your employer brand is? Is it differentiated? Is it strong in your industry? In your region? Does it map back to your corporate brand? Does it have a strong element of purpose? Do you regularly reexamine your employee value proposition? Does your EVP set your company apart? Does your EVP appeal to passive candidates? Would current and former employees validate the authenticity of your brand EVP? Are you effectively promoting your brand and EVP? 24