Middle market companies are the largest creators of new U.S. private sector jobs each year. These businesses with annual revenues between $10 million and $1 billion generate 60% of new jobs and employ about one-third of U.S. private sector workers. Despite this workforce impact, mid-size firms consistently report difficulties with talent management, including recruiting, hiring, and retention.
Through surveys, focus groups, interviews, and case studies, the Brookings Institution and the National Center for the Middle Market identified sources of these problems and potential solutions. These firms have the needs of a large company, but the capacity of a small one. The resulting internal and external challenges for workforce reflect distinctive characteristics of middle market companies attributable to their size — in their own human resources practices, as well as the responsiveness of educational, training, and job placement programs.
Internally, middle market firms typically have lean human resources systems that are more operational than strategic in their emphasis. They frequently lack scale or capacity for functions such as skills mapping, succession planning, regularized training, and extensive recruitment. Externally, the workforce development system of public agencies, universities and colleges (two- and four-year), nonprofits, and industry groups is not focused on or aligned with middle market needs; fragmented support services are confusing and time-consuming for mid-size firms to navigate, and incentivized to focus on larger companies with many openings at a given time.
Mid-size firms can take a variety of actions to improve their own talent management approaches, many of which require some level of staff time and leadership commitment at little or no cost. The array of workforce service providers can adjust their strategies and programs to better reach and fit middle market employers. Both can develop collaborations among other mid-size firms, industry groups, educational institutions, and workforce agencies, where proven models have overcome the limits of size by creating scale for efficient recruiting and training.
Given their economic and employment power, focused action on middle market firm workforce needs across this spectrum of stakeholders is critically important to companies and industries, workers and communities, and the nation as a whole.
The National Center for the Middle Market, a division of The Ohio State University’s Fisher College of Business, is a member of the Metropolitan Council, a network of business, civic, and philanthropic leaders who act as financial and intellectual partners of the Brookings Metropolitan Policy Program.