Talent Trumps Cash as Top Concern for Indianapolis High Growth Firms
Previous Growthology posts have discussed how talent is an important attribute for growing companies. While easier financing conditions and eased regulations can be beneficial to businesses, without talent, the potential of high-growth companies is anchored. It is talent that produces the innovations that spur growth benefiting the economy as a whole.
This concern about acquiring and retaining the kind of talent that can allow these high-growth companies to achieve their goals is present in a recent Kauffman report on high-growth firms in Indianapolis. The report featured a number of interviews with firms that made Inc. Magazine’s 500/5000 list of America’s fastest growing companies. The report found the ability to attract and retain talent, particularly technical talent that can sustain the founder’s plans for growth, was the biggest challenge among Indianapolis startup founders. There are two main issues related to talent for high-growth firms in places like Indianapolis.
First, the quality universities in the surrounding area are not producing enough technical talent to satiate the demands of these firms. This problem especially exists at entry-level positions, according to the interviewees. However, there is Indiana University in Bloomington, a major research university, as well as Rose-Hulman Institute of Technology in Terra Haute, a top ranked undergraduate engineering program according to the U.S. News and World Report. So there is some good level of quality and quantity. The problem is rather the lack of recruitment channel between those local colleges and companies.
Second, for cities like Indianapolis and others that are not tech hubs, attracting that kind of technical talent is very difficult. Indianapolis, as well as a number of other American cities, is not known as a high-tech industry leader nor does it have the cultural cache to attract the kind of young talent high-growth firms crave.
So how do these growing companies solve this talent drought? If talent will not relocate to you and the local talent that is graduating either will not stay or does not match your company’s needs, what do these firms do?
The solution some of these firms have come up with is relatively simple: start younger. Local high growth companies understand the rarity of graduates with the technical talent their companies desperately need staying in the area, often because firms from the tech hubs can offer more attractive positions and compensation. To combat this, local firms have begun to integrate interns and graduates with potential but little technical skill into the firm by emphasizing training and development. Thus, the companies hire for passion, not for specific skills. Then, those young ‘talent’ would work closely with senior and intermediate level employees on technical projects. This allowed the firm to grow their own technical talent.
Another benefit of this kind of training is that when a firm found young talent and cultivated it within the firm, employee turnover was reduced. Obviously, if finding talent suitable to your firm is a challenge, finding new talent to replace employees who leave will also be challenging. When employees are trained by the firm for the specific needs of that firm, not only are their skills more firm-specific, but these kinds of employees are less likely to move to other companies (perhaps because of those firm-specific skills). While the upfront costs of implementing a training and employee development program that integrates students into a company are not insignificant, multiple Indianapolis firms said that programs like this were a big part of their corporate success or that retention and recruiting efforts were positive.
Because talent is the indispensable resource entrepreneurs need to create and lead high growth companies, its scarcity is a predictable topic when talking with entrepreneurs about what they need to succeed. Talent, especially technical talent, is needed to sustain the ambitious growth paths of high growth potential companies. These Indianapolis founders got creative and found promising individuals who they then could develop and invest in, molding employees to best fit the company. When entry-level talent is not plentiful or competition for that kind of talent is too fierce, young, growing companies can take advantage of these kinds of strategies where and when the kind of talent they need is available.
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