When it comes to the war for talent, private and family companies often face an uphill battle against their larger, public counterparts. What can they do to level the playing field? What factors can be leveraged to allow private companies to attract top executives and other emerging talent?
ARTICULATE YOUR VALUE PROPOSITION
Private and family-owned companies face a greater challenge in the war for talent than their public counterparts for a few reasons. Notably, candidates have a harder time learning about private companies as the information is not readily available. Older companies established in remote parts of the country (100+ miles from the nearest metro city) tend to hire locally from community colleges and smaller universities. While this worked well for baby boomers and Generation X, it may not work for Millennials, Gen Z and later generations.
To level the playing field, private companies should articulate a compelling value proposition that includes the positive culture of the private/family company and more flexibility for management in the decision-making process, resulting in speed in execution and, thus, a competitive edge. Other positive factors include better job stability (because of the reduced effect of quarterly results and stock prices, commitment to longer-term goals, the ability to be more creative in compensation packages and longer tenure in private companies due to a “family first, employee first” culture.
Being privately owned does not mean everything needs to remain private. Like a public company, private companies can invest in marketing and branding, including social media. Tell the story of why your company is a great place to be part of. Curate the message for the different generations, including Millennials, Gen Z and Gen Alpha. Leverage AI and the human touch to attract talent, especially the younger generation, as Gen Zs tend to switch companies more often.
Subash Anbu is a director of Field Fastener and VP of IT and chief information officer of Bemis Manufacturing Company.
OFFER MORE STOCK AND STOCK OPTIONS
Private company boards and founders often wonder how to attract the type of executive talent they see in public companies in their industry. The answer, dear Brutus: Prioritize the career aspirations of the executive, offer an attractive compensation package and recruit in the same places where public companies do.
Focus on candidates that have a passion for stretching the boundaries of your industry, both in the products offered by your industry and the set of businesses and people that your industry identifies as customers. Public company senior executives, of course, also must focus on these priorities. However, out of necessity, public company executives’ attention and energies are divided between these priorities and the tasks specific to public companies, such as SEC filings, responding to institutional and other large investor and regulator queries and staying out of the glare of a usually hostile media, whose priorities tend to be anything but long-term value creation.
Salary and bonus tend to be the minor part of senior executive compensation. Of much greater significance is incentive compensation via grants of various types of stock and stock options. All else equal, stock and stock options of public companies are more valuable because they are marketable (hence, more liquid) and easier to value. To level the playing field, private company executives must be offered significantly more (perhaps, 60% to 90% more) stock and stock options.
Sanjai Bhagat is an independent director of ProLink Solutions and a provost professor of finance at the University of Colorado at Boulder.
EMPHASIZE AUTONOMY AND GROWTH
Private and family-owned companies have a distinct advantage in attracting top talent in that they can emphasize autonomy, recognition, growth opportunities and flexibility. Unlike larger public corporations, smaller to mid-cap businesses allow employees to wear many hats, gain hands-on experience and directly influence the company’s bottom line. Additionally, private companies often demonstrate greater agility in tailoring benefits and opportunities to meet the specific needs of their employees, allowing them to compete effectively in the war for talent.
For example, in Germany, where talent is scarce and many candidates prefer American “tech companies” for their perceived growth opportunities, private companies can stand out by highlighting their unique value proposition. Employees in family-run businesses are empowered to make meaningful changes, work closely with decision-makers and see the direct impact of their work. Furthermore, private companies can offer flexible benefits, such as tailored development plans, performance-based incentives and enhanced work-life balance, fostering a sense of recognition and ownership that large corporations often cannot provide.
Similarly, in Singapore, where competition for talent is fierce, private companies can emphasize the benefits of working in a dynamic, resource-constrained environment. With limited resources, employees are encouraged to roll up their sleeves, take ownership of challenges and explore areas outside their expertise. This hands-on exposure fosters professional growth and instills pride as employees see their efforts drive real business results.
By focusing on autonomy, the ability to enact change, tailored benefits and versatile growth opportunities, private companies can position themselves as attractive employers for top talent.
Linda Fonner is an advisory board member of TrainedArrow and Sioux Steel Company, and CFO of Edmund Optics.
LESS BUREAUCRACY, MORE EQUITY
As an independent director, I have observed that private and family-owned companies possess unique advantages that larger, public companies often lack. While they may not offer the substantial paycheck typical of public companies, they compensate with fewer bureaucratic processes and the potential for a more rewarding overall package if they devise an inspiring total rewards program.
To attract top talent, private companies must articulate a clear vision, growth strategies and a robust resourcing plan to achieve their ambitious goals. When prospective employees understand the company’s vision, their role in it and their potential to create a lasting impact beyond just quarterly earnings, they feel genuinely motivated. Additionally, potential hires are keen to grasp the company’s culture and leadership principles. They want to know how decisions are made and whether they will have the authority to influence and implement changes.
Moreover, private companies should offer equity stakes that grow with the company’s success. This approach appeals to leaders who are comfortable with risk, confident in their abilities, and eager for the chance to drive meaningful change and leave a lasting legacy. Such opportunities are often elusive in public companies and make it possible for private companies to attract top executives.
Irma Shrivastava is an independent director of Sciens Building Solutions and Desi Fresh Foods, and founder and principal of R Squared Strategic Solutions.
LEVERAGE YOUR UNIQUE QUALITIES
When it comes to the war for talent, private and family companies often face an uphill battle against their larger, public counterparts. With more resources, brand recognition and a global presence, big corporations can seem like the obvious choice for many job seekers. However, private and family-owned businesses have unique advantages that, if leveraged correctly, can be just as compelling to top talent. Addressing these challenges requires a proactive, intentional approach.
Here are three strategies that private and family-owned businesses can adopt to attract and retain talent.
Emphasize unique company culture and values. Highlight a unique work environment and legacy. Family-owned businesses often offer cohesive, supportive and flexible environments. Emphasize these benefits during recruitment. Talented professionals who value work-life balance and a collaborative culture may be more drawn to such opportunities. Pro tip: Make sure that your company values and mission are well-defined and communicated. People often seek out roles that align with their personal values, and family businesses can leverage this by promoting their strong sense of community and purpose.
Offer a competitive benefits package. MetLife’s 2024 Employee Benefit Trends Study revealed that 78% of employees are more likely to stay with an employer (or switch jobs) because of the benefits program. A competitive benefits program includes basics like health insurance, PTO and 401(K), and may also include unique perks such as tuition reimbursement, flexible working arrangements, childcare support and wellness programs (i.e., counseling services, massage therapy and yoga). Pro tip: Equity compensation, even for nonpublic firms, can be a powerful tool to attract executives by aligning their financial success with the company’s growth.
Highlight leadership growth opportunities. Employees who are ambitious and passionate about their work value opportunities for growth. To remain competitive, leverage opportunities for career advancement, such as mentorship, leadership development programs, continuing education courses and promotions. Doing so improves work performance, boosts employee satisfaction and supports succession planning. Pro tip: Invest in leadership training programs and digital upskilling initiatives to demonstrate a commitment to professional growth.
By capitalizing on their distinctive strengths — cohesive culture, a strong legacy, opportunities for personal growth and adaptability — private and family-owned businesses can effectively compete for top talent. Customizing the work environment to align with the values and needs of both executives and emerging talent will help cultivate a loyal, engaged and high-performing workforce.
Lisa J. Wicker, Ph.D., is a member of the advisory board of STOPit and president and CEO of Linwick & Associates LLC.