It pays to be in small business

A study by SurePayroll, a Skokie, Ill.-based paycheck-services company, found that the average salary among Nevada companies with 100 or fewer workers has jumped 14.8 percent since December, to about $32,900 at the end of October.

That’s higher than the national average of just less than $32,500, SurePayroll reported.

The higher pay comes even as hiring among the state’s small businesses is flat, with average staff sizes rising 1.5 percent to 5.04 workers in the first 10 months of the year.

On their surface, sharply increasing salaries might not make sense given flat hiring, but Michael Alter, president of SurePayroll, said Nevada’s particular growth dynamic explains both trends.

As resort operators and bigger service companies bolster hiring to prepare for the coming wave of hotel-casino openings on the Strip, small companies have trouble hiring, and they have to work harder to keep existing employees. Winning the talent war often requires higher pay and improved benefits.

Also, with population growth down — the Clark County demographer said in October that the county’s expansion rate fell from 5.3 percent in July 2006 to 2.7 percent in the same month a year later — there are fewer candidates available for hiring, Alter added.

“It’s simple supply and demand,” he said.

Nevada’s average small-business paycheck remains below the Western regional average of about $34,000, so there’s room for salaries to continue to increase, Alter said.

“The question is, given the speed at which salaries are escalating, it may have an impact on small businesses and their ability to keep growing,” he said. “If it continues to get that much more expensive to find workers, it certainly will reduce the profits they’re making. The flip side is, businesses with a stronger consumer bent will find that their customers might have more purchasing power.”

Local small companies say they’re experiencing the pay spike firsthand.

Alice Roussos, owner of Interior Motives in Las Vegas, said paychecks at her interior-design firm have increased about 14 percent to 15 percent in the past year. The higher pay comes despite a lower staff count: Roussos let two members of her five-employee company go earlier this year after demand dipped for makeovers among homeowners and inside new-home sales offices, model homes and clubhouses.

“When you have a small staff, it’s really important that you have quality people, so keeping workers happy is a critical issue,” Roussos said. “I don’t want to have to start from scratch. Retaining someone who is useful and talented is cheaper than going out, finding someone new and starting over.”

Roussos is also reducing overhead, combing through expenses such as worker’s compensation to cut budgetary bloat. It could be a year or more before business has recovered enough to add workers, and even then, she’ll likely bring them on as independent contractors rather than full-time employees.

Yet, Roussos expects salaries for her existing workers will continue to jump noticeably in 2008.

“The expense will be worth it,” she said.

The employee roster and the typical paycheck are both up at The Idea Factory, a Las Vegas advertising agency.

The firm has grown from seven workers to 10 employees in the past year, and Jan Scarborough, principal of The Idea Factory, said some paychecks are up 10 percent to 15 percent in the same time period.

Diversification is partly pushing the employment gains at The Idea Factory. Its home-builder-heavy client list has felt the effects of a flagging housing market, so The Idea Factory’s executives have added gaming companies, retailers and commercial developers to their customer base.

Retaining and recruiting employees to handle the expanded business base has required higher pay, because the company, where starting pay ranges from $24,000 to $34,000 a year, must compete with major hospitality operators for labor.

“We typically look for degreed employees, and our starting salary doesn’t really compare with what a bartender can make,” Scarborough said.

But Scarborough managed recently to snag a prospect out from under the art department of a big Strip hotel-casino.

She couldn’t match the resort’s pay, but — in the longest recruiting meeting Scarborough said she’s ever had — she highlighted nontraditional benefits.

What won the candidate over was the opportunity to work in a greater variety of media, the ability to put together integrated campaigns and the “lure of what he could learn, and the way he could stand out, at a small agency,” Scarborough said.

Roussos also emphasizes the positives of bypassing interior-design departments at resorts and working instead for an independent company. Chief among the improvements: shorter hours and looser deadlines.

Smaller operations aren’t simply raising pay and talking up intangibles to attract job applicants. They’re also assembling benefits packages with unusual perks.

Both Interior Motives and The Idea Factory give employees the holiday season between Christmas and New Year’s Day off with pay, on top of existing paid vacation time. Interior Motives also doles out credit cards for gasoline purchases.

At The Idea Factory, workers enjoy car detailing, massages, flex time, flexible dress codes, a kitchen stocked with requested treats and anniversary gifts such as jewelry. The company also schedules team-building activities such as bowling and pottery decorating.

The Idea Factory could find itself pitching new workers on its environment harder than ever in 2008, because Scarborough hopes to add three employees in the creative department and account services by the end of the first quarter. She acknowledges the labor will be tough to find, but she believes The Idea Factory has at least one key hiring tool going for it.

“When you have a family atmosphere, it makes a big difference,” she said.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or (702) 380-4512.