Middle market firms – those with annual revenue between $10 million and $1 billion – report difficulties with recruiting, hiring, developing and retaining workers with the skills they need, according to the “Help Wanted,” report released by the National Center for the Middle Market in conjunction with the Brookings Institution’s Metropolitan Policy Program.

Middle market firms are responsible for about one-third of US private sector jobs and 60% of new hires. However, nearly four in 10 middle market executives reported a lack of talent constrains their companies’ ability to grow.

“Middle market companies typically have more complex workforce needs than small companies but lack the HR capacity of larger companies to recruit, assess, hire and train the talent they need,” said Martha Ross, a fellow with the Brookings Metropolitan Policy Program. “Additionally, they don’t have the brand power or hiring volume of larger companies, and educational, training and job placement programs are not always responsive.”

The chief reason cited by middle market executives for the lack of talent is a gap between supply and demand, with 44% reporting a lack of candidates with the necessary skills makes it difficult to recruit. Other challenges include competition from other employers, a low number of applications, limited work experience among those who do apply and qualified candidates who are outside of the company’s salary or wage range.

The report suggested actions middle market firms can take to improve their approach to talent management. With six out of 10 companies engaging in talent searches only when specific jobs become available, they should become more proactive in recruiting, training and retaining skilled employees. Companies should also invest in talent planning activities, build strategic HR capabilities, develop internship programs and enhance community outreach. Middle market companies should also engage with universities, nonprofits and public-sector workforce programs, though only 20% do.

Middle market companies can also address their workforce problems collectively. Today, only 14% work with other companies to deal with workforce needs; The report suggests these companies participate in or create consortia to leverage workforce efforts within their region or industry.

The National Center for the Middle Market surveyed 1,000 CEOs, CFOs, and other C-suite executives of America’s middle market companies during the first two weeks of December 2016. Additionally, the Center and the Brookings Institution conducted focus groups with middle market executives in Atlanta and Philadelphia in April 2017.