The Big Apple gets down to small businesses

In little more than two years, the New York City Department of Small Business Services (SBS) has become the darling of employers and job seekers by placing more than 4,500 employees in jobs every calendar quarter—up from a mere 127 per quarter in 2003.

The task of leading the dramatic turnaround fell on the shoulders of David Margalit, BE ’97, the department’s deputy commissioner for business development and agency strategy.

Armed with a UD degree in business administration with concentrations in finance and operations management, a minor in management information systems and a Harvard MBA, Margalit joined the New York City administration in 2002. As the deputy commissioner for workforce development, he led the merger of the Department of Employment with the Department of Business Services to become SBS.

After the merger, Margalit says he racked his brain to find a way to enhance the performance of the department and add value to the services available to businesses, but he did not have much information to go by. There were no services geared toward the more than 200,000 businesses with fewer than 100 employees, and employment services focused on trying to place employees in any jobs that might be open.
The overhaul began with Margalit getting rid of programs that he says did not serve their purpose, including dissolving the Department of Employment, which received $60 million in federal funds to help people find work. He then retooled the job placement process to start with an assessment of employers’ needs so that potential employees could be prepared for those specific requirements.

“There was almost no accountability when I first started. The outcomes were just abysmal,” Margalit says. “We tried to be anything and everything, and we wound up doing very little. A lot of people got training. A lot of people got résumé assistance. Nobody got jobs.”

Key to Margalit’s new approach was the formation of NYC Business Solutions Centers, located in business districts throughout the city’s five boroughs to help companies connect to financing and incentives, navigate government and recruit and train workers. He also led the creation of an enterprise sales force to help business clients recruit and hire qualified candidates, a service that reduced their ratio of applicants to hires by as much as 95 percent.

Among the many SBS success stories based on Margalit’s “demand-driven” system to respond to the needs of employers in growth industries was the staffing process for a new Whole Foods store in the city, which needed 350 employees.

“We referred 349 of the staff. For every 3 1/2 candidates we sent to them, they hired one, which is very good,” Margalit says. “The retention for those hires has been longer than their typical retention. There is a major social benefit. The way we prepare them, the way we train them, we prepare people for jobs that the market needs.”

The results from the new strategy have drawn widespread attention. Delegations from Chicago, Boston, London, the Netherlands, Denmark and the World Bank have visited New York City to study the strategy of linking economic development and workforce development.

“We fundamentally believed that labor and jobs and hiring the right people is an important driver for economic development,” Margalit says. “Having access to the right labor is what draws companies to places and makes them stay.”

He says he developed a foundation for a model that would consistently deliver through a critical assessment of performance and capabilities, as well as interviews with many professionals. The main ingredients, he says, are the right candidate, the right opportunities, the right preparation and the right place and time.

“One of the advantages is that we targeted businesses,” Margalit says. “We use lots of technology to keep track of who is doing what. We have grown to a large-scale operation dealing with hundreds of companies a month. Now we have data in real time—who is getting placed, who is seeking what.”

He credits his broad and innovative people-focused approach to both his academic preparation and his education outside the classroom, especially at UD, where he was a Eugene du Pont Distinguished Scholar and in the University Honors Program.

“What I found extraordinary at UD was the range of opportunities to explore things inside and outside the classroom,” Margalit says.

—Martin Mbugua