How to get talented people to work in the middle of nowhere

March 13, 2014: 5:00 AM ET

Think you've got problems finding the right hires? Just be glad you're not trying to recruit people in Thief River Falls, Minn. Electronics supplier Digi-Key is doing just that.

Digi-Key warehouse

Digi-Key's warehouse in Thief River Falls, Minn.

FORTUNE -- Four weekdays out of five, Marty Espersen gets on a bus in his hometown of Crookston, Minn., and rides 40 miles to his job at Digi-Key in Thief River Falls. The commute takes about an hour, and the bus, run by his employer, has a portable Wi-Fi hot spot and other amenities. The free ride was one reason Espersen, a recent graduate of the University of North Dakota, decided to work at Digi-Key. "I got a flyer in the mail about it in mid-January," he says. "So I put in an application."

Hired last month, Espersen works as a "picker" in Digi-Key's 800,000-square-foot warehouse. Chances are that the components in your phone or laptop came through Digi-Key, a distributor of some 860,000 kinds of electronic parts to Apple (AAPL), Microsoft (MSFT), and dozens of other big-name brands worldwide. The company began as a small ham-radio parts maker 45 years ago and morphed into an electronics supplier in the 1980s, when computers were starting to look like a promising business. It's now a $1.5 billion enterprise, shipping about 3 million orders a year.

Just one hitch: Digi-Key has never budged from its original headquarters in tiny Thief River Falls, Minn. (population: 8,000). Six hours north of Minneapolis, the town boasts almost 100 lakes within a short drive, which makes it a great place to live if you like to fish. But recruiting enough people to keep up with Digi-Key's fast growth hasn't been easy.

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"When I started working here 12 years ago, we had about 1,000 employees," says Rick Trontvet, Digi-Key's vice president of human resources. "Now we have 2,850. So we've almost tripled our headcount since 2002." Trontvet's goal: 3,000 employees by the end of this year.

Besides the offer of a free bus ride to work from other bucolic towns in the surrounding countryside, Trontvet is attracting new hires in five ways. First, Digi-Key pays an $850 relocation bonus to anyone who moves to Thief River Falls from more than 60 miles away -- which in itself is problematic, since the town suffers from a housing shortage. "There just aren't enough places for everyone to live," Trontvet says. "We need developers to come here and build some."

Late last year, Digi-Key launched an employee-referral program called Talent Scout that pays a $500 bonus to any worker bringing in a new hire who stays more than six months. Third, Digi-Key offers a scholarship through nearby Northland Community and Technical College. "We pay half the students' tuition, and give them a part-time job here through their two years of school, if they agree to come and work here full-time after graduation," Trontvet says.

A major draw, especially for business majors, Digi-Key recruits at the University of North Dakota, about 50 miles away. The company has a long record of promoting from within, so management-track hires see a clear path to bigger jobs. Linda Johnson, for instance, is now vice president of sales operations, but she started as a warehouse picker in 1987 -- Digi-Key's 96th employee. "Most of my staff has the same kind of history with the company," she says.

What about money? To compete with other rural Minnesota employers, like Marvin Doors and Windows and snowmobile maker Arctic Cat, "we have to pay people at or above what they could make somewhere else," Trontvet notes. But his real ace in the hole is benefits. At a time when most companies are asking employees to ante up a bigger share of the costs of health insurance, Digi-Key is going in the opposite direction, providing full medical coverage with no co-pays or deductibles. Employees also get dental insurance, generous life and disability policies, 401(k) matching, and a profit-sharing plan.

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That package is a powerful recruiting tool. Survey after survey shows that people are worried about paying more for health coverage in particular, so companies offering gold-plated cradle-to-grave coverage stand out from the pack. "One of the things that drew me here was the health benefits package, which is absolutely fantastic," Marty Espersen says. "I've met people who've worked here for years and have never seen a medical bill. If other employers are having trouble finding the right people, they might want to try something like that."

Maybe so. In the meantime, to meet his 3,000-employee target, Rick Trontvet will probably have to think of a few more enticements. "Thief River Falls is a great place to be," he says. "We've just got more jobs here than we've got people."

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