Habits for effective hiring

When hiring an employee you want to minimize costly mistakes. Here are 8 steps of effective hiring:

1. Have a strong mission statement and vision for your company that will excite a prospective employee.

2. Develop a detailed job requirements document for the position to be filled to help you weed through candidate qualifications.

3. Develop a thorough job description for the position so there is clear communication about the job between you and the candidate.

4. Subject the candidate to personality and skills assessments testing to assure the individual can do the job and fit into your culture.

5. Develop and practice effective interviewing techniques to maximize the value of the job interview for both you and the candidate.

6. When offering a job, make sure your wages and benefits are competitive.

7. Welcome new employees, introducing them around, and doing everything you can to make them feel a part of the team and productive from day one.

8. Oh, and if a mistake is made in hiring and the employee does not work out, terminate the relationship sooner rather than later. This will be best for you and the individual as well as sending a positive message to other employees.

New hire background checking

While we hear daily tales of gloom-and-doom layoffs, there are still strong well-managed businesses that cater to the real needs of both consumers and businesses. Looking at Monster.com or help wanted ads reveals many businesses needing to hire quality help. I’m sure every ad yields an overload of responses. It is definitely an employer’s labor market.

With so many people to choose from there is no reason not to pick the absolutely best person for the job. Most small employers rely on resume and application information combined with gut instinct after cursory interviews. Few small businesses exercise due diligence in background checking, other than sometimes making a call to a prior employer or reference.

Unfortunately, most prior employers will not reveal any information beyond dates of employment for fear of being sued for defamation. I understand that some states now have laws protecting employers from frivolous defamation lawsuits to encourage sharing of proven bad behaviour with potential employers.

When hiring someone with a prior history of sexual harrasment, abuse, or a criminal record, the new employer may well be at risk for not having learned of the bad behaviour.

Money is well spent on hiring professional firms to do background checks prior to hiring a new employee, especially if:

• Your business has proprietary information or deals with confidential information which, should it be misappropriated, could harm you or a client
• The person will be involved with financial data, accounting records, payroll, accounts receivable, accounts payable, or handling cash
• The person interfaces with the public – especially if they go on site to customer homes
• You are in the health-care industry
• The person will have any contact with children

There are established firms specializing in employee background checking which may include: drug testing, searching for criminal records, verifying education credentials, credit checks, prior employment verification, and more. The cost can range from around $50 to several hundred dollars, but is a small investment if it saves you from hiring the wrong person. The National Association of Professional Background Screeners, www.napbs.com, is a starting point in locating a firm to conduct your testing.

Eight habits for effective hiring

Consider the amount of time spent in recruiting, hiring, and training a new employee. Consider your lost productivity in conducting the search and interviewing. Consider the lost productivity of having a vacant job that is not being performed.

Some estimates put the cost of hiring at about three quarters of the annual pay for an employee.

As a hiring employer, you need to minimize mistakes. The stakes are just too high.

Here are the 8 habits of effective hiring:
1. Have a strong mission statement and vision for your company. Share these with job candidates. If you know where you are today and where you are going, you can excite candidates about you and your organization.
2. Develop a job requirements document for the position to be filled. Know exactly what capabilities you are looking for.
3. Develop a thorough job description for the position. be able to tell a candidate exactly what is expected.
4. If possible, subject the job candidate to personality and skills test to help assure that the individual can do the job and fit in with your style of organization and management.
5. Develop good interviewing techniques in order to conduct effective job interviews.
6. Check all references, and do background checks.
7. Research prevailing wages and benefits for the type of job being offered to assure competitiveness in the market.
8. Welcome new employees and make them at home, comfortable, and productive from the day they are hired. Train them. Monitor and provide feedback on their performance.

Oh, and if a mistake is made in hiring and the employee does not work out, terminate the relationship sooner rather than later. This will be best for both you and the employee.

Right-Sizing

As 2008 winds down there are daily reports of layoffs from local, regional, and national companies. This is a tough economic climate for large and small businesses alike. If you have been following my blogs you know that I am and remain optimistic for owners of small businesses. Those who are adjusting their business model to efficiently provide services and goods that people need at reasonable prices will surely thrive. There are over 300 million people in the US who need every conceivable type of products and services.

But, back to layoffs. What are you doing to right-size your company? Are you staffed appropriately for present and projected sales and profit? Are the right people on your staff? With many talented people losing their jobs, now may be an excellent time to pick up the talent you need, and to fill the skills-gaps in your business.

This may be the perfect time to use zero-based budgeting principles in looking at your staff. Examine each person, his or her job description, and the work performed. Is it needed work? Can it be done more efficiently? Is the individual performing to your expectations? Is there work to be done for which you do not have the proper talent?

In order for your firm to survive and to keep paying a workforce, you may need to take the painful steps of letting go redundant or poor performing people, while hiring talented folks who will help you grow and prosper.

Hiring your first employee

Many businesses start with no employees except for the owner, often operating out of the house to minimize overhead. For the newly minted entrepreneur, especially one who came from corporate America, it is a difficult adjustment to wear all the hats with no one available for delegation.

It may be very tempting to go out and hire an employee, and there often does come a crucial decision point where the owner is overwhelmed with work, has a real need for a staff, or decides to grow the business, and determines it is time to hire the first employee.

This is a momentous time in the life of a business. Up to this point there have been minimal government forms to fill out and file, no concerns about unemployment insurance or workers compensation, and no interpersonal or management issues. But now the entrepreneur will be faced with all of these.

The sad fact is that often a sole practitioner who has had a comfortable income, starts seeing the income drop after starting to build a staff. So, here are some things to do before putting an ad in the help wanted section.

1. Write a job description for each job that you are doing. Now, review the job descriptions of each task that you least like to handle yourself, or for which you believe you are in most need of assistance.

2. Determine if some or all of these jobs can be outsourced. For example, if one of these job descriptions is for bookkeeping, you may be able to find a freelance bookkeeper whose services you can retain for a few hours a week.

3. If tasks can not be outsourced, does the amount of work justify a full time person, or could one or more part time people do the work?

4. Will the new employees actually perform revenue generating work, or free you up to generate more income? It is key that for each employee hired, there is sufficient additional revenue generated to MORE than cover the wages, taxes, and other financial benefits of the employee. If a hiring analysis fails this test, you need to tread very cautiously!

5. Create a cash flow forecast for the next year to verify that your analysis in step 4 is correct.

6. If you do decide to hire, create a detailed job description for the job you want to fill, starting with the descriptions you created in step 1. From the job description create a list of requirements for a person to fill the job. Use the description and requirements document to drive the recruiting and hiring process. Do not hire a relative, friend, or prior associate just because you like them if they don’t have the requisite abilities to fill the job you need to have performed.

In the next few posts I’ll talk more about the hiring process, and discuss the issues to be aware of in hiring full time, part time, and contract employees.

I need to add a word of caution – this post does not purport to offer legal or tax advice. When hiring the first employee, make sure to seek advice from your attorney and tax adviser.

Will Limkemann
Limkemann Business Advisors
440-871-0976
www.neobizadvisor.com