Hiring the best candidates for your small business doesn’t have to be difficult if you develop and implement good processes and systems to hire right from the beginning.
The average cost-per-hire is $4,129, while the average time it takes to fill a given position is 42 days, according to the Society for Human Resource Management’s (SHRM’s) new Human Capital Benchmarking Report
According to Jörgen Sundberg, CEO of Link Humans, an employer branding agency – 75% of hiring is because of employee turnover.
Whether you are hiring your first employee or your 100th employee, you should develop strategic plans to hire great employees and prevent turnover.
What is the Cost of a Bad Hire?
According to a CareerBuilder Survey, many companies have lost an average of $14,900 on every bad hire in the last year.
Some of the reasons why they were bad hires were because:
- 35% thought they could learn new skills quicker than they did
- 33% say the candidates lied about his/her qualifications
- 32% say they took a chance on a nice person
- 30% felt pressured to fill the role quickly
- 29% said they focused on skills and not attitude
- 25% said they ignored some of the warning signs
All of these things could be prevented with methodical, standardized, and effective hiring systems in place.
Although your small business hiring practices may not fully be developed, below are some steps to ensure you hire top employees:
1. Develop an Employee Handbook
If your small business doesn’t have an employee handbook in place, ensure you develop one. Your handbook can be the backbone of your company and can outline your company’s expectations. Include policies that are mandatory for compliance and ones that your employees need to know. Anything you write in a handbook should comply with all federal, state, and local laws and be enforced by all managers. If you have already developed a handbook, you should review it each year for legal changes or topics you would like added. See The 9 Items You Need to Include in Your Employee Handbook.
2. Write a Really Good Job Description
Writing a good job description can provide clarity and expectations for job searchers. You should develop a job description for every position within your company, even if you have already hired for those positions. The job description will define expectations for new and existing employees, help you understand the top qualities you are searching for, and will aid you in developing a thorough compensation program. If you make changes to a job, ensure you update your job descriptions. See How to Write a Good Job Description for Your Business.
3. Find and Keep Your Top Talent
Once you have developed a good job description, you will start advertising for those employees. If you have good, existing employees in place, ask them to help you spread the word and offer an employee referral bonus. Conduct on-site job fairs and advertise on job boards and other areas. Ensure you implement best practices to keep your employees and you treat them well. If your small business has a turnover problem, you will develop a bad reputation in the community, which will make it difficult for you or your recruiter to hire. See How to Find and Keep the Best Hourly Employees.
4. Determine Their Exempt or Non-Exempt Status
Ensure your workers are classified correctly according to their exempt status and whether they should be paid overtime or not. Many states adhere to a typical calculation of overtime pay as anything beyond 40 hours per week. But some jurisdictions, like California, are stricter. Know your state and federal laws to ensure you pay your employees correctly. See Exempt vs Non-Exempt Employees, What You Need to Know.
5. Develop a Thorough Pre-screening Process
Before hiring your best employees, you should develop a pre-screening process to determine the applicants you would like to interview. If you receive a large number of resumes or applications, you should develop a spreadsheet to ensure you cover each step with each applicant correctly. Again, follow all state and federal laws to ensure you are in compliance. See Pre-Screening Candidates: How to Develop a Detailed Process.
6. Structure Your Interviewing Process
Next, you want to start interviewing. When you are interviewing candidates, develop a structured interview process to find your A-players. Once you know the candidate has the skills to do the job, you should ensure you interview them for soft skills (e.g. communication, leadership). You want to make sure candidates will culturally fit within your organization well. See Effective Interviewing Tips and Tricks to Find the Ideal Employee.
7. Onboard Your New Employees
Most turnover happens within the first 45 days. By onboarding and training your employees correctly, you will have better chances of keeping them. Onboarding is not a quick process and many times new employees feel overwhelmed with all the information given to them. By developing an extensive orientation program, they will become engaged faster. Assign mentors and ensure they understand their performance goals. See How to Implement a Successful Employee Onboarding Process.
8. Ensure Your Employees are Engaged
Once you hire them, you should ensure they become quickly engaged in your small business. If your employees are not engaged, productivity suffers, and customer service expectations are not met. Employees who do not like their jobs or their manager will not stay long and they will only do what is basically required until they find another job. Ensure you hire top leaders in your company and implement systems to ensure engagement. See Employee Motivation: Cracking the Employment Engagement Secret.
9. Keep Your Employees from Leaving
Design and implement plans to ensure you will keep your A-players. hire top leaders, pay good wages, offer good benefits, and provide some additional perks. Ensure you listen to feedback, whether it is from employees who resigned or if it is from employees who are currently working there. Implement good performance review systems and develop succession plans with each one to show you are committed to their future with your company. See How to Keep Your Best Employees from Leaving.
Improve Your Employer Brand
One of your goals is probably to ensure your company brand (reputation) is respectable with existing and potential clients. You want clients to like your company and enjoy your products or services so they may tell others and spread the word. Well, as an employer, you should also be concerned with the same thing.
From a recent survey:
- 49% of employees would recommend their employer to a friend.
- 87% of organizations cite culture and engagement as one of their top challenges, and 50% call the problem “very important.”
- 69% are likely to apply to a job if the employer actively manages its employer brand (e.g., responds to reviews, updates their profile, shares updates on the culture and work environment)
- 76% want details on what makes the company an attractive place to work.
- 69% would not take a job with a company that had a bad reputation, even if they were unemployed
You can hire top recruiters, HR Managers, spend thousands on recruiting advertisements, and even offer huge referral bonuses, but you will not get top-notch employees if you are considered a bad place to work in the community or on Glassdoor. You should be concerned about the candidate experience and the current employee experiences for your employer brand to be good enough for candidates to consider you in their job search. It is also important to have a company culture that is so good it sells itself to candidates.
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Ensure Your Candidates Have a Great Experience
Candidate experience is defined as how job seekers perceive and react to employers’ recruiting, interviewing, hiring, and onboarding processes.
What makes a bad candidate experience? If you are rude to applicants in which you have no interest in pursuing, not responding to email or phone call queries, or not informing them of job status decisions. These are just a few things which create a bad experience for candidates with your company.
Before the internet, if someone had a bad experience, they would just tell a few friends about their experience. But now, because of social media and companies like Glassdoor, candidates are telling others where to apply and where not to apply.
Tips on Creating a Great Hiring Process
- Make your job application process easy. Don’t make applicants upload a resume and then have them fill out the same information again like job history. Applicants are more likely to fill out an application when it takes less than 15 minutes.
- Ensure you are always polite to candidates. Even if candidates are rude or difficult, you should always maintain your composure if you are the point of contact. Sometimes they have been given the runaround by other companies and they take it out on you.
- Communicate with your applicants. Let them know quickly if you have decided to move on with more qualified candidates. If you know you are going to take some time to recruit, then make sure you let each applicant know the approximate length of time so they aren’t expecting a phone call the next day. Some companies even have websites where a candidate can log in to see where they stand in the process.
- Ensure all interviewers are trained. Have you ever been on an interview with multiple people and there was one person who was different or didn’t understand why they had to interview you? Or they just joked around and didn’t really ask questions? If you have multiple people interviewing the candidate, make sure they know how to communicate well with applicants, they know the process, and they have interview guides. Sometimes you may have someone be a “fill in” in case someone is out. Ensure they are trained as well.
When Hiring Learn from the Best
When developing your hiring plans, investigate and implement best practices from other companies and people to ensure you hire great employees. One bad manager or another team member can hurt your business.
Richard Branson, Founder of Virgin Group, says, “Most skills can be learned, but it is difficult to train people on their personality. If you can find people who are fun, friendly, caring, and love helping others, you are onto a winner.”
Before bringing someone on board, Jeff Bezos, the founder of Amazon asks these three questions:
- Will I admire this person?
- Will this person raise the level of effectiveness for our company?
- Where can this person shine?
Lee Iacocca from Ford says, “I hire people brighter than me and I get out of their way.”
Steve Jobs from Apple said, “When you have really good people, you don’t have to baby them. By expecting them to do great things, you can get them to do great things. A-plus players like to work together, and they don’t like it if you tolerate B-grade work.”
The Importance of Having a Cultural Fit
Some companies, like Netflix, use interview techniques designed to search for cultural fit and even give presentations to show applicants more about their culture and what they are looking for. This can help reduce turnover by being completely transparent about cultural fit – on both sides.
Michael Gerber, who is the author of the best-selling E-Myth series along with Awakening the Entrepreneur Within and The Most Successful Small Business in The World suggests you bring in people with less experience and teach them your company way. “If that person can’t learn our way, they can never get to the point where they can begin the process of innovation, quantification, and orchestration, which is the true and continuous process of developing a business.”
Effective and precise hiring methods aren’t difficult if you develop a standardized approach at the beginning. Whether you are a small or large business, you should analyze your work culture, employer brand, candidate feedback and experience, and take a detailed look at yourself to ensure you are a top-notch employer where others want to work. Ensuring you have systems in place when hiring good leaders will greatly reduce turnover. Hiring A-players as managers will ensure they will want to hire A-players who will work for them. Investigate best practices, develop good interview questions, and if something isn’t working, change it.
Author: Kimberley Kay Travis
Kim Travis, co-owner of Travis and Adams Consulting Group, has over 20 years’ experience in human resources and leadership roles.
She has specialized knowledge in employment law, employee relations, recruiting, management consulting, leadership development, manufacturing safety programs, and writing business articles and blogs.