Hiring the best candidates for your small business doesn’t have to be difficult. Develop and implement good processes and systems to hire right from the start.
According to Glassdoor, the average cost of hire is approximately $4000 per new hire. Also, it takes about 24 days to hire a new worker. According to Jörgen Sundberg, CEO of Link Humans, an employer branding agency – 75% of hiring is because of employee turnover.
You should develop strategic plans to hire great employees and prevent turnover. If your small business has a turnover problem, you will develop a bad reputation in the community. This can make it difficult for you to hire.
What is the Cost of a Bad Hire?
Whether you are a small or large business, a bad hire can result in many problems.
- The U.S. Department of Labor says the cost of a bad hire can reach up to 30 percent of the employee’s first-year earnings.
- Bad hires can cost $240,000 in expenses. Those are broken down into costs such as recruitment, lost customers, damage to employer brand, and litigation fees.
- CareerBuilder found that 43 percent of respondents made a bad hire because they felt they needed to hire someone quickly.
Tips on Creating a Great Hiring Process
- Make your job application process easy. When Hiring 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. Let each candidate know your timeline if you can. Some companies even have websites where a candidate can log in to see where they stand in the process. You should never “ghost” your applicants. You may not be able to reach out to each of them every day, but make sure they know your process and timeline.
- Train all interviewers. Have you ever been on an interview and someone didn’t really know what you were interviewing for? 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 should know the process, and they should have interview guides. Sometimes you may have someone be a “fill in” in case someone is out. Train them before the interview.
How to Hire Good Employees
Write a Good Job Description for Every Position
Writing a good job description can provide clarity and expectations for job searchers. You should develop a job description for every position. Even if you have current staff for those positions. The job description will define expectations for new and existing employees. They will 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.
Develop an Employee Handbook
Ensure you write a well-written employee handbook. If your small business doesn’t have an employee handbook in place, develop one. Your handbook can be the backbone of your company. It can also outline your 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 and update it each year for legal changes or topics you would like added.
Hire Top Talent
Recruiting and keeping the best hourly employees can be challenging. 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. Apply best practices to keep your employees and treat them well. Also, utilize your social media sites. Conduct current employee interviews about what it is like on-the-job site. Place those interviews on your social media sites.
Develop a Thorough Pre-screening Process
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. There are also HR systems you can purchase to help you. Again, follow all state and federal laws to ensure you are in compliance.
Interview Your Applicants Well
Next, you want to start interviewing. Know effective interviewing tips to find your ideal employees. 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 interview them for soft skills (e.g., communication, leadership). You want candidates who will culturally fit within your organization well.
Determine Their Exempt or Non-Exempt Status
Do you know if your employees should be exempt or non-exempt? Classify your workers correctly. Know 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.
Onboard Your New Employees
Most turnover happens within the first 90 days. Develop a good onboarding process. 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. Ensure you pre-onboard them with new hire information and develop an extensive orientation program.
They should understand your mission, values, and what is important for your business to thrive. Make them feel welcome and assign mentors. Finally, make sure they understand their performance goals as well as the business goals. Their success is helpful for your business to grow.
Motivate Your Employees and Help Them Become Engaged
Once you hire them, help them become quickly motivated and engaged in your small business. If your employees are not engaged, productivity suffers, and customer service expectations may not be met. Employees who do not like their jobs or their manager will not stay long. They may only do what is basically required until they find another job. Hire top leaders in your business. Also, implement systems to ensure engagement.
Keep Your Employees from Leaving
Do you know how to keep your best employees from leaving? Design and implement plans to keep your A-players. Hire top leaders, pay good wages, offer good benefits, and provide some additional perks. Listen to feedback, whether it is from employees who resigned or if it is from employees who are currently working there.
Implement a Great Performance Review System
Implement a good performance review system and develop succession plans with each employee to show you are committed to their future with your company. There are different performance review systems, but it is important for you to find the best one that works for you and your business. Also, consider a performance review system that gives effective feedback and helps your employees grow. The purpose of a performance review is not to just do one, but it should show that goals are being met and the employee is helping your business to grow.
Hire Great Leaders
Most employees leave because they have a bad manager. Promoting good leadership skills is important. If you have one bad manager, you will have a hard time hiring future employees. Now word spreads quickly with social media. If you have high turnover, high absenteeism, or any complaints, it is time to start looking at your leaders.
Know the top leadership skills every manager should have to recruit the best managers. Having good 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.
Improve Your Company Culture
Your company culture is important for your small business. One of your goals is probably to make sure 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.
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.
Implement Good Time Clock Rules and Manage Overtime
If a majority of your employees who you are hiring are hourly, you should implement good time clock rules to ensure you have accurate records. Bad attendance can hurt your small business. The Fair Labor Standards Act (FLSA) requires employers to maintain accurate records. They do not require employers to use time clocks or any specific system. However, if you do not keep good records but your employee does, you could be accountable for back pay of owed overtime.
Consider using systems that may help you such as an inexpensive time tracking app for your small business like ezClocker. Provide your employees with a mobile time clock using their own device, manage employees’ time entries and schedules through the ezClocker website or app, and use GPS time tracking to verify your remote employees showed up at the correct location when they clocked in.
Need an Affordable Mobile Time Tracking App for Your Employees?
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. Investigate best practices, develop good interview questions, and if something isn’t working, change it.