There are few things more crucial to the success of a company than its people, especially for a small business. With a small workforce, each new hire has an outsized impact on the company’s culture and achievements. Brett Lewis, who co-founded Skillbridge, an online platform for business freelancers, has said, “Great people versus okay people is the difference between success and mediocrity.”
Hiring the right people is also important for controlling costs. Recruiting is a big expense for a business of any size, and if that employee isn’t a good fit it’s expensive to replace them. The median cost of replacing an employee is 21 percent of that person’s annual salary according to the Center for American Progress. For employees earning less than $50,000 annually it’s about 20 percent; for positions that pay $30,000 and under—which includes more than half of all U.S. workers—it’s 16 percent. That’s significant, especially to a small business.
Make sure your hiring practices allow you to find the best candidates for every position.
First, write out all the tasks involved in the role you need to fill. Then add to that the personality you feel is best for the role, the salary, benefits, time commitment and the other employees that person will be working with regularly. Write out the overall goal of the position, even if it’s very general. Then include the specific skills needed for the job, whether that’s knowledge of Java, QuickBooks, Excel, WordPress, etc.
Devote time to hiring. As a small business owner, you probably don’t have an HR department—and likely not even an HR person–to whom you can delegate a lot of the hiring process. Yes, it’s difficult to add this to the array of hats you’re already wearing but it’s crucial for the success of your business. So schedule it into the workday as you would any other meeting or task.
Look in the right places for the right people. Now that you know what you are looking for, where do those types of candidates spend time, both on and offline? Find out by talking with other small business owners, as well as vendors, friends and family about where they find good candidates for the position you need to fill.
Don’t limit yourself to active job seekers. Every employee today is a passive candidate, so it pays to look where people are already doing the job you need done at your company . If you need someone with HR experience, for example, go to human resources association meetings. If you need someone in sales, attend trade shows in your industry. If it’s someone with very specific expertise, for example, a senior financial officer who understands financial technology, try fintech meetups.
Don’t be desperate. Desperation will only cause you to compromise on what you want and, ultimately, wind up with the wrong hire. So don’t fool yourself into thinking that a warm body in the position is better than no body at all—that can wind up being an expensive mistake. Wait until the right person is available for the job.
Test drive. Consider hiring someone on a contract basis, which is a cost-effective way of conducting a candidate search. Contractors mean you can have the staff you need immediately but without having to make a long-term commitment. If the person turns out to be terrific then you can offer them a full-time position. And since they’ve already been doing a great job, you can be secure in the knowledge you’ve hired the right person.
Hire the right employee the first time to conserve costs and drive growth for your business. Do you have any hiring tips to share with other small business owners? Share them with us on Facebook.