Hiring is a major struggle for small business owners in America. In fact, 60% of small businesses reported hiring or trying to hire. Reliant Funding’s VP of Human Resources and member of the Forbes HR council, Lindsay Patten discussed hiring in-house and what small business owners should consider. From that discussion, we have compiled responses to these questions:
- What is an effective way to strategize hiring?
- What role does culture play in a hiring strategy?
- How can I evaluate what type of employees to hire and ensure I am complying with employment laws?
What is an effective way to strategize hiring?
Determine Your Employer Brand
The first step to have an effective hiring strategy is to begin with your employer brand. Components of an employer brand are: your mission, your company values, the company culture and/or the company’s purpose.
Measure Key Indicators
Using data to drive decisions is the smartest approach you can take as a small business owner. Finding key indicator data to determine a high likelihood of success starts at reviewing what you have already done. Furthermore, matching resumes of existing or past employees to their performance is where you can start.
How many matched keywords were there? What were those key phrases or self-identifiers that lead to success in that role? If they were unsuccessful in accordance with the goals of the role, why or why not? Look at type of skills the person communicated they had and how many employees in similar roles that are successful have those skills.
If you are filling a role you have never had before, you can research traits for roles online to see what data others have found. You can also reach out to your network and gather some qualitative data from your peers regarding what has worked for them.
Have a Clear On-boarding Process
You should also ensure clarity of the on-boarding process. This way you are prepared to effectively communicate expectations. By ironing out the on-boarding process early, your business and the new employee will experience an easier adjustment.
Be sure to conduct a 30-day review, 60-day and 90-day review of the on-boarding process for employees. This can help you identify and correct gaps to ensure retention. When you identify any misunderstandings of expectations from managers or employees early, you can correct them.
Use Multiple Resources
Another part of your strategy will be how you will hire people. If you are looking for an IT specialist, you can post on general job boards or through social media. However, it may be better to fish with a lure vs a net. In this scenario, you can join IT groups and post the job there or attend an IT networking event to look for talent.
You can always hire through an agency but be aware of the cost before making that investment. You should feel confident in asking your existing employees to recommend talent. [If you do not, it may be time to evaluate your staff, roles and employer performance.] By using existing employees who demonstrate the culture you are trying to build, it is likely their recommendations would also be a good fit.
What role does culture play in a hiring strategy?
Happy Employees = Success
Unhappy employees directly correlate to a loss to American businesses of $300 billion each year. So, to ensure happy employees, it is important to have a positive culture in which employees can thrive. Part of establishing that culture is hiring employees that exemplify the values of the company.
Some examples of values a company may have for employees can be; a great attitude, the way they act under pressure, the way a person communicates their ideas, experience with philanthropy or results-driven experience. Knowing your existing employees is the first step before determining who you will hire.
Another part of creating a positive work environment is balancing the company’s goals with the employee’s goals. Truly caring what your employees care about will create a symbiotic relationship.
Asking employees what they value during the interview process is an opportunity to identify if those values align with the company’s values. Some entrepreneurs hire for personality and some hire for skill set or employ a balance of the two. Your personality vs. skill set ratio can be determined by using your company’s values and goals.
How can I ensure I am complying with employment laws?
Determine Employee Classification
Staying current with new employment law will be the difference between thousands of dollars kept or thousands paid in fines. There are many kinds of employees a small business can hire. You can hire a freelance employee, an hourly employee, a salaried employee or a contracted employee. Depending on the type of work they will be doing and what they will need from you to do their job will determine what type of employee you should hire.
Many businesses may think the best employee to hire is a contracted or “1099” employee. [1099 refers to the tax document given to a contracted employee]. The reason small business owners may want to hire this type of employee is because otherwise, they are required to provide health coverage or other benefits. This is dependent on the state in which your business is located. However, there are a lot of restrictions of what these kinds of employees can and can’t do if they are in your office.
Use Local Educational Opportunities
The reason compliance is so important? Cost.
For example, in California the state penalty for willfully misclassifying employees as independent contractors can range from $5,000 to $25,000 per violation. In Montana, if an employer violates a provision of the Independent Contractor Exemption Certificate law, each violation can cost up to $1,000. These compliance laws vary by state and it is important to correctly classify your employees to avoid expensive penalties.
You may think that only hiring independently contracted employees is cheaper but, in reality, it can cost you much more long term. Something else that Lindsay Patten stresses the importance of during her interview, is to ensure you have up-to-date new hire paperwork. There are fines if you are out of compliance with these requirements as well.
The good news is that there are often local new-hire and HR-related seminars offered by government offices and human resource organizations. You can always find this information online. Be sure to update your information at least each year if not more often as these requirements are updated frequently.