In December 2013, US small businesses borrowed more money, signaling growth in purchases of tools and equipment, more leases on rental property, and more hiring. Most often, small businesses don’t have HR departments and instead use a highly informal hiring process. ‘Does anyone here know someone who does social media?‘ is a common refrain. Applicants over the past 6 years have been happy to get any job, however, as the job market heats up, there can be stiff competition for qualified applicants and small companies should be ready to hire in the new environment.
As small businesses begin to compete for great candidates against large and small companies, they need a hiring process. And before they have a process, they should define a strategy. Are you looking to expand? Then you need to hire people who can grow and expand with the business. Are you looking to add a hundred people in the next couple of years? Don’t forget to hire an HR Manager along with sales and operations people. Do you want to improve your company’s efficiencies and lower cost? Build a hiring process that carefully selects people who are equipped to do the job and motivated by what you can offer, otherwise high employee turnover is expensive and slows you down. Do you want to retire in 10 years? Perhaps you should look for someone(s) who can become your partner(s) over time and ultimately buy you out. Once you have your strategy, it’s time to build a process that supports it.
The hiring process looks very much like the sales process. First, you have to fill the funnel. How many resumes do you need to receive in order to find a qualified candidate that meets your specifications (those that you wrote into your job description)? How will you recruit? Will you post opportunities on your website? Recruit via social media? Post ads? In one of my businesses, we determined it took 100 resumes to turn into one hire. We were advertising all the time, even when we didn’t have positions available. Growth companies must recruit all the time to keep the funnel full. Figure out your ratio as you build your process so you’ll know how many resumes you’ll need in your pipeline.
That job description is a vital step. Employees and employers need them. You will need to budget a reasonable compensation package into your business forecast. Remember to have your compensation package aligned with the industry and location. To do so, you can purchase Individual Labor Market Reports for very little money to make sure you are on target with your compensation packages.
The interview process should include more than one interview. Almost anyone can make it through an interview without letting on that they really want to move across the country and work in a different industry in a couple of months. It’s much harder to make it through two interviews without exposing their low interest in the job, and even harder in three interviews. Perceptions of different interviewers help to “read between the lines” and will ensure a higher success rate.
To compete against larger and smaller businesses for the best candidates, you will need to offer benefits beyond those offered by your competitors. You may not be able to offer as much money or more vacation days, however your position may report directly to the CEO, offer more flexible hours, or may provide higher bonus opportunity when the company is successful.
Finally, verify! Checking references is easy to do and so important to selecting the right candidate. Ask for references and call them. Is the candidate representing their credentials honestly? Don’t you want to know that? Depending on the job, you can do background checks and you may want to consider drug testing as part of the requirement for the job.
When you’re ready to make a job offer, put it in writing, and make it contingent upon the verification steps above. Don’t forget a Non-disclosure Agreement, especially if you have a patent or work with sensitive data from individuals or companies!
Wait. One more thing. Now that you have a hiring process, you’ll need a firing process, too. Companies hold on to the wrong employee to the detriment of their business and, in many cases, to the employee. Some great advice from Moneyball: “Be straight with them. No fluff, just facts.”
All the best!