Almost all owners and managers of small businesses function as their own human resource managers. They manage the recruiting and hiring, set up the compensation and benefits package and, in many cases, write the paychecks and keep the appropriate records.
Most don't do this because they want to. They have to.
Human resource management is all about people: Finding and
recruiting them; hiring them; training and developing them; paying
them; creating an environment that's safe, healthy and productive
for them; motivating them, and terminating them. It's also about
doing whatever is reasonably possible to find that delicate balance
between what best serves the basic needs of the employees with what
best serves the market-driven needs of the company.
The very first step is finding good people attracting, recruiting and hiring folks who are able to work smart and willing to work hard. The second step is retaining them, making them happy, long-term employees.
If you hire the best, train the best, communicate the best, motivate the best and compensate the best, you'll not only retain present employees, you'll also attract good new ones.
Healthy, profitable business practices start with smart hiring. Converesly, bad hiring decisions are costly in money, morale, productivity, customer serviceand just about everything else.
Assume you've run ads, gone through the interviewing and hiring process and now, six months later, you realize you've made a hiring mistake. This bad hiring decision has cost you a great deal more than you think.
Review the following costs for a salesperson at $45,000 annually: running ads and reviewing applications, $1,000; interviewing time and costs, $1,500; six months' salary, $22,500; six months' benefits, $7,500; training, $2,500; and lost profits on low start-up sales, $80,000.
That's a total of $115,000 for one employee.
And, this doesn't reflect the starting-over costs, poor morale among existing employees, lost time on your part or poor image with vendors and clients.
But don't be discouraged. Most bad hiring decisions are avoidable, if you and your "team" approach the process with respect, understanding and discipline.
Consider these factors:
- It used to be that if a new hire wasn't working out in one position that you could move them to a different one. No more! Everyone has to contribute by doing their job well. Every employee has a measurable impact on the company's ability to compete.
- The qualifications for jobs that used to be "routine" have escalated. Today's employees have to do their jobs with less supervision. Not all employees can flourish in this environment.
- Technology continues to have a huge impact. Almost every task in business has to be done faster and better. Companies of every size are relying on technological advances to streamline day-to-day operating procedures. Employees have had to adjust and adapt to the new pace and growing demands.
As you sit down to write your business plan, try to establish a true strategic mindset of job descriptions, performance evaluations, your present employees and future employees. When hiring now, you will want more information than ever before. To get you started, here are some key questions that you and the other people in your company should answer before you make new hires or changes with present employees.
- What are the most pressing competitive priorities facing your company right now?
- What are the main competitive trends in the kitchen and bath industry?
- What are your company's long-term (three to five years) strategic goals for the future?
- What kind of culture currently exists in your company? What kind of culture do you ultimately want to create? What are the values you want your company to represent?
- What knowledge, experience, skill sets and attributes (in general) will be required to keep pace with these goals and, at the same time, allow you to remain true to your company values?
- How does the current level of knowledge, experience, skill sets and attributes of your present employees match up with what will be necessary in the future?
- What mechanisms (compensation, incentives, communications, etc.) are in place to insure that the time and resources you invest in developing your employees will keep them from leaving and going somewhere else?
Inside and Out
As you already know, you can look for new employees in two places: inside or outside your business. Looking inside is the easier of the two approaches. You should know the capabilities, strengths and weaknesses of those working there.
Hiring from the inside can save time and be less costly no waiting for responses to ads, no multiple interviews and the existing employee will know fellow employees and some of the routines. Many times morale is enhanced because one of their own has been promoted. It makes your employees feel that good work is recognized and rewarded. Finally, the adjustment period should be shorter. Sure, there will be new things to be learned, but the existing employee certainly should have a head start.
Conversely, there are pluses to hiring outside the organization. You can pick from a larger selection of talent, and "new talent" offers new outlooks, ideas and perspectives. An outsider can also bring a more diverse background that can add positively to the culture of your company.
Deep down, you've always known that good people are the key to your business success, but you've been so busy developing the showroom, finding the correct product mix, putting together the perfect marketing plan and working on design and sales skills that you've failed to really make human resource management a priority. Slowly but surely, you're evolving and hopefully you will now be able to put HR at the top of your list.