Choosing the right people no easy task
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Tuesday, 3 July, 2001 - 22:00
WHEN is the right time to hire someone extra? Choosing this is one of the hardest decisions facing any small business, especially one run by family members or a partnership of friends.
This important decision doesn’t just mean a commitment to payroll every week or month. It means the provision of proper facilities; superannuation; workers’ compensation; group tax; insurance; perhaps even more furniture; another telephone; another computer; more office consumables; tools of trade; and in some cases a vehicle. In fact, it means so much more than just another wage.
Then there’s the hidden cost of training, the even greater cost of making a mistake and, of course, the demands on your time.
No wonder small business proprietors put this decision off as long as possible, sometimes never actually facing up to it.
Often the proprietors just work harder and harder until there’s no spare time left, and then suddenly the business doesn’t seem as much fun as it used to be.
What you need to do is change your mind-set. You’re not just hiring a person and increasing your costs, you’re investing in the growth of your business, for without increased resources it will never grow beyond your own capacity to contribute.
Where do you start? How do you arrive at that momentous decision that you’re ready to expand?
Firstly you need a positive tick by each of the following points.
p Are you currently as productive as you can be without giving up your quality of life?
p Is there more market share out there for your business that you can reasonably expect to win?
p Are you serious about growth (as opposed to merely being self-employed)?
p Do you have the cash flow to support an extra person, for however long it takes, before the benefits of having that person flow through to your bottom line?
p Following on from the previous point, can you be confident that the extra person will facilitate revenue growth of at least three times their cost? This is a good benchmark.
p If this is your first employee, have you clearly defined the role they will perform, how it will enable you to generate more revenue (by freeing you up for that task or by them generating it), and how you will reorganise duties in the business to accommodate the new person?
p When there are only a few of you in the business, everyone needs to support the idea of a new employee, so do all the stakeholders in your business agree with the need to hire?
p Finally, remember your due diligence, blind optimism is not enough. Prepare a proper budget, allow for all those on-costs I mentioned at the beginning, and be sure you’ve got the money, time and energy to embark on this process.
If you can give a confident tick to each of these points you’re ready to go. And that’s when the fun begins.
In a previous article on ‘Effective
Recruitment for Small Business’ I listed some golden rules for hiring, in summary these were:
p Document the job. Be clear about specific duties and the measurable outcomes.
p If you advertise the job, be clear about what the job is and “what’s in it for them”.
p Move quickly to interview the best few applicants before they get jobs elsewhere.
p At the interview, ask lots of open questions, and if you really like someone, get their clearance to do reference checks before they leave.
p Always reference check, and when you do, make sure you probe a bit, find out how they behaved on the job, how good their skills were, how they responded to problems, and why they left.
p When you’ve found your person give a letter of offer, with a copy for them to sign, stating terms and conditions, expected outcomes, any probationary period (a good idea) and an attached job description.
p Finally, make sure your new employee is properly inducted, made welcome, and given appropriate training.
It might seem like a daunting challenge, it might cause some sleepless nights, but in the end it’s all about making a good business decision, and being well prepared to make the best one you can.
Remember when you are planning your business expansion that most small businesses which fail do so because of poor management, not lack of product knowledge or trade skills.
You can be the best retailer on your strip, the best electrical contractor in your area, or the best financial planner, but there’s a lot more to managing a business with employees.
If you think you need some skill development in management, try contacting the Small Business Development Corporation, they will tell you where to get cost-effective courses.
This important decision doesn’t just mean a commitment to payroll every week or month. It means the provision of proper facilities; superannuation; workers’ compensation; group tax; insurance; perhaps even more furniture; another telephone; another computer; more office consumables; tools of trade; and in some cases a vehicle. In fact, it means so much more than just another wage.
Then there’s the hidden cost of training, the even greater cost of making a mistake and, of course, the demands on your time.
No wonder small business proprietors put this decision off as long as possible, sometimes never actually facing up to it.
Often the proprietors just work harder and harder until there’s no spare time left, and then suddenly the business doesn’t seem as much fun as it used to be.
What you need to do is change your mind-set. You’re not just hiring a person and increasing your costs, you’re investing in the growth of your business, for without increased resources it will never grow beyond your own capacity to contribute.
Where do you start? How do you arrive at that momentous decision that you’re ready to expand?
Firstly you need a positive tick by each of the following points.
p Are you currently as productive as you can be without giving up your quality of life?
p Is there more market share out there for your business that you can reasonably expect to win?
p Are you serious about growth (as opposed to merely being self-employed)?
p Do you have the cash flow to support an extra person, for however long it takes, before the benefits of having that person flow through to your bottom line?
p Following on from the previous point, can you be confident that the extra person will facilitate revenue growth of at least three times their cost? This is a good benchmark.
p If this is your first employee, have you clearly defined the role they will perform, how it will enable you to generate more revenue (by freeing you up for that task or by them generating it), and how you will reorganise duties in the business to accommodate the new person?
p When there are only a few of you in the business, everyone needs to support the idea of a new employee, so do all the stakeholders in your business agree with the need to hire?
p Finally, remember your due diligence, blind optimism is not enough. Prepare a proper budget, allow for all those on-costs I mentioned at the beginning, and be sure you’ve got the money, time and energy to embark on this process.
If you can give a confident tick to each of these points you’re ready to go. And that’s when the fun begins.
In a previous article on ‘Effective
Recruitment for Small Business’ I listed some golden rules for hiring, in summary these were:
p Document the job. Be clear about specific duties and the measurable outcomes.
p If you advertise the job, be clear about what the job is and “what’s in it for them”.
p Move quickly to interview the best few applicants before they get jobs elsewhere.
p At the interview, ask lots of open questions, and if you really like someone, get their clearance to do reference checks before they leave.
p Always reference check, and when you do, make sure you probe a bit, find out how they behaved on the job, how good their skills were, how they responded to problems, and why they left.
p When you’ve found your person give a letter of offer, with a copy for them to sign, stating terms and conditions, expected outcomes, any probationary period (a good idea) and an attached job description.
p Finally, make sure your new employee is properly inducted, made welcome, and given appropriate training.
It might seem like a daunting challenge, it might cause some sleepless nights, but in the end it’s all about making a good business decision, and being well prepared to make the best one you can.
Remember when you are planning your business expansion that most small businesses which fail do so because of poor management, not lack of product knowledge or trade skills.
You can be the best retailer on your strip, the best electrical contractor in your area, or the best financial planner, but there’s a lot more to managing a business with employees.
If you think you need some skill development in management, try contacting the Small Business Development Corporation, they will tell you where to get cost-effective courses.