How small businesses can hire the right people
Doug and Polly White have seen small businesses use all kinds of questionable hiring practices. There was the entrepreneur who hired anyone looking for work. Then there was the woman who hired and fired her sister twice. The list goes on.
In their book, Let Go to GROW: why some businesses thrive and others fail to reach their potential , the Whites found from their business consulting that entrepreneurs often don’t know how to hire employees.
“No one is born knowing how to hire and manage people,” said Polly. “You come into this with no clue how to hire and manage people. So entrepreneurs often end up hiring friends and family. While your friends and family may be right for a job in your organization it’s not always the right way to go.”
Entrepreneurial interviewed the Whites about the five steps businesses can follow in order to hire the right people.
1. Know what you need
Hire someone based on their behaviors and cognitive capabilities.
Few small businesses plan to hire
Many small business owners in the United States are reluctant to hire more employees in the near term as economic uncertainty and sagging sales continue to put pressure on company balance sheets, the latest index on small business optimism from the National Federation of Independent Business (NFIB) shows.
Of the 2,077 small businesses in NFIB’s membership surveyed, the number of companies planning to increase staff is down two percentage points to just nine percent, while 12 percent plan to reduce their workforce over the next three months. The report also shows employment has been reduced for the fifth month in a row with an average reduction of 0.1 workers per company.
“Small businesses seem to have the right number of employees,” said Holly Wade, senior policy analyst at the NFIB. “They’re breaking even. But until they see a pick-up in consumer spending there’s no reason to hire.”
Economic uncertainty is affecting consumer confidence and in turn small businesses. Twenty-six percent of business owners surveyed said poor sales are their main concern.
Wade doesn’t see anything inspiring more consumer confidence in the near future. “We don’t see anything on the horizon that would get small businesses to hire more and consumers to spend more,” she said.
At the same time, Sageworks has seen an increase in private company profit per employee with average profit per employee rising by 50 percent since 2009. The profit per employee has so far been $15,000 this year.
“Private companies have seen revenue growth between four to six percent,” said Libby Bierman, an analyst with Sageworks. “The companies are growing, but they’re not adding a lot of employees.”
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When the bull’s eye lands on your business
– George F. Brown, Jr. is a business strategy consultant specializing in business-to-business growth issues. Reuters spoke to him about the topic of a new book he co-authored, CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs (Greenleaf Book Group). –
Q: You talk about what happens when a business becomes a bull’s eye, that is, the target of rivals looking to undercut by price. How does this happen to small companies when they’re rarely dominant players in their market? A: Small business is rarely the largest provider to a large company, but I’ve seen quite a few instances where a small business is a key supplier to another small business.
Q: How do you know if you’re becoming the bull’s eye?
A: Whether you’re a big business or a small business, if you sit back and reflect and this sounds right, I’m fairly important, I’m fairly visible, I could see the competitors and the procurement managers taking aim at me – assume it’s going to happen at some point and begin to prepare for that day.
Q: What are your options when faced with severe price competition?
A: One fork in the road is to say this customer really should and does care about much more than price. If you believe that’s true, you emphasize the product, you emphasize the service, you tell them all the things you’ve done over the years to help them be successful. The other fork in the road is to say I’m not very different from my competitors, I really haven’t done anything that is going to generate applause. And I better figure out how do I compete with price being a part of the equation.
Q: Should you let the customer go?
from Ask...:
Family ties and helping hands
Unlike their big corporate brethren, small businesses have one key advantage they can tap when the going gets tough: family.
In a pinch a business owner can turn to family members and ask them to help out. A quarter of small businesses have a family member working for free, according to the American Express Open Small Business Monitor.
What do you think? If you're a small business owner, what role does family play in your business?
I think these are very good suggestions. However, good communication skills can be taught and there are extremely cost effective resources that can teach the entire staff to communicate more effectively.
Often, people with high levels of communication skills will not be priced for the small business person to hire. They will be picked up by larger companies with more attractive offers.
So, it is important for the small business owner to understand where cost effective resources are.
Yes, you can screen for skils and attitudes. But probably more important is for the small business owner to decide the type of culture they are operating from and the values and behaviors that support this.
The small business owner, for example, that is very command and control oriented when the rubber meets the road will be out of step with the idea of building cooperation, for example. And, again, these skills can also be taught when the small business ower is self reflective and willing to grow, too.
Dianne Crampton
corevalues.com