Financial Data
Updated 29 Feb 2020

Hiring: the when, where and how

The prospect of hiring staff strikes fear in even the strongest entrepreneur's heart. What if I hire the wrong person? What if I can't afford their salaries? Read here for some practical guidelines to smooth the hiring path.

02 April 2012  Share  0 comments  Print

All the answers to your unique business lifestage questions

Employees are assets who must be strategically selected and cared for. Correct hiring strengthens your staff complement and enables your business to grow. But when you hire is as important as who you hire.

The most obvious indication of appropriate staffing levels is the ability to deliver on time. If deadlines are consistently missed, it could be because you have too few people on the job.

Other signs could include extensive overtime, an increase in staff grievances relating to hours worked, and delayed or cancelled leave.

As with any strategic decision, you must evaluate business needs before taking on the responsibility of a new employee.

If you think you're ready to begin hiring, ask yourself the following questions:

Am I spending too much on freelancers?
Compare the expense of freelancers with that of full-time employees. One consulting firm estimates that if management can book a full ten days of work per month for a new employee, then that employee's salary is paid for. Anything after that creates direct revenues.

Am I ready to grow the business? 
The real challenge to growth is being able to work on your business, not in it. A new employee can free you of day-to-day responsibilities so that you can pursue new opportunities.

Am I spending too much time in areas that do not utilise my talents? 
Hire employees who will assume tasks in areas where you are weaker so that you may concentrate on your strengths.

Am I ready to delegate tasks and manage people? 
Bear in mind that additional staff means more of your time will be spent dealing with associated admin and HR issues.

Do I have the capital reserves? 
Look for ongoing contract work, rather than once-off project fees, to fund additional long-term expenses such as salaries, tax and medical benefits.

How to screen an applicant

The screening process provides information about an individual's skills, knowledge and attitude, enabling you to determine whether that person is suited to, and qualified for, the position.

Remember that hiring an overqualified person can be as harmful as hiring an under-qualified person. Start by asking applicants to fill in an application form and submit a detailed CV.

This is the best way to compare the applicant with the job description. It also ensures that you don't waste time on applicants who do not meet the minimum requirements.

Must-ask interview questions:

1. Why do you want to work for us?
Screen out candidates who aren't serious about the company or who may be using it as a stopgap while they look for something better.

2. Describe a situation in which you didn't meet your goals, and explain why.
Look for examples of what the candidate did to rectify the situation.

3. Describe a situation in which you faced conflict or communication problems. How did you handle them?
Look for someone who can rise above conflict and who will get on well with others while still delivering the company's objectives.

4. Where do you see yourself in three, five and ten years time?
Ascertain if the candidate's long-term goals are in line with your business's growth strategy.

5. What would your current manager say are your strengths and weaknesses?
At the very least this will tell you what the candidate thinks of his/her own abilities.

6. Why should we give you this job?
What makes this candidate different?

7. Describe your greatest work challenge.
This will give you an idea of the applicant's problem-solving abilities and commitment to delivering results.

8. Do you prefer working in a team or on your own?
Someone who prefers to work in a team might be uncomfortable handling responsibility, whereas a solo flyer might not. A combination of both is ideal.

9. What would you change if you worked here?
Are you looking for an "agent of change" or someone to maintain stability?

Top hiring mistakes

  • Not looking into candidates backgrounds. No matter what candidates include on their resumes, you need to conduct some due diligence. Verify qualifications and contact previous employers.
  • Choosing academic qualifications over experience. A strong track record could be as, or more, valuable than a degree, depending on the field in which you operate.
  • Not having a long-range plan. Hiring someone to fill a current need can help you through a busy time. However, unless you're hiring on a temporary basis, you need to think beyond your immediate requirements.
  • Making promises you cannot keep. Know ahead of time what you can and cannot offer a prospective employee, eg, in terms of profit share, ownership schemes and performance bonuses.
  • Hiring someone for the wrong reasons. Don't hire someone purely because you owe someone a favour or you like the way the applicant looks. Make sure he/she can provide what you need.
  • Not looking for a good fit. There needs to be rapport among employees. Hire someone who fits in with the existing team's chemistry.

Where to look when hiring

  • Present employees : Promotion from within keeps employee morale high. Whenever possible, give current employees first consideration for any job openings.
  • Unsolicited applicants : SMEs receive many unsolicited applications from qualified and unqualified individuals. Keep the former on file - it could be a valuable resource for future recruitment.
  • Schools : High schools, trade schools, colleges and universities are all good sources of potential full- or part-time employees, especially if prior work experience is not a major requirement.
  • Private employment agencies : These firms match people to jobs in exchange for a fee. Depending on the agency, either the applicant or employer pays.
  • Employee referrals : Word of mouth is one of the most commonly used recruiting sources in the SME community. Few colleagues would recommend someone with below-average abilities.
  • "Help wanted" advertising : Letting people know you are hiring gives you access to the pool of potential employees. Put up a "help wanted" sign in your window, or place adverts in daily and weekly newspapers, the Internet or in specialist media.

Outsourcing is an option

If you decide to outsource certain functions, search for referrals from other companies and service-provider directories.

Contact potential contractors and ask specific questions about the services they provide and their abilities to meet your unique needs. Select a contractor who has experience in similar businesses and who will be able to give your needs the priority they deserve.

Remember to establish performance measures before entering into an outsourcing agreement, as well as financial incentives to encourage the contractor to meet deadlines and control costs.

The agreement should also outline confidentiality rules and ownership rights to new ideas or technology. It should include a means of exiting the relationship if the service does not meet your expectations. Ask an attorney to review the agreement before you sign it.

The PROs of outsourcing:

  • Critical expertise now: Outsourcing allows you to pull in essential expertise when, and only when, you need and can afford it.
  • An objective perspective: Really good contractors will tell it like it is and, if appropriate, fire you if you're not enabling them to do the job for which they were hired.
  • Cost savings and control. Many businesses embrace outsourcing as a way to save and control costs. Contractors who specialise in a given function can usually perform that function more efficiently and cost-effectively than non-specialist businesses that try to do it themselves.
  • Staffing levels. Outsourcing helps to minimise fluctuations in staffing as a result of changing demand for a product or service. It also reduces the workload on employees, freeing them to take on additional money-making projects, or to pursue more development opportunities.
  • Accountability. A contractor who does not perform will not be paid. Employees, however, don't always have the same motivation.

The CONs of outsourcing:

  • Poor quality control. If a contractor is not based at your premises, it is difficult for you to oversee his or her work.
  • Decreased company loyalty. A contractor who is not part of your company may not have the same goals and broader accountability as you.
  • A lengthy bid process. Selecting a contractor for each project could take more time than you have.
  • A loss of strategic alignment. Being at separate locations, and not being part of the same company, could lead to diverse and possibly conflicting ideas in approaching and completing a project.

Which functions can be outsourced?
Anything that is not part of your core business can potentially be outsourced. For most businesses this typically includes:

  •  IT functions such as network administration, application and web hosting and custom software development.
  • Marketing functions such as print/media advertising, website development/content, online marketing, event planning and PR.
  • HR functions such as payroll, recruitment, benefits and training.
  • Legal functions.
  • Finance jobs like billing, collections, accounting and tax.
  • Fulfilment functions like warehousing, handling, packaging and physical delivery.
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