Focus on small business & HR

Drake Editorial Team, Paul Falcone, and Lori Kleinman

In the increasingly complex world of human resources, small to mid-sized enterprises (SMEs) face employee challenges similar to those of larger organizations, including finding skilled workers, boosting employee productivity, motivating and engaging staff, and retaining them.

Never has it been more important for business owners to understand core human resource issues. In fact, it’s mandatory for growth and profitability. The main problem is that small-business owners must take on multiple roles. They are usually so busy trying to generate revenue and manage daily operations that HR goes to the bottom of the list of things to do. Limited time, money, and resources can keep these business owners falling behind in the battle to hire and keep good talent.

Whether large, small, or mid-sized, a competent workforce is a necessary asset for any company to convert growth plans into reality.

Even with a leaner workforce structure, the right people have to be in place.

Too frequently, small-business owners hire employees before thoroughly understanding the technical and behavioural competencies needed in the position and for the company culture. This information is crucial to ensure superior performance and retention. As well, the selection and interviewing process may be rushed and ineffective, and reference checks may be not thorough enough or even done at all to raise red flags before the selected candidate comes on board.

Unfamiliarity with employment laws, not hiring the right people for the job, and not addressing or documenting performance issues can make the HR side of business very stressful for SMEs.

Smaller organizations are often more at risk and have to handle more uncertainty than larger ones. This “Focus on Small Business" section can help guide and support small-business owners in addressing the HR side of their business.

How to Hire the Right Person the First Time

Develop a human resource strategy

As a business owner, you prepare business plans at the start, but you may not consider human resource planning as part of your overall business strategy. Understanding the staffing skills and competencies you need right now and going forward to meet business growth and profitability plans is a necessity.

The first step is to tie your human resource plans to your business plan. Assess the current situation and your future goals. Do you plan to expand into new markets or introduce new product lines? Will you need to change technology that may require new skills? Will any possible economic changes on the horizon make good people more difficult to find?

Think through your business plan carefully to determine the people and skills you have right now and any workforce gaps needed to meet your business objectives going forward.

Understand the position

Once you have planned your HR strategy and know the hiring gaps you have now, start thinking through all aspects of the position(s) so you thoroughly understand the role. What will be the responsibilities and duties? How much authority and accountability will be required to perform the work? What will be the major and minor activities? How will you judge performance?

Know what you are looking forThe goal in any recruitment strategy should be to attract a top performer who will reach a higher level of productivity in a short time frame and ultimately stay with your company for a long time.
To help ensure hiring success, you need to know not only a candidate’s skills, knowledge, abilities, and experience, but also their behavioural competencies — personal attributes or characteristics demonstrated through on-the-job behaviours. These describe how a job is performed — flexibility, teamwork, motivational needs, decision-making style, energy level, stress levels, and self-confidence. You also need to understand your company culture and the behaviours required for the best fit.
Target your ideal candidate

Once you know who you are looking for and have written a job description, you can write an ad and target candidates through a variety of channels. When preparing the job advertisement, think of the Attention, Interest, Desire, and Action (AIDA) approach. You want to attract the attention of a sufficient number of qualified people, attract their interest by communicating the essential points quickly and clearly, compel them to respond, and provide a clear response process and mechanism.

Pre-screen the applicant flowAn open position can easily receive many responses. You will need to pre-qualify the applications to determine who best matches your ‘must have’ criteria. Many companies prefer to outsource this step. In particular, small-business owners often don’t have the time or the staff to handle the pre-qualification of all the resumes they receive. In addition to telephone pre-qualification, a questionnaire determines which candidates will advance to the interview stage.

Rank your applicantsOnce your applicants have been pre-qualified and telephone screened, the next step is to rank and sort their resumes to determine which ones meet or exceed the job’s requirements based on the criteria you have determined for skills, knowledge, education, experience, and any other qualities necessary for the position.

Interview and evaluate

The job interview is a powerful tool in the employee selection process and is key to assessing personality and cultural fit. A behavioural-description interview enables the interviewer to assess the candidate’s actual workplace behaviours, through discovering how the candidate acted in specific employee-related situations. The questions are more probing and more specific than traditional interview questions.

Before you begin the interview process, make sure you are well prepared and advise the candidate what the interview format will be.
Match the top candidates to the position

Shortlist your top candidates against the skills and behavioural competencies required for the position and for your company. The second interview stage with the shortlisted candidates lets you find out which candidate has the highest likelihood of success. Focus your questions on gaps arising from the benchmark you set so these can be explored in depth.

Check for red flagsReference checks help you make the best hiring decision possible by identifying the candidate who will be the most successful in the position and within your company.

When requesting a reference, consider the position and what you need to learn about the candidate. Plan your questions in advance and schedule your call. Ask the reference for specific examples of times when the candidate has successfully demonstrated the core competencies required for the position. During the conversation, listen to what the individual has to say and the words they use and how they use them. Be mindful of legal discrimination issues and ask only questions that relate directly to the candidate’s ability to be successful in the position. At the end, ask if there is anything else you should know about the candidate.

Depending on the nature of the position, you may want to get a background check to provide insight into an individual’s behaviour, character, and integrity.

Make the job offerWhen preparing the offer, advise the candidate how the offer will be sent (e-mail, regular mail, or other). Provide a reasonable amount of time for the candidate to confirm and accept.

Integrate new hiresIn small companies, every employee counts. Onboading and orientation help integrate new employees so they can quickly become key contributors. Start the process even before they come on board. Call them in advance, let them know who they will meet on their first day, greet them warmly when they arrive, introduce them around, and get them settled. Present information in an easy-to-digest fashion. New hires should be thoughtfully introduced to your company and to the new role.

Make sure that employees currently working with you know the new person will be joining, when, and what they will be doing, so everyone can welcome them. This is good not only for new hires, but also for the health of your company.

Onboarding is not a one-day event. Be sure to chat with new hires on a regular basis to find out how they are doing and if they have any questions or concerns. This is also all part of performance management, a continuous process of working together to plan, monitor, and review an employee’s work objectives and overall contribution to the company.

SummaryMost small-business owners know the frustration of spending more time than they want, or should, on non-revenue-generating activities. From payroll and HR management to benefits and compensation, entrepreneurs can spend up to 40% of their day engaged in time-consuming tasks.

The answer may be to outsource part or all of your HR functions so you can focus on your core business. If you have someone on your team who is trying to fulfill a number of roles including HR, outsourcing may be a wise decision.

Paul Falcone on:3 Surprisingly Easy Ways to Generate Meaningful Candidate ReferencesWhen you’re in the hiring seat, you’re expected to conduct thorough interviews, administer pre-employment tests, and typically conduct criminal background checks, but many employers still shy away from checking references with candidates’ prior employers. The mistaken reasons for this include:

• Past employers won’t give references
• It’s a waste of time: Candidates give you the names only of people who will speak well about them
• It’s illegal to check references and could expose our company to a lawsuit

Nothing could be farther from the truth. In fact, hiring candidates without checking references is like having a loose cannon on the deck of your ship. Until you’ve vetted your impressions with prior immediate supervisors who have managed the individual on a day-to-day basis, you won’t know whom you’re hiring or what the real person behind the “interviewing facade” is all about until you’re well into the relationship.

The critical part of effective reference checking lies in how you structure your call and set expectations, both with the candidate and the prior supervisors. It’s a lot easier than you think and yields outstanding results if you’ll follow these three simple rules:

Rule 1: Tell the candidate you are checking references of several finalists for the position in question.This builds a sense of competition into the process and will typically motivate candidates to work harder to set up the reference-checking phone calls with their prior bosses. Also, since candidates will believe that they are one of several finalists under consideration, they won’t be shocked if they don’t get your job offer after the reference check step has been completed.

Note: You do not want to explain it this way: “Good news. You’ve completed all interviews and tested well, and now the only thing left to do is set up your reference calls.” If you don’t hire the candidate, they may assume it’s because they got a bad reference from one of their prior supervisors, which could create a lot of unnecessary drama and potential legal exposure for both the referent and your organization.

Rule 2: Have the candidate do all the legwork in terms of reference bridging and setting up the call.Prior employers likely won’t engage in a reference conversation with you if you’re making a cold call. After all, if they haven’t heard from the candidate in a few years and had no idea this call would be coming, then the standard response mechanism will typically kick in: “Sorry, all reference calls need to be referred to our HR department.”

Consider telling the candidate: “Peter, our next step in the hiring process is to check references on our short list of finalists. References are very important to us in the selection process, and I’d like to ask for your help. You listed four prior supervisors on your employment application, and I’d like to discuss you with them. I’d also like to ask you to contact them and ask them to vouch for you. So please call them up and let them know that you’re a finalist with us, so that they’ll feel more comfortable speaking with us. In fact, either your former boss could call me directly or we could arrange a time for me to call her.”

This shifts the responsibility for tracking the supervisor down and setting up the call back to the candidate, where it belongs. And if a candidate is super excited and asks a prior boss to speak with you, the chances are high that you’ll have an insightful conversation once you both connect.

Rule 3: When opening a conversation with a past supervisor, spread honey on the situation and tell, more than ask where you’d like the individual’s help like this:“Laura, Peter said some excellent things about your leadership abilities in terms of providing him with structure and direction in his day, and I was hoping that you could share some insights into his ability to excel in our company." (Sure.)

“Our challenge is to find someone whose personality best matches the temperament of this role. The position that Peter’s applying for is very fast paced. It requires someone who enjoys working with the public and can sometimes tame cranky customers, and it also requires an analytical eye because there’s much necessary detail in the follow-up reports. Did he tell you anything about the job or express interest in it at the time he asked you to speak with me.” (Yes, he said he was very excited.)

“Great! Then how does that sound as an overall fit in terms of his personality, his ability to work with the public, and his attention to detail?” (That sounds like a great match. It’s very similar to what he did here with us.)

“I’m glad to hear that. Then allow me to ask you some specific questions about Peter and his ability to excel in this particular role .”

Once you’ve set up the terms or context of your call this way, you can then begin asking questions about the candidate’s ability to excel in your environment. You can include questions on their ability to communicate effectively, accept constructive criticism, balance quality and quantity, as well as questions on areas for professional development, eligibility for rehire, and the like. With the proper setup and a handy list of insightful questions, you’ll be well on your way to engaging prior supervisors in the pre-employment selection process, and developing an accurate understanding of what it’s like working with this individual side-by-side every day. In short, you’ll gain the advantage of developing a realistic glimpse of the person you’re hiring, not just the candidate behind all the interviewing hype.

Reprinted with the permission of Paul Falcone (www.PaulFalconeHR.com), a human resources executive who has held senior-level positions with Nickelodeon, Paramount Pictures, and Time Warner. Paul wrote a number of bestselling books published by the American Management Association, including 96 Great Interview Questions to Ask Before You Hire; 101 Sample Write-Ups for Documenting Employee Performance Problems; 101 Tough Conversations to Have with Employees; and 2600 Phrases for Effective Performance Reviews. Follow Paul on Twitter at @PaulFalconeHR.

Lori Kleinman on:The HR Issues Small-Business Leaders Need to Think AboutWhether it’s recruiting, retaining, or training employees, or maintaining compliance with legal guidelines, human resources departments play a critical role in small businesses. But not every company needs a dedicated HR staff. In fact, many small businesses can do without a formal HR department. However, no matter the size of a business, the HR function cannot be ignored. Fortunately, there are options for handling HR related issues and tasks.

Answer these questions to evaluate the best HR approach for your small business.

Does your company have a touch point for employees?Employees are more productive when they feel they’re cared about and that someone’s paying attention. The HR function originally was formed to provide that attention, but has grown to taking on responsibikity for the the life cycle of an employee — from candidate development to separation of employment. Does your company have someone who can focus on employee issues and career development throughout their relationship with the organization?

Where can the HR function reside?In many small organizations, HR is a hybrid function within finance or operations departments. Sometimes, an outstanding office manager or administrative person handles HR. Wherever it’s housed, HR ideally should have a direct reporting line to the organization’s president or chief executive officer so that it focuses on organizational goals rather than those of a particular unit. If an individual is handling HR in a hybrid role, the organization needs to provide continuous training on HR issues for that person. Can your company combine HR with another function, or would it be better served with a dedicated HR team?

Can the HR function be outsourced?]Some organizations have reasons for not wanting the HR function to have executive-level influence. Or they simply don’t have time or staff to devote to HR-related tasks. Does your company have the capacity to handle HR internally, or should you consider outsourcing the function altogether? Is the outsourcing decision based on your ability to provide the HR expertise or just an evaluation of expense?

Does your company have workforce issues?If your company has a particularly high turnover, trouble recruiting workers, confusion with compliance, or other workforce issues that can be time consuming to manage, you may require dedicated HR staff. Are employee issues fairly minimal, or are there more extensive workforce challenges?

What are employee costs?When management examines budgets, it may be shocked to see how large a percentage of expenses are employee related. It’s common to see 40 to 70% of organizational budgets focused on employees. Talk to the person most responsible for the budget items that impact employees. Seek feedback from employee-facing vendors, such as the payroll provider or benefits consultant. Consider hidden costs like unemployment and workers’ compensation that are typically kept in check by HR. What would be the impact on those costs if your company had dedicated HR staff and if it didn’t?

It’s common to see 40 to 70% of organizational budgets focused on employees.

Can your company leverage technology?A vast majority of the HR function is administrative. Many HR tasks can be streamlined or eliminated with technology. Can your company implement technology solutions to take over some of those tasks?

Can your company handle compliance issues on its own?Compliance needs constant attention in businesses of all sizes. Regulations exist for recruitment advertisements, new hire paperwork, employee files, treatment of employees, social media, and a lot more. And that doesn’t even include health-care reform. Does your company understand compliance issues needed to manage them?

Can HR help meet your company’s business goals?Highly functioning HR departments focus on and are expected to contribute to achieving organizational goals. They understand the business, industry, mission, and strategic initiatives. They add value by creating programs that drive business results and keep the workforce motivated and operating effectively. Can management envision giving the HR function a seat at the management table?

Does your company have an effective leader for the HR function?Whoever leads the HR function needs to be a trusted member of the management team. They also need knowledge of, and experience with, technology, finance, sales, operations, and vendor and talent management. HR leaders need to be innovative and focused on business goals. Does your company have someone who is up to the HR challenge?

The answers to these questions can help your company get a better sense of its HR needs. Whatever solutions are implemented, make sure they add value to the business and fit the culture of the organization.

Reprinted with the permission of Lori Kleiman, a US-based human resources consultant and author of the recently published book, Getting a SEAT. www.hrtopics..com. Contact Lori at [email protected]

Drake International has assisted small, medium, and large organizations with their HR and talent challenges since 1951. We have a full suite of talent solutions just for you, and we also offer a selection of unbundled, on-demand HR services to support business owners in addressing the HR side of their business. These include:

• Assessment tools that reliably identify top performers
• Training in how to recruit effectively
• Writing job advertisements
• Creating top performer profiles
• Posting on job boards
• Resume screening
• Behaviour description interviewing
• Background and criminal checks
• Reference checks
• Skills testing
• Behavioural testing

To learn more, contact your nearest Drake location, or visit our website at www.drakeintl.com to find out how our unbundled recruitment and talent solutions can help your company attract and retain top performers to help your business grow and prosper.Drake P3 provides employers with objective, science-based behavioural and personality profiles. This powerful psychometric assessment tool clarifies personality profiles and individual capabilities to help you hire the best candidate the first time.