Hiring new employees is probably the most important aspect of any small business. Most business owners waste a lot of time, money, and energy on finding the right fit for your business. Hiring the wrong person is not only costly, but it devalues your brand as well.
According to most recruiters, the cost of a new employee – including your time, training, and benefits – is $240,000. But if you hire the wrong person it can cost you up to $840,000 when you factor in total compensation, including severance, additional hiring, and other disruptions to your business.
Hiring is more than just placing an ad on Craig’s List, interviewing, and then checking out references. It’s important to have the proper process in place each time a position becomes open.
1) Write Better Job Descriptions
This is often an overlooked part of hiring. If you don’t describe exactly who and what you want, then you’ll get the wrong candidates applying for the position. Many companies write detailed descriptions with long lists of responsibilities and requirements; but a study done by the Wall Street Journal says that this can actually alienate a lot of qualified employees.
In the study researchers found that in 56 job ads, those that emphasize on what an employer can do for the candidates found they attracted better quality candidates. Write ads that create excitement and value for the candidate and you’ll find the right applicant begging for the job.
2) Interview Multiple Candidates Multiple Times
This may seem intuitive but it’s crazy how many people don’t take the time to interview more than one candidate. If you let excitement or lack of time get in the way, you’re more likely to grasp the first promising lead that comes your way.
You also want to get a second opinion on your candidate. Find either a co-worker or another manager to give your candidate a second opinion, preferably someone with a different personality than you. It is great to see how the candidate does under different circumstances.
3) Focus On Soft Skills
You might be tempted to hire somebody based on work experience and whether they have certain skill sets but social intelligence, institution, conflict resolution, and critical thinking are all skill that cannot be easily taught—if at all. These should be considered into your decision. Not just an impressive resume.
4) Embrace Social Media
Like most employers, you might do a quick Google search on your candidate and see what comes up online. But you should also be looking through the candidate’s social media profiles to check out what sort of person they are. At the very minimum, you should check their LinkedIn profile; but you also want to search them on Facebook and Twitter as well. If you see lots of photographs of parties, then you shouldn’t be too surprised if they call in sick on a Monday morning.
5) Improve Your Interview Skills
Sometimes even star candidates don’t perform well in interview situations. It’s your job to make them feel comfortable and act as naturally as possible. You should think out your interview questions beforehand and roll play with your own staff to make sure you can guide your interviewees to get answers you want. Become a skilled interviewer and you’ll find your hiring will improve.
6) Have A Probation Period
When you hire somebody it’s best if you make it clear that you’re hiring them on a trial basis. You never know what issues will pop up. Sometimes you underestimate the chemistry required for an applicant to be successful. Even after you’ve done all your due diligence you never know if a person will really work out.
Another strategy you can use is to hire your candidate as a freelancer or an intern. That way if they don’t work out then it’s not such a big impact. Or if you’re desperate for a full-time employee you can give your candidate a small task to complete. For example, you can get them to write a blog article like this one, or social media to see how detailed oriented they are.
Hopefully this article has given you some helpful tips on how to hire superstars. Hiring top talent will do more than anything to boost your business and take it to the next level.
General Stats for Conclusion
SMALL BUSINESS AND THE ECONOMY
American Business is Overwhelmingly Small Business
In 2012, according to U.S. Census Bureau data, there were 5.73 million employer firms in the U.S. Firms with fewer than 500 workers accounted for 99.7 percent of those businesses, and businesses with less than 20 workers made up 89.6 percent. Add in the number of nonemployer businesses – there were 23.0 million in 2013 – then the share of U.S. businesses with less than 20 workers increases to 97.9 percent. Among employer C Corporations in 2012, 99.2 percent had less than 500 workers, and 86.2 percent had fewer than 20 employees.
The Small Business Share of GDP
A January 2012 report from the SBA’s Office of Advocacy found: “Small businesses continue to be incubators for innovation and employment growth during the current recovery. Small businesses continue to play a vital role in the economy of the United States. They produced 46 percent of the private nonfarm GDP in 2008 (the most recent year for which the source data are available), compared with 48 percent in 2002.”
Source: “Small Business GDP: Update 2002-2010”
Bulk of Job Creation Comes from Small Business
According to the SBA’s Office of Advocacy: “Small firms accounted for 63 percent of the net new jobs created between 1993 and mid-2013 (or 14.3 million of the 22.9 million net new jobs). Since the end of the recession (from mid-2009 to mid-2013), small firms accounted for 60 percent of the net new jobs. Small firms in the 20-499 employee category led job creation.”
See the Office of Advocacy’s “Frequently Asked Questions” publication.
Small Business Share of Employment
According to U.S. Census Bureau data, employer firms with fewer than 500 workers employed 48.4 percent of private sector payrolls in 2011, and employer firms with fewer than 100 workers employed 34.3 percent, and those with less than 20 workers employed 17.6 percent.
Data from the Census Bureau’s Statistics of U.S. Businesses can be reviewed here.
Small Business and Innovation
The SBA’s Office of Advocacy notes: “Of high patenting firms (15 or more patents in a four-year period), small businesses produced 16 times more patents per employee than large patenting firms.” In addition, a 2008 study by Anthony Breitzman and Diana Hicks for the Office of Advocacy (“An Analysis of Small Business Patents by Industry and Firm Size”) found that “small firms are much more likely to develop emerging technologies than are large firms. This is perhaps intuitively reasonable given theories on small firms effecting technological change, but the quantitative data here support this assertion. Specifically, although small firms account for only 8 percent of patents granted, they account for 24 percent of the patents in the top 100 emerging clusters.”
See the Office of Advocacy’s “Frequently Asked Questions” publication.
See “An Analysis of Small Business Patents by Industry and Firm Size” here.
Small Business and Trade
The U.S. Census Bureau noted the following about small and mid-size businesses in the international trade arena in 2013:
-“Small- and medium-sized companies (those employing fewer than 500 workers, including number of employees unknown) comprised 97.7 percent of all identified exporters and 97.1 percent of all identified importers.”
-“Among companies that both exported and imported in 2013, small- and medium-sized companies accounted for 94.4 percent of such companies.”
-SMEs accounted “for 33.6 percent and 31.1 percent of the known export and import value, respectively.”
-Among all U.S. manufacturers: “96.5 percent of manufacturing exporters were small- and medium-sized companies and they contributed 19.1 percent of the sector’s $839 billion in exports. 93.5 percent of manufacturingimporters were small- and medium-sized; they accounted for 13.4 percent of the sector’s $914 billion in imports.”
-Among wholesalers: “99.2 percent of exporting wholesalers were small- and medium-sized companies; they accounted for 64.8 percent of the sector’s $303 billion in exports. 99.1 percent of wholesaler importers were small- and medium-sized; they contributed 60.0 percent of the sector’s $593 billion in imports.”
Self-Employed Trending Down
Based on U.S. Bureau of Labor Statistics data, the level of entrepreneurship actually has declined in recent years. That is, the number of self-employed in the U.S. has dropped notably. Incorporated self-employed fell from 5.78 million in 2008 to 5.13 million in 2011, then climbing back to 5.48 million in 2015. So, after seven years, the number of incorporated self-employed remains well short of the 2008 level.
Unfortunately, the news is even worse when it comes to the larger measure of unincorporated self-employed. The number of unincorporated self-employed declined from 10.59 million in 2006 to 9.36 million in 2014. While incorporated data only go back to 2000, unincorporated self-employed numbers date back decades.
The 2014 number actually was the lowest since 1986. The level moved back up to slightly to 9.51 million in 2015. However, within 2015, the data turned down after May. Consider that the December 2015 level of 9.364 million was down markedly from the intra-year high of 9.968 million in May of 2015, and was off from the December 2014 level of 9.527 million.
Survival Rate for Small Businesses
According to the SBA’s Office of Advocacy: “About half of all new establishments survive five years or more and about one-third survive 10 years or more.”
See the Office of Advocacy’s “Frequently Asked Questions” publication here.
How Small Businesses Work, Background and Education
In June 2011, the U.S. Census Bureau released its 2007 Survey of Business Owners (Note: results of the 2012 Survey of Business Owners are scheduled for release in 2015), and it supplied some interesting information about how small businesses function, including:
• 51.6 percent of businesses were operated primarily from someone’s home.
• 23.8 percent of employer firms operated out of a home.
• 62.9 percent of non-employer businesses were home-based.
• “About 28.2 percent of firms were family-owned. These family-owned firms accounted for 42.0 percent of all firms’ receipts.”
• “Business owners were well-educated: 50.8 percent of owners of respondent firms had a college degree.”
• And 13.6 percent of business owners were foreign born
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