Small Business Guide to Hiring the Right People

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For small business owners, hiring the right person is a combination of offering benefits that attract applicants – and identifying the candidates who are a good fit for your venture. Here’s what you need to know about how to hire good employees for small business.

Since 2018, the job market has been a so-called candidate’s market. There are about one million more job openings than candidates available to fill them. The pandemic has caused the job market to shift rapidly, however, and talented candidates are seeking opportunities at businesses of all sizes.

The State of Small Business Report from 2017 found that the number one challenge for 50% of small business owners is hiring new employees. Small businesses may feel hiring someone is better than hiring no one, and that the best candidates will be more attracted to the resources and benefits of a larger company. But, that assumption is not necessarily true, and the COVID-19 has changed the hiring market to favor businesses. 

Why is it important to hire the right person?

The right person can do a lot to run and grow your business profitably. By some estimates, a great employee is worth 40% in incremental profit each year. Small business employees play an outsized role in the business’s success. Your team likely has more contact with customers, multitasks in many different aspects of business operations, and can problem solve creatively to save money in a pinch. It’s vital that you find a new hire that can adapt to the challenging – and rewarding! – task of running a small business.

And, perhaps more importantly, the costs of hiring the wrong person are steep. “By some estimates, the wrong hire can cost a business up to 2.5x the salary — easily over $100,000. That’s a mistake many small businesses simply can’t afford to make,” reported the US Chamber of Commerce.

Hiring the wrong person can be a costly mistake – not to mention time-consuming. The time it takes to fill an open position is 36 days, on average. That’s more than a month spent reading resumes, screening candidates, hosting interviews and putting together an offer package, only to have to do it all over again when the wrong hire leaves, losing another month in the process. When as much as 80% of employee turnover results from bad hires, this mistake puts small business owners in an untenable position. 

What should I look for when hiring a new person for my small business?

No one sets out to hire the wrong person. So how do you avoid making this common mistake?

Your approach should be two-pronged: first, attract the right applicants to your business by rethinking your job descriptions, employment marketing, and benefits. This will start to bring in applicants that are better suited for your company culture and open roles.

Secondly, dive into the hiring process to make sure the best candidates are rising to the top of the pile. You may need to change the way you’re screening resumes, interviewing candidates, or all of the above. 

Every small business is different, and what makes someone “right” for your venture won’t be the same for the business next door. But, by following these steps, you can begin to attract high-quality leads and decrease your chances of hiring someone who won’t go the distance with your business.

How to attract applicants to your small business

It’s impossible to improve talent retention if your hiring process isn’t set up to attract applicants who are willing to go the distance. Here are some ways to make sure you’re attracting applicants who will be successful at your business. 

Write a clear job description

Nine times out of ten, the “wrong” employee may not be a bad worker – they’re just the wrong fit for the particular role. This happens when a job description is not clear. “One of the common hiring mistakes employers make is announcing they’re hiring without first determining the essentials of the position and writing a detailed job description,” reported Fundera.

Before you open a position for applicants, take the time to be detailed about your job description. Know from the beginning what character traits you are looking for, as well as what skills will be needed from the outset – versus those you plan to train your team to learn. If there are specific requirements about remote work, working on weekends, or needing a vehicle as part of the job, mention those requirements up front. Allow candidates to self-select based on the restrictions and requirements of the role.

[Read more: How To Write A Job Description

Sell the role 

As you write the job description, keep in mind that you’re trying to sell your company as much as find the right person. Help candidates decide if this is a good fit by adding a secrion with your company’s mission statement, values, and company culture.  “The best potential hires want to know what your company stands for, why you do what you do, and what core beliefs you will never compromise,” writes Fundera.

Put the tools of employer branding to work: while you may not be able to offer the same benefits and salary as Google, there are plenty of other things to be excited about your business. A six-figure paycheck isn’t everything: many candidates are looking for a friendly, personal work environment with lots of opportunity to grow. Several surveys have found that these perks attract job seekers:

  • 57% of small businesses say they are offering flexible hours
  • 33% say they are offering flexible work locations
  • 21% say they offer advancement and mobility
  • 18% say they provide generous vacation policies

That’s not to say you shouldn’t also include a section detailing salary and benefits. Millennials, in particular, have proven to show interest in benefits beyond basic compensation and health insurance. Do you offer remote work? Pets in the office? Flexible vacation time? Expand on these perks to attract great talent.

Go outside traditional job boards

Job sites like Indeed and Glassdoor have thousands of new positions listed each day. It’s easy for any business to get lost in the crowd. Spread the word about your open position in more targeted ways: 

  • Social media: use your Facebook and LinkedIn company page and personal profile to let your network know you’re hiring. 
  • Local business agencies: connect with those in your industry who can send qualified candidates in your direction.
  • Universities and colleges: work with a career department to reach not only recent graduates, but alumni in the area who might be looking for something new. 
  • Partners and clients: see if any of your vendors, partners, or clients know anyone in their networks who could be a good fit for your team.
  • Your employees: referrals are a recruiter’s best friend. See if anyone on your team has someone they can recommend. 

Think outside the box when it comes to sourcing resumes. And, don’t be shy about advertising a role by any means necessary! The more applicants you can get the better chance the right fit will be there. 

How do I choose the right person for my job?

Now that you’ve set up your funnel to begin bringing in high-quality candidates, how can you adjust your screening process to make sure you’re giving great people a chance?

As we cover in our guide, “How to Design A Recruitment Process To Predict Job Performance,” the best predictors of job performance are:

  1. Skill assessments as part of your recruiting process
  2. Replacing unstructured interviews with job auditions
  3. Tracking and understanding employee performance metrics

We’ll get into this third point in a later section, but here’s what you need to know about merit-based hiring.

Use a skill assessment

Many of those “wrong fit” employees make it through the hiring process because we’re using the wrong metrics to wave them through. Recruiters have traditionally relied on resumes and job inerviews to identify the right new hire. But, for numerous reasons – one of which being that candidates tend to lie on their resumes – skill testing offers a better measure by which to hire., 

A skills test is an assessment used to provide an unbiased, validated evaluation of a candidate’s ability to perform the duties listed in the job description. Questions on a skills test can be designed to cover task-related abilities, like coding, copywriting, or sales, as well as some of the less tangible capabilities that are critical at a small business – things like teamwork and leadership.

Running a skills test through Vervoe, or any other platform, is relatively straightforward. Select questions from a library of assessment tools, or design your own questions based on the specific needs of your company. The best part? Many skill assessments are affordable for small businesses. 

[Read more: How You Can Use AI For Recruiting – Even If You’re A Small Business

Re-think your job interviews

“A typical job interview is little more than a social call with some predictable choreography. A conference-room meeting, a pristine résumé and the standard questions: Where do you want to be in five years? What do you consider your biggest failure? What are your strengths and weaknesses?” wrote the New York Times.

It’s true: most interviews are a poor predictor of job performance. Instead, job auditions provide an environment where a candidate can show off their skills. These assessments show how a person will handle a real scenario at your small business: making a sales call, dealing with an angry customer, or negotiating with a partner. See how a person performs before you actually make them an offer. 

Interviews are a useful tool build a relationship with a candidate, and should be used to to answer unanswered questions from the hiring process. If you have the results of their assessment prior to the interview, you can concentrate on the skill areas they didn’t perform well in. 

How do I know if I’m hiring the right person?

A skills assessment can go a long way toward making sure you’re finding a person based on their talent and capabilities – not based on their resume or rehearsed interview answers. Many recruiters also rely on existing employee performance metrics to see if they’re hiring the right person.

Your HR analytics and KPIs can be used to inform your recruiting process. Employee performance metrics like work quality, quantity, and efficiency can tell you who your top performers are. Those team members can then help you design a skill test designed that predicts the same level of success. Using an AI-powered platform like Vervoe, you’ll get an instant benchmark of performance that you can then tailor to your preferences. 

There’s never any guarantee that the person you hire is going to be a rockstar and stay with your company forever. But these steps can help you find and nurture talent while saving time and money. 

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