Steps for Making the Best Use of Your Employees
When it comes to using human resources, small-business owners typically fail to pay sufficient attention. Too often they take employees--their most valuable resource--for granted.
“A small-business owner will spend money on new machines, a marketing plan and technology but frequently doesn’t make the investment to develop this resource . . . and this is the resource that makes all of the other things work,” said small-business consultant Debra Esparza, owner of Esparza & Associates in Long Beach.
As a small-business owner, you should use the best business practices to attract, select, train and retain your employees. Below are guidelines to make the best use of this asset.
* Attracting: Plan ahead. Don’t wait until your existing staff can’t do the work before hiring new people. While you search for new employees, your company’s work quality or quantity can take a serious dip, Esparza said.
As part of your planning process, hire just before expected growth so you don’t burn out your staff. Consider the type and number of employees you’ll need to meet that growth. If you’re targeting a new market, you might want different kinds of employees than those now on board.
“Who you hire is dictated by your company needs and your company needs are driven by the opportunities and threats in your industry,” Esparza said.
When hiring, prepare a well-defined written job description and identify the experience, education, skills and abilities required for the job.
You don’t always have to hire full-time employees. You can lease employees through a personnel agency, hire part-timers or use independent consultants. If you use consultants, make sure you check federal and state laws on what constitutes an independent contractor versus an employee. Small-business owners can easily run afoul of these definitions and end up paying substantial back wages, taxes and fines.
Know how your salary and benefits compare with other businesses in your industry. Check with industry or trade associations for comparisons or do the sleuthing yourself.
The more you use your own personal sources in the search, the better your chances of finding qualified people. Generic ads typically are not that useful because they lack the personal element. Ask your employees for referrals, check with your trade associations or local job banks, talk to others in your industry and those in your business network.
* Selecting: Applications, interviews and testing are important elements of your selection process, and each requires specialized attention or skills.
Don’t devise your own application form because you may inadvertently violate federal antidiscrimination laws, which prohibit asking questions about age, sexual orientation, religion, marital status, details on criminal records and other information, Esparza said. Use forms from stationery stores, forms from catalogs such as Human Resource Direct, and forms provided by membership organizations such as the Employers Group, Business for Social Responsibility and others. Keep all completed applicant forms in case someone later claims hiring discrimination.
Remember that some experts estimate that as many as 15% of job applications contain falsifications or errors. Thus, the second step in selection--interviewing--is crucial to hiring good people. Remember to let the applicant do most of the talking. Start the interview with a list of questions about the person’s skills and abilities to make sure they correspond to what you need. Avoid questions that discriminate. The same ones you can’t ask on paper, you can’t ask verbally.
Ask a few hypothetical questions to determine how an applicant might respond to a particular job situation. If you are seeking an administrator who will work with employees in different parts of the business, you might ask how your applicants would decide which task to do first if three employees came to them with requests on the same day. Applicants might answer: “The first person who comes to me gets their work done first” or “I’d see which is the most pressing task” or “I’m not going to take orders from three bosses!”
Include problem-solving questions in the interview, if applicable to the job, especially problems that do occur in your business.
After the interview is completed, make notes and determine which applicants should be called back for a second interview. Never hire on the spot. You may want others in the company or on your advisory board to interview the final candidates, and you need time to verify the applicants’ degrees and credentials and check their references.
* Training: On the first day, spend a couple of hours orienting your new employees to your company’s goals and objectives. Introduce them to other workers and perhaps to your company advisors. You may want to give them company guidelines and logistical information such as where to park, where the water cooler sits, where they can hang their jackets and get supplies, when to turn in a time sheet, and what time and how long their lunch break lasts. Do it the first day to avoid misunderstandings. Show them how their job fits in and how it is important.
Once the orientation is complete, begin ongoing training. Pay for employees to attend off-site training courses or workshops that will enhance their professional skills, add value to your company and help them grow personally. The training will allow you to capitalize on your employees’ strengths and give your company more resources for growth.
This is not as expensive as it seems. More than a dozen Small Business Development Centers and other nonprofit agencies exist in Southern California that provide two-hour classes either for free or a small fee.
* Retaining: Communication and respect are key to ensuring that your employees feel valued and stay with your company, Esparza said. Listen to their comments, concerns, issues and suggestions. Because they are on the front lines, they can help you do business more effectively. For example, a retail clerk who is trained to report that customers ask for certain products or different sizes can help grow your business.
Remember to reward and thank employees for suggestions that aid your business. If you can’t afford to give bonuses, consider a special dinner for an employee and family members, gift certificates or time off.
If you can’t afford to buy health insurance or retirement plans for your employees, try hiring a financial planner or accountant for a few hours to help your employees prepare for retirement or plan for their children’s education.
As a perk, provide time off for employees to volunteer for charity tasks, or shut down the business entirely and have all your staff work at a charity activity such as a school maintenance day or fund-raising event.
Profit sharing, bonuses and employee stock ownership also can work for a small-company owner, but these may involve complex arrangements and you’ll need to bring in professionals for guidance. But remember that whatever incentive, bonus or profit-sharing plan exists, it should be structured so that the employees’ reward is directly related to their efforts and they aren’t left out when profits come in.
All these measures can’t take the place of high salaries or generous benefits, but they can help employees in a small business feel better about the company they’re working for, the jobs they’re doing, the boss they have. Even better, they feel good because they are growing personally, learning new skills, being listened to and contributing to the growth of a business.
“Having a highly skilled and motivated work force can be one of the best competitive weapons available to a small-business owner,” Esparza said.
Exercise: Identify how you expect your business to grow, if you will need more employees and what types they should be.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Entrepreneurship 101
Chapter 5: HOW TO GROW YOUR BUSINESS
* Devising a Strategic Plan
* Making Alliances
* Using Technology
* Using Human Resources
* Forming an Exit Strategy
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
The Bottom Line
“Entrepreneurship 101” is a tutorial on how to choose, start, finance, plan and grow a business. The program, written by Times small-business columnist Vicki Torres, was developed by Debra Esparza, a faculty member at the Entrepreneur Program of USC’s Marshall School of Business. Esparza is a former head of USC’s Business Expansion Network and is a program advisor at Women’s Enterprise Development Corp. in Long Beach. With Esparza’s help, WED is launching a series of courses targeting small businesses that want to grow. Entrepreneurship 101, the tutorial, also can be found at The Times’ Small-Business Web site at https://www.latimes.com/smallbiz.
