Knowing when to bring on new employees in a small business can be a headache. It’s a huge expense and can add to your tax and admin burden.
But you can’t grow a small business without additional human-power. Luckily, right now is one of the best times to start looking for new people, says Barry Lehrer, Founder and Director of DiffuzeHR.
“The time right after the Christmas and New Year holiday period has always been seen as a good time to find new talent,” he told The Huffington Post Australia.
“People tend to do a lot of reflecting during this period and consider where they want their career to go.
“Employees tend to be fresh and ready to embrace a new role and you, as the owner, are in a clearer frame of mind ready to make renewed effort to build your business.”
But there are a few things you need to consider before you rush out to hire a batch of new people. Lehrer told The Huffington Post Australia his expert advice.
You gotta know when to hit the GO button
Knowing the right time to bring on a new employee was the first and most crucial step, said Lehrer. Your business may be on the cusp of expansion with new projects on the rise, but continuing contracts may not be certain.
Lehrer said there were three key indicators that you needed more staff.
The first was that the workload of your existing team had become beyond their capacity or their expertise.
“My experience is that once a person is at 90 percent of their capacity they are starting to become overworked and will generate a greater number of mistakes,” Lehrer said.
The second key element was recognising that your team didn't have the skills required for the growth of the business.
“The concept of ‘jack of all trades’ becomes a major negative of a growing business,” Lehrer said. “Reliance is placed on one person with the expectation they have the complete skillset. The result is poor decisions, missing things and in fact, stifling growth.”
The third consideration was your bottom line as a business owner -- if you could manage the cost of an extra pair of hands, then do it.
“This does not mean you have the money there and ready, but your forecasting demonstrates that you can afford to bring a new person on,” he said.
“Remember this cost is not just their salary but needs to include all the additional statutory costs (superannuation, workcover and possible payroll tax) plus the additional overheads needed to maintain the new employee.”
A new year, and a new team
As workers think about their new year’s resolution to find a more rewarding job, they’re likely to be out there looking for new opportunities. That’s good news for small business owners, but Lehrer said to remember you’re after quality, not quantity.
“Be sure that what you are looking for and what is available is the correct fit,” he said. “A larger talent pool doesn’t necessarily mean the right person is in it.”
His advice was to create a position description for the role you want to create. This will not only be useful as an advertising tool but also to help with recruitment, performance reviews, performance management, organisational restructure, the setting of key performance indicators, day-to-day management of an employee, Lehrer advises.
“You need to be clear and have a defined understanding of the role to be performed and the specific requirements, capabilities and experience you expect any candidate to have,” he said.
What should you pay a new employee?
Lehrer advised to do your research around various roles and what the industry was paying by joining industry groups and networking with other employers -- many would be happy to trade information -- as well as scouring the internet.
“A great way is to subscribe to one of the salary surveys and trawling through the job boards to determine what other companies are offering new employees,” he said.
Getting down to business
Recruiting an employee is something you can do on your own as a small business owner, or outsource to a dedicated recruitment firm. Lehrer said there were pros and cons with both.
“The biggest con is cost -- this is money you may not have but need to spend to engage a recruiter and if you select the wrong recruitment company they may not truly understand your needs or may just send you candidates to make a sale,” he said.
“The pros revolve around getting the right person -- recruiters tend to have better connections and are able to attract candidates."
If you decide to do it yourself, here are a few tips:
- Create the position description and selection criteria so you have a clear idea of who you are after;
- Develop a questionnaire that will help guide you through the interview process and include competency-based questions built around situations the new employee may experience in the job;
- Prepare yourself for the questions the candidate will ask you such as what kind of company you are, specifics on the role (don’t sugarcoat it) what your expectations of them would be, future career progression and a clear discussion about remuneration;
- Give them plenty of opportunity to ask you questions -- it’s a bit like dating, but not speed dating.
You can also include others in the interview process to help with your decision.
Knowing whether someone is the right fit for your business will depend on how well the interview goes but also their reference checks.
Lehrer said a reference check was the best way to gather feedback about a candidate and explore any areas of concern you may have.
“But reference checks are only an indicator,” Lehrer said. “It’s highly unlikely a candidate is going to give you the name of somebody who is not going to say nice things about them.
“When conducting a reference check, listen for pauses, change of thought or answers – this may indicate a situation the person doesn’t want to talk about.”
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