Small Business Employee Hiring Mistakes

By: Don Osborne
Submitted: 2007-01-17 12:35:53
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It probably started with the first person you hired. As a brand new small business owner, you hired your first employee without knowing exactly what role they would play, a well thought-out job description, no skills testing or resume checking, no source of funding for their pay check and no game plan for getting the best they had to give. Guess who you hired? You hired "You" for the position of business owner and every other job you're currently doing. Here's how to avoid the same small business hiring mistakes in the future.

Create an Organizational Structure

Every small business must perform certain basic functions to ensure their success and profitability. Your organizational chart should reflect not the people who occupy the position but the position itself. What must be accomplished is the function you will ultimately hire an employee for.

For example, if your small business uses a direct sales method to accomplish its marketing function then the chart needs a place in it for that position. Yes, someone or some system will perform the function as an employee, but the first issue is to designate the function. If the function doesn't exist don't hire someone to fill the space just because they could be good at it or you'd like to employ them. Start with spaces, not faces when you create your small business organizational structure.

List the Skills You Need to Hire

Once you've created an organizational chart based on the functions required for your small business to succeed and profit, than you can turn your attention to the skills required for the position. You're still not at the stage of hiring an employee. You're only at the point of listing the skills an ideal employee should possess.

A common small business hiring mistake is to hire people who you like or are related to you. The idea of fully understanding the skills and aptitudes required to successfully complete the required tasks of a particular job is not always how a small business owner approaches the development of a job description. Every employee should be hired against a job description.

Don't hire a person with the idea you'll fit them in. Hire the skills you need to accomplish the functions required by your small business. A good employee starts with a person who possess the basic skills you've listed.

Source Funds to Compensate the Position

Every small business function and the jobs required to complete them must be matched to a source of funds. Each employee function you hire should be viewed from a cash flow standpoint. Does the position primarily create revenue or save expenses.

Revenue producing employee positions are often part of your marketing function. Expense saving positions may be found in your operations function. In either case, you'll need to determine the source of funds for compensating the employee. If the position is revenue producing the source of funds for compensation might be the sales volume the employee creates. If the position is expense saving the source of funds might be tied to how the employee impacts your monthly overhead.

In every case, the source of funds used to pay an employee position must be determined before deciding to hire the position. It's also very important to discuss how a position is to be paid and what your expectations are with any employee candidate. Don't expect an unclear source of funds to produce the cash flow you need on payday.

Design a Plan to Motivate the Person Hired

Given an organizational structure, a list of required skills for the employee position and a source of funding based on creating revenue or saving expenses, you now ready to actually hire a qualified individual - a real person. If you're a fit, hire yourself or some other qualified person. Once you've selected a candidate to hire there's one more critical step.

It's too time consuming and expensive to make the small business hiring mistake of not keeping a person you've just hired. And, for most new employee hires, they'd like their new job to work out too. It's critical to design a plan to ensure employee retention. At the core of employee retention is keeping people engaged and motivated. Do you know what you're potential employee is looking to achieve through their employee relationship?

Small business owners often feel the steps required to avoid common employee hiring mistakes are not worth the rewards following them would provide. The first reward for following the steps listed above is a small business that's on track for reaching its objectives. The second reward is exponential results of having an employee who is truly qualified for the position they hold. The third reward is getting your money's worth out of the compensation you're paying. The fourth reward is a long-term employee satisfied with the position they hold.

If these rewards fit your small business hiring goals then use the four steps above to avoid these common employee hiring mistakes. It's possible you didn't subject yourself to these steps when you hired yourself as a small business owner, but it's never too late for you and all the jobs you do to benefit from them.

Learn' Do Solutions - Free Assistance to maximize your small business profits. Small Business Crossword Puzzle at: http://www.profitpuzzle.com. Don Osborne authors The Profit Puzzle to help you plan, finance, start up, run, grow, sell your small home based business ideas.

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