Self-Employment Series--When to Hire & When to RUN!

Employees can be a huge liability for any small business owner. But the right employee can also be a wise investment and boon to a business.  So in the interest of helping our readers be successfully self-employed, and in order to better financially prepared, I’m going to pass on a few key snippets of wisdom that many small business owners have to learn that hard way.I hope it saves you a whole lot of headaches in the future so that your business can thrive in response to all of your hard work.

First of all, many small business owners actually hire an employee way too soon.  Let me explain what I mean by that.

The bottom line is that the ONLY reason you should ever hire an employee is if you are then able to bring in more money as a result of that hire.  In any market, let alone a slow one, no one should feel like they have the luxury of hiring someone just for image, busy work, etc.  Spouses, kids, and friends can help with busy work.  Employees must be viewed as a financial asset to your company—plain and simple. For example, if you hire a receptionist, make sure that person isn’t just there to answer the phone, but can actually be proactive in garnering your business.  Everyone you hire in your business should be capable of “selling” your business to more customers.  Everyone should be sufficiently educated to share your marketing message and your unique position in the marketplace. What? You mean you aren’t supposed to hire a person for busy work?  That’s correct, unless that busy work is keeping you from doing what only you can do expertly on behalf of your business. In that case, the employee you hire to handle the mundane, busy work is actually a good financial asset because they are providing your day with the time to do the big dollar things that only you can do.

When it comes to hiring employees, be sure to remember that every single act they perform in their duties as your employee is also MARKETING on behalf of your company. Your job is to make sure that everything they do ends up furthering your reputation and marketing goals. For example:

  • How well do they answer the phone (how many rings till pick-up, are they polite, do they speak in a professional manner, use good grammar, etc.)?
  • How quickly are e-mails responded to?
  • Do they write well, understand business format--using good grammar, and spelling?
  • Is  the veracity of the information shared with your customers up to the quality that compliments your company's image?

ALL of these actions are marketing. The question is, is the marketing your employees are currently engaging in for your business or for the competition?  I can assure you that there have been many instances in which the actions of an $8 an hour employee of Wal-Mart have actually ended up being effective marketing for Target.  In some cases the mistakes of poor-quality employees can be so significant that the subsequent purchases from former customers at your competitor's establishment cause more action than a multi-million dollar television commercial campaign.  When it comes to using coupons, Wal-Mart and Target have done a great job in marketing a negative image, so their customers feel compelled to use alternative stores—because these stores are so awful and inconsistent in how they train their staff to handle coupon use. So remember, while you may not be giving one of your employees the title of “marketing director” they still have an abundant amount of impact on your marketing messages regardless of what responsibilities you assign to them.

In today’s job market, the massive amounts of responses one receives for even the smallest of positions with their company may be a bit overwhelming. Just the thought of reading that many resumes or getting that many phone calls can be a bit daunting.  So here’s my suggestions for making the most of the hiring process (which I have used for years, in good markets and in bad, and it’s never let me down).

First of all, yes, you’ll need to take the time to review the resumes as they come in. And yes, I STRONGLY recommend that you request a resume along with a cover letter.  Review the resume and check for typos, improper sentences, gaps in employment etc.  If a person is unable to write their resume correctly (something which they have all the time in the world to perfect prior to sending it on to the person who may be responsible for supporting their family) then I certainly wouldn’t trust them to answer the phones for my business.  I’ve seen countless resumes in which the person even misspells their own name! I don’t care what kind of industry in which you're hiring, those kinds of mistakes could cost you thousands of dollars. Remember, casual is the predecessor to casualties.

Secondly, I always request a cover letter and specifically request that they will write one in which they can assert that they are specifically a good match for my company.  This requires them to have some basic writing and reasoning skills. I can’t think of a single position that wouldn’t benefit from hiring persons who hold at least the most basic of writing and reasoning skills.  I’ve seen persons with Master degrees write some of the worst letters. Again, if this is what they do in the privacy, comfort and familiarity of their own home, what in the world might they produce in your company?  I specifically look for typos, laziness (a letter containing two very generic sentences is a dead giveaway), and I look for a little bit of their personality to come out as well. I’m very clear in my classified ads (whether it be utilizing Craigslist or the local newspaper) that I need a cover letter and resume either e-mailed or faxed to me.  So imagine how impressed I am with a person who sends their resume without a cover letter.  NEXT! Into File 13 it goes. If they can’t follow the most basic of written instructions—especially when they have the luxury of reading and re-reading them prior to sending in the information requested in the job description, then they have given you every reason in the world to think they will not follow your instructions once they have been hired.

Oh, and by the way—this is a big one—remember that YOU are the boss. YOU are the one hiring the person.  Don’t let those silly creatures bully you around who say they won’t be submitting their resume to you until they get more information from you on what the job is about, etc. Even in a job market in which good employees are scarce, I have never given into such demands.  Those are the kind of applicants that will be trouble for you in the end, usually painfully troublesome. Don’t even give such persons the time of day. Again, if they have such a big ego that they can’t follow the most basic of instructions, and are going to initiate their relationship with you via contention and challenging of authority, then shame on you for hiring them.

Third, make sure that you gather ALL of the resume and cover letters via technology. You don’t need to respond to every submission when they come in.  Instead, have them come into your in-box and remain until your dedicated time to focus on them arrives.  It’s important that you not spend any more of your precious time than is absolutely necessary on this process. It’s taxing enough as it is.  When you receive a resume with a positive view along with a well-written cover letter, then send that person an e-mail.  The purpose of the e-mail is for you to answer all of their most basic questions about your position, such as the days and time they will be working, what basic job requirements they will need, what their basic duties will be, what pay range you’re offering to the ideal candidate, and the bold-faced truth about your company.  I say bold-faced truth about your company because this particular step is about you sifting through the chaff.  For example, in this step of the hiring process, I’m frank in letting them know that working for me will require a person to be on their toes, pay special attention to details, and work in a fast-paced environment in which priorities can change quickly due to market demand. I let them know the good and the demanding in a general sense.  When I send this synopsis over to the prospective hire, I let them know that I think their resume contributed some good information about them that might make them a good fit for our company. I then let them know that if after reading the synopsis they still feel they are a good fit for our company, then they should schedule an employee testing appointment and a subsequent interview.  I can’t stress this step enough folks. You don’t want to spend your time in each and every interview telling them the hours they will work, what type of work they will be doing, etc. Let technology do that for you instead.

Also, they are going to discover the stressful circumstances of working with you eventually, so you might as well share with them the good and the challenging right up front. If they still come back to you interested in the job, then you’ve covered a lot of ground in the selection process easily. I would also recommend that you include in this summary what kind of dress and atmosphere can be found at your work.  If it’s business casual, say so. If it’s professional say so.  Either way, once you have stipulated the dress code, you should expect the potential employee to attend the interview dressed appropriately.  When I was hiring previously, it was for a high-level international finance company. I actually had two persons show up in jeans, and one even in tennis shoes.  Those persons were notified by the receptionist that they would not be given access to the testing or the interview.  Yeah, that’s a tough one to do sometimes, but hiring someone who’s wrong for your company (and picking up the pieces when you have to fire them) is a heck of a lot more painful.

Next, if you can possibly have someone else in your company call prospective employees and set an appointment for them to come in for an interview, do so.  Otherwise, I recommend that you do so via e-mail.  The purpose of this exchange is simply to schedule an appointment at which they will take some basic tests and have an interview with you.  You do not want to get into a “selling situation” with the person on why they should work for your company.  Doing these particular steps goes a long way in addressing the hierarchy and the respect that is expected from those who work for you.  I hate to say this, but your employees are not your friends. They are a liability in one way or another, and if you endeavor to make them your friend and confidant, you will undoubtedly empower them to be a huge liability--in detriment to your success (I can and should address this aspect in another article in the future). When you contact them, give them a choice of two times, and only two times in which you are available for an interview.  Let them know that the process will take approximately 1 hour, as they will be taking a written test prior to the interview. If they pass the written test then they will be granted an interview.

What? A written test?  Yes, folks. This is another important part of the hiring process and will save you a lot of headaches later on down the line.  Again, so long as they are good with that, then you’re going to have less and less to do—time wise—when it comes time to the actual interview.  I don’t care if you’re hiring for a part-time job, or for the CEO of a company, I strongly recommend these steps each and every time. The written test should include approximately 20 questions that will help you better understand what skills the applicant has, and if they match the requirements you desire. For example, in my business, typos and other written mistakes could literally lose us hundreds of thousands of dollars, as these kinds of errors would automatically label a document as questionable and perhaps even fraudulent.  Perhaps your business is sales, though. In that case, I would create some simple questions that give you an idea of the applicants problem solving skills, basic math abilities, work ethic beliefs, etc.  Believe it or not, it’s actually quite easy to come up with 20 questions that reflect the responsibilities of the position for which you’re hiring.  I also recommend that you ask some common sense types of questions. For example, I always ask the question “Which weighs more, a pound of fat or a pound of muscle?”  Those who were in a hurry and not willing to take the time to think about the question would inevitably answer “the pound of fat.”  Clearly that is incorrect since BOTH of them weigh a pound. I’m of the opinion that haste makes waste regardless of what business you are in.  If they aren’t going to take the time to answer these questions for you correctly and wisely when they are trying to put their best foot forward, what’s going to happen on the day that they come in to work in a foul mood because of family troubles at home or a headache?

My criteria is that a person has to get at least 75% of the questions correct.  I don’t have a set time in which they have to finish the test, but I do keep track of how long it took them to take the test. If they get 75% correct, but it took them an hour and a half to answer 20 simple questions, then they probably are lacking in focus and concentration and thus aren’t the one for my company either.  If they do not reach the 75% grade requirement, then they shouldn’t be taking up your time for an interview. Yes, there have been times when the applicant has had to be informed that they were not eligible for an interview because they didn’t get that 75% grade.  But I’m telling you, you’ll be sorry if you give much wiggle room in this regard. Just stop and think about the long-term consequences. I can’t tell you how many times I’ve experienced, or heard horror stories, of an employee doing a very foolish thing that resulted in a suit against the company.

Here’s something interesting to note.  I don’t know if this is just a Utah thing or what, but before I started implementing this hiring process, at least 80 percent of the applicants would be a no-show.  However, once I implemented this no-nonsense, structured interview process, I always had a 90% show rate.  There’s something to be said about working for a company that clearly has their stuff together.  People like structure--as one of the hardest business environments to work in are those with no structure, direction, or conviction.

Next comes the interview.  I suggest that you ask pointed questions from the content contained in their resume. Find out why they left every single job.  If it’s because of a personality problem, that’s a red flag to me.  If it’s because they didn't make enough money, then that too is a red flag to me.  I believe that people get paid what they are worth, and that nearly every personality conflict at work can be smoothed out.  A person should also be comfortable enough in their own skin to be able to assert what they believe they are good at and why they believe they are an asset to your business.  You really don’t have the luxury of hiring people because you feel sorry for them and want to rescue them emotionally and financially. I know that sounds harsh, but you’ll be paying for those kinds of decisions literally in the form of unemployment compensation for a long time.

Lastly, be wise in making your hiring decisions. Make sure that they aren’t just looking for a job. You want someone who will stick around after you’ve spent all of the resources, time and focus required to train them to be the ideal employee for your company.  You can’t force loyalty on a person, nor pay for it.  So if during the interview you hear that the person is planning on moving in the next year or so, then I’d say pass on this individual. Training an employee requires a great deal of time and money on your part, and the last thing you want to do is train a great candidate for your competition.

I think that’s enough for one “Self-Employment” article in this series. Hopefully you’ll pick up a thing or two that will be beneficial for your own business and/or your self-employment path.


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Comments

Great write-up Kellene. I only disagree with one thing. I believe people are NOT paid what they are worth, as long as the company can get away with it. Case in point, a former employee of the company I work for when I'm not doing my own business left us about a month ago. I've spent time with him since and he's intimated to me that when he told the VP he was leaving he was offered up to $8 more per hour to stay and do the exact same job that I also do there. So, what makes him worth more money then myself? Nothing really. We have the same credentials, the same schooling, as a matter of fact I have more real-world working experience, and I am frequently called upon to do many things outside of the scope of my job. The only thing that I can assume (that's a dangerous word) is that the VP knows how much money we are worth, but chooses to skirt the issue until someone extorts it from him. Logic tells me that I could threaten to leave and get more money out of them, however, I am not comfortable with the steps that would have to be taken to get it. I would rather be paid what they are willing to pay because they feel I'm worth it, not because I had to extort them for it.

I agree with you in this aspect. In this article though, I'm having to assume that an employer is in possession of honesty and integrity.

That whole honesty and integrity thing is actually huge.
Now if I loan money to someone that has never paid back the loan,I eat the loss but could, and have the mext great thing. If it doesn't work out who eats the loan? Now if it was my brother I eat the loan. Now if it is Bank of America the tax payers eat the loan. Will somefolks take advantage that? Of course.
Why shouldn't the big banks eat/foreclose on the crappy loans they offered? They gave them the loan. I'm a sum-prime person and not only got my house but another to flip. I did it it at the top of the market. Gosh I could have caught out. I knew the realestate market was crashing. My house was tied up in legal stuff.
Do you think food will get cheaper next year?
Do you think cotton and cloth will get cheaper next year?
Do you think power/energy will get cheaper next year?
Do you think that gold, silver or commodities will get cheaper next year?
Now think about what you will do about it.

Two books with great information on hiring are Michael Gerber's "The E-Myth Revisited" and .... dang, I've forgotten the title, but it's in one of Stephen Pollan's books, where he details everything about how he hires folks.

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