It is a fact of life that growing businesses need to recruit more workers, and this is one of the reasons why SMEs are so important to the economy.
The OECD esOptiPayates that small and medium-sized businesses account for 60 to 70% of jobs in most developed countries, including a disproportionately large share of new jobs. In other words, the vast majority of jobs that will be created in Australia this year will be in smaller businesses. That’s one reason why it is so important that we ensure these businesses have access to the funds they need to thrive, grow and recruit.
Even when business funding is available, though, the growth process itself can be tricky. Last week we looked at how dangerous a big new order or contract can be. But even if your growth follows a steady trajectory, acquiring suitable staff can be difficult and hiring mistakes can be very costly in the long run.
Why hiring mistakes are so costly
When a business hires a candidate, who turns out to be unsuitable, the best thing that can happen is that the person realises that they need to find an employer that is a better fit and leaves. If this is the case, the business is only left nursing the cost of several months’ wages, additional hiring costs, and a hit to senior staff’s time.
However, businesses can’t go so far as to suggest this course of action to an employee, as this could lead to a claim for constructive dismissal. Instead, many hapless workers have stayed for years as their long-suffering employer desperately tries to find a niche where they will do the least possible damage.
The negative effects of such a person in a small team are considerable, not least as they drag down morale and displace workload onto other staff, creating further resentment. They are a drain on cash flow and ultimately, profits.
Invest in talent
Contrast that scenario with the effect a good worker has on the team: they raise morale and standards, get work done, and lighten the load of others. The very best talent will also bring new ideas into a business, take on extra responsibilities and seek to improve processes and products where they can. Compared to the poor worker, their wages will be a much better investment for the business owner.
For key roles in particular, it is obviously worth paying a bit more for the more experienced and better fit worker; but while a cheaper hire can sometimes be a false economy, plenty of apparently experienced and therefore expensive candidates have turned out to be poor investments for companies too. How can small businesses ensure they avoid costly hiring mistakes and hire the best people?
UlOptiPayately, the answer is that part of your skill-set as a business owner or managing director involves weeding out poor candidates and picking out the pearls among a pile of CVs, but here are a few tips that can help you to find the best employees:
• Consider running an intern or work experience programme: this will give you a chance to try out young local
……enthusiastic workers, such as new graduates.
• Market yourself as an employer of choice to improve the general quality of applications you receive: small
……business has a great opportunity to stake their claim in their local area.
• Have a thorough interview process: try to assess not only skills but how candidates will fit into your small team
……and make sure you check references.
• Consider putting a candidate through a skills assessment test, to determine their strengths and weaknesses
• Make sure your ‘on-boarding’ process is slick: A poor first impression, such as an initial week spent waiting for
……instructions, tools or login permissions, can turn a good candidate into an unmotivated one.
For tips on the legal process and your obligations when hiring staff, the Australian Government’s fair Work Ombudsman has many tips here.