Research: Method Mark Team Date: 01.04.2018

Tackling the Number One Problem for Small Business

Every business is in the talent business. Recruiting and hiring are two of a company’s most important components. If a business wants to continue to expand, recruiting and hiring new employees is a vital part of this growth. As Lisa Sacchetti, CEO of The Renaissance Network said, “When you recruit in your own network, you lose a valuable opportunity to tap into a candidate pool that can have a greater impact on your competition.” Hiring the right people matters for companies, and looking beyond one’s immediate circle of peers to other potential candidates is a valuable process for recruiters.

For entrepreneurs, startups and small businesses in particular, the process of recruiting and hiring new team members can be exceptionally complex. Where do you begin? What are some issues worth considering? As 2017 comes to a close and we look toward 2018, many startups are asking themselves these exact questions.

In fact, according to a recent Microsoft Store survey, 90% of small business owners plan on hiring one to two new employees in the next year.At the same time, Wasp Barcode’s 2017 State of Small Business Report, found that 50% of small businesses in 2017 reported hiring new employees to be the top challenge they faced.That makes it the number one challenge for startups and businesses with less than 499 employees—more than increasing profits, employee healthcare, growing revenue and cash flow.

So, while recognizing the value in hiring new employees, small businesses and startups still face challenges in how to go about the process. As we move forward into 2018, many entrepreneurs, startups and small businesses look toward expanding their networks and hiring new employees. When it comes to adding members to your team in 2018, there are various components to consider and integrate in your strategy, as you move outside of your social network and into business expansion.

When to Consider Hiring

When most entrepreneurs and small businesses start up, the natural hiring progression usually involves people in their close circle—friends, family members, neighbors, etc. Usually, the first people on the ground floor of a small business know each other in some way or another. The hiring process is minimal, if it exists at all. It tends to be more of an “I know this person, he/she has a good work ethic, has experience and would fit in well. I should ask him/her about joining.”

But, as the business takes off and begins to expand, founders often find themselves in need of more employees, but not quite sure where to look.At that point, they’ve either exhausted their social networks of potential team members or don’t see any more potential employees within their network at all. As an entrepreneur or small business owner, when is a good time to consider hiring outside of your immediate social circle? Organizational psychologist Dr. David G. Javitch shares a few ideas:

  • Current employees have too much to do. If your current team members are overworked and complaining about lack of capacity, then it’s probably time to reorganize, restructure and consider recruiting someone new.
  • The business is growing, but you aren’t able to keep up. If your products or services are doing well—and continue to do well—but your current team members can’t keep up with the added work, then consider hiring on a new employee. Especially if your business or startup is bringing in increased revenue through this growth, then allotting that revenue to a new team member could be the perfect next step.
  • Team members lack a certain skill or knowledge needed to grow the business. If your company is looking to expand its current products or services, but needs professionals to fill an ill-equipped area, then hiring on a new team member could be the best move possible for the business.

Closing out the quarter at the end of 2017 is the ideal time to reevaluate your business’s current needs with team membership and consider recruiting and hiring in 2018.

Small Business Hiring Challenges

Hiring new employees is the number one challenge faced by small businesses with less than 499 members in the United States, more so than increasing profit, employee health care, growing revenue and cash flow. Why is hiring such a perceived issue for so many startups and entrepreneurs? While so many small businesses may recognize the need for additional team members, many also face distinct challenges in the recruiting process.

One huge challenge for hiring is many small businesses don’t have a dedicated human resources department or HR person. This means you or your team members have to find extra time in already busy schedules to dedicate to the recruiting process. Diana Goodwin, founder and CEO of Toronto-based AquaMobile, was quoted in Monster saying, “This can mean having to work longer hours to fit everything into their busy day, or pausing on certain projects until the hiring is completed.” While most small businesses might not need a dedicated HR department right away, having one person or a team of people in charge of the recruitment process is a great first step in moving forward without an HR representative. Then, as your business continues to expand in the future, an HR team may be something worth consideration.

Other hiring challenges for small businesses and startups include competing with bigger companies and finding qualified applicants. Obviously, large companies tend to offer higher salaries, better benefits packages and larger networks for professionals. As a small business, competing with companies like these for recruits can be difficult. Finding qualified applicants can also be challenging for startup companies who might not have the financial capabilities to hire a professional recruiter. Small businesses can tend to get unqualified applicants who don’t fit the job and can’t meet your needs.

Both of these challenges can be overcome by promoting your brand and the benefits of working for a small business.In a recent Forbes article, Joan Graci, CEO and President of APA Solutions, says less than 30% of potential employees say they’re concerned with the product brand of their employer. Instead, they look at the talent brand: the three-dimensional nature of the place they work: the who, the what and the where. In 2012, LinkedIn’s Employer Brand Playbook  found that a strong talent brand reduces cost-per-hire by up to 50%, and reduces turnover rates by 28%.

Identifying your organization’s talent brand is about actively pushing, monitoring, shaping, building and maintaining the image you want potential team members to have of your business. Is your business the calm, cool and collected company (who) that focuses on marketing (what) in the Midwest area (where)? Or, is it a creative, inspiring, loosely held startup (who) that builds websites (what) for clients on the West coast (where)? Whatever it is, identifying your talent brand and then promoting it to new team members will help get the right employees through the door.

What makes working for a startup better than working for a large company? Small businesses tend to be less bureaucratic than their larger counterparts, there’s more room for promotions and employees can gain more hands-on experience at startups. Use information like this to your advantage when sharing about the job offer, either through professional or personal networks. Then, be sure to have a plan in place when applications come through.

How to Put a Hiring Process in Place

If your small business is looking to hire in 2018, be sure you have a recruiting process already in place. First, craft a job description which not only tells what the candidate will be doing, but also who the company is that he or she will be working with. What are your company’s values and mission? What brand identity are you looking to create? Diana Goodwin again says, “Don’t waste your time on applicants who show no specific interest in joining your company.” Not only do you want a candidate who can do the job well, but you want one who fits into your small team environment and can move the business toward its larger goals. When sharing about your opening either in public or private platforms, communicate who you are to people: your culture, values and mission. The right candidate will then fit both the job and the company.

When your brand identity is set, use tools to create a thorough recruiting process. Tools like social media marketing via LinkedIn, Facebook or Twitter, an outside job search agency, team calendars to connect on interviews together or landing pages for candidates to respond through your website are great ways to automate the recruiting process and make it easier to duplicate in the future.

Once recruiting has been accomplished and a new team member is hired, be thorough in your onboarding practice. Allison Megalis, president of MCL Contracting Services, an HR consulting firm in Chicago, says orientation and onboarding are critical to the success of a new hire. Having an established orientation and onboarding process sets employees up for success, boosting retention rates and increasing productivity. Onboarding involves introduces new team members to the company and its values, going through necessary technical training and of course teaching any valuable skills for the job.

Dos and Don’ts for Hiring

Once you have a process in place for hiring, consider some professional dos and don’ts for bringing on your first “outsider” team member:

Do:

  • Share the job listing through different avenues.
  • Set clear expectations for the position.
  • Consider a candidate’s cultural fit with the company.
  • Refer to your current social network for potential candidates.

Don’t:

  • Forget about conducting a reference check.
  • Hire to meet only short-term goals; consider long-term as well.
  • Offer someone the job on the spot.
  • Rely solely on your social network for candidates.

Hiring Outside of Your Social Network

So, how can your organization take the first step in putting a hiring process in place? By stepping outside of your social network. The Wall Street Journal states,“ Networking can solve a lot of your recruiting problems. If one of your contacts refers a candidate to you, chances are good that they’ve done some of the selling work already.”But if you’ve already exhausted your immediate social network of potential team members, how do you continue to use networking for hiring? The answer is simple: expand your social network.

Networking is often an unintentional and even unconscious tool for most people. As human beings, we naturally network with those around us—friends, family, coworkers, neighbors, etc. The problem arises when we consistently network with people who are likeus, which is often the case. We tend to be more comfortable with people who look, think and act like us, and our social circles reflect that. All of this is why—so often—startups and small businesses are made up of teams from similar backgrounds, have similar relationships and may even be close personal friends or family. These people are in our immediate social circles.

However, when expanding your business and looking to recruit new employees, it is vital to intentionally step outside of that social network and hire people you may feel less comfortable with. Harvard Business Review states “… you’re more prone to groupthink if you’re not exposed to diverse perspectives and points of view.” Harvard sociologist Robert Putnam recommends a balance of both “bonding capital” and “bridging capital,” or relationships based on commonalities (bonding) and relationships built across differences (bridging), respectively.

Expanding your network can lead to more diverse teams, which have consistently been proven to bring about positive aspects of businesses. Harvard Business Review states that,“In numerous studies, diversity—both inherent (e.g., race, gender) and acquired (experience, cultural background) is associated with business success.”In 2015, McKinsey reported on 366 public companies. They found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above the industry mean;those in the top quartile for gender diversity were 15% more likely to have higher returns as well. Diversity within the team increases conflict, which—more often than not—is actually a good thing. This tension causes team members to feel less comfortable, therefore causing them to work harder and produce better results. Therefore, quite literally reinforcing the sentiment: no pain, no gain.

Hiring outside of your social network is about more than just racial, ethnic or gender diversity on your team—although those components are critical. It’s about taking logical steps to expand your personal and professional network and sharing potential job opportunities across various platforms. As a business continues to expand, there comes a time when relying on those immediately closest to you will no longer work. As 2017 comes to a close and we look forward to 2018, consider where your small business or startup falls in the recruiting process. Consider these tips as you continue to reevaluate your 2018 business strategy, recruit talented new team members and grow your company.