3. Hiring the Right Employees

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A business is only as good as the people in it. Therefore, to effectively manage your business, you must take the time to find and hire the right employees.

This Guide discusses the process of staffing a business: setting the personnel policies, determining what skill and abilities are needed, finding applicants, developing application forms, and interviewing prospective employees.

Staffing is of critical importance to businesses of all shapes and sizes. All firms take the same risk in hiring a new employee. However, the smaller the firm, the less it is able to afford the time and costs involved in hiring and then firing, the wrong employee.

Bigger companies have developed effective hiring techniques and procedures to lessen this risk. If you, the owner-manager of a small to medium firm, are going to effectively manage your operation, you too must apply some of these staffing techniques.

Setting Personnel Policies

First of all, know yourself. Know what business you are in. Know your own personal abilities and weaknesses, and try to anticipate how you will deal with the situations that you expect to arise in the daily operation of your business.

Then, formulate your policies in writing. Include all matters that would effect employees, such as wages, promotions, vacations, time off, grievances, fringe benefits, and even retirement policies.

Employment and training procedures must be established so that you have a better chance of getting the job done the way you want it done. You might want to consider the way you want it done. You might want to consider written policy decisions for the following areas.

Hours

Consider here the number of hours to be worked per week, the number of days per week, evening and holiday work, and the time and method of payment for both regular and overtime work. Unnecessary payment of overtime at premium rates is a source of needless expense. By planning ahead, you may be able to organize your employee’s work to keep overtime to a minimum. When peak periods do occur, you can often handle them by using part-time help paid at regular rates.

Compensation

The bulk of your employees’ earnings should come from a base salary competitive with the pay offered by other similar local firms. It may be possible to supplement the base salary with some form of incentive, such as a small commission or quota bonus plan. Try to relate the incentive to both your goals and the goals of your employees. Whatever plan you use, be sure each employee understands it completely.

Fringe Benefits

You may consider offering your employees discounts on merchandise, free life insurance, health insurance, pension plan, and tuition payments at schools and colleges. You might also look into joining with other merchants in a group disability plan and a group workers’ compensation plan. Such a plan could mean a considerable savings in your premium costs.

Vacations

How long will vacations be? Will you specify the time of the year they may be taken? With or without pay?

Time Off

Will you allow employees time off for personal needs, emergencies in the family, holidays, special days such as election day, Saturday or Sunday holidays?

Training

You must make sure that each employee is given adequate training for the job. In the smaller firm, the training responsibility normally falls to the owner-manager. But, if you have supervisors, each one should recognize the importance of being a good teacher and should schedule time to teach new people.

Retirement

What are your plans for retirement age benefits such as Social Security, pension plans, and annuity plan insurance?

Grievances

You may expect conflicts with your employees without regard for the quality of the employment you offer. The best course of action is to plan for them and establish a procedure for handling grievances. Consider the employee’s rights to demand review, and establish provisions for third party arbitration.

Promotion

You will want to consider such promotion matters as normal increases of wages and salaries, changes of job titles, and the effect your company’s growth will have on this area.

Personnel Review

Will you periodically review your employee’s performance? If so, what factors will you consider? Will you make salary adjustments, training recommendations?

Termination

Even though this is a distasteful matter to many managers, it would be wise to have a written policy on such matters as layoffs, seniority rights, severance pay, and the conditions warranting summary discharge.

When you have developed your personnel policies, write down the policy on all matters which affect your employees and give each one a copy. Matters such as the following should be standardized and not left to the whim of a supervisor: hours of work, time recordkeeping, paid holidays, vacations, deportment and dress regulations, wage payments, system, overtime, separation procedure, severance pay, pension and retirement plan, hospitalization and medical care benefits, and grievance procedure.

Determining Needed Skills and Abilities

The trick is getting the right person for the job is in deciding what kind of skill is needed to perform the job. Once you know what it takes to do the job, you can match the applicant’s skills and experience to the job’s requirements.

The first step in analyzing a job is to describe it. Suppose, as a busy owner-manager, you decide to hire someone to relieve you of some of your duties. Look at the many functions you perform and decide what your stronger and weaker areas are.

Further suppose that you have decided that you will need help in the office. The phone is always ringing. Letter which need answering are piling up. Merchandise must be ordered.

Once you have a job description on paper, decide what skills the person must have to fill the job. What is the lowest level of skill you will accept? In this example, let us assume that you decide initially to hire a secretary, but discover that secretaries are scarce and expensive. Moreover, in your area, stenographers are almost as hard to find and nearly as expensive as secretaries.

Perhaps you could get by with a typist. Hiring a typist may be both easier and cheaper than hiring a secretary or stenographer. Many high schools students are well qualified as typists, and many are seeking part-time work.

One additional point: When you start to look for someone to fill your job, make sure you spell out just what you want. Imagine that an owner-manager advertised for a “sales clerk.” What should the applicant be able to do? Just tally sales receipts accurately? Keep a customer list and occasionally promote your products to these people? Run the store while you are away? The job of “sales clerk” means different things to different people. Make sure you know what skills you need and what skills you can get by with, as determined by what kind of training you can give the employee.

Finding Applicants

When you know the kind of skills you need in your new employee, you are ready to contact sources which can help you recruit job applicants.

Each state has an unemployment service (sometimes called Public Employment, Unemployment Security Agency). All are affiliated with the United States Employment Service, and local offices are ready to help businesses with their hiring problems.

The employment service will screen applicants for you by giving aptitude tests (if any are available for the skills you need). Passing scores indicate the applicant’s ability to learn the work. So, be as specific as you can about the skills you want.

Private employment agencies will also help in recruitment. However, the employee or the employer must pay a fee to the private agency for its services.

Another source of applicants is a “Help Wanted” sign in your own front window. Of course, a lot of unqualified applicants may inquire about the job, and you cannot interview an applicant and wait on a customer at the same time.

Newspaper advertisements are another source of applicants. You can reach a large group of job seekers and you can screen them at your convenience. If you list a phone number at the store, you may end up on the phone instead of dealing with a customer.

Job applicants are readily available from local schools. The local high school may have a distributive education department where the students work in your store part time while learning about selling and merchandising along with their school courses. Many part-time students stay with the store after they finish school.

You may also find job applicants by contacting friends, neighbors, customers, suppliers, present employees, local associations such as the Junior Chamber of Commerce, service clubs to which you belong, or even a nearby armed forces base where people are leaving the service. However, do not overlook the problems of such recruiting. What happens to the goodwill of these sources if they recommend a friend whom you do not hire, or if you have to fire the person they recommended?

Your choice of recruitment method depends on your type of business, your location, and you. You have many sources available to you. A combination may serve your needs best. The important thing is to find the right applicant with the correct skills for the job you want to fill, whatever the source.

Developing Applicants Forms

The hardest part of your work, if you did a good job listing the skills needed, is in finding and hiring the one right employee. You need some method of screening the applicants and selecting the best one for the position.

The application form is a tool which you can use to make your tasks of interviewing and selection easier. The form should have blank spaces for all the facts you need as a basis for judging the applicants. A sample form is provided below.

You will want a fairly complete application so you can get sufficient information. However, keep the form as simple as you can. The form may be mimeographed or ditto form.

Have the applicants fill out the application before you talk to them. It makes an excellent starting point for the interview. It is also a written record of experience and former employer’s names and addresses.

Remember, the Civil Rights Act of 1964 prohibits discrimination in employment practices because of race, religion, sex, or national origin. Public Law 90-202 prohibits discrimination on the basis of age with respect to individuals who are at least 40 but less than 70. Federal laws also prohibit discrimination against the physically handicapped.

When an applicant has had work experience, other references are not very important. However, if the level of work experience is limited, additional references may be obtained from other individuals such as school counselors who can give objective information. Personal references are almost useless as an applicant would only list people who have a kind word for them.

Interviewing Job Applicants

The objective of the job interview is to find out as much information as you can about the job applicant’s work background, especially work habits and skills. Your major task is to get the applicants to talk about themselves and about their work habits. The best way to go about this is to ask each applicant specific questions: What did you do on your last job? How did you do it? Why was it done?

As you go along, evaluate the applicants’ replies. Do they know what they are talking about? Are they evasive or unskilled in the job tasks? Can they account for discrepancies?

When the interview is over, ask the applicant to check back with you later, if you think you may be interested in that applicant. Never commit yourself until you have interviewed all likely applicants. You want to be sure that you select the right applicant for the job.

Next, verify the information you have obtained. A previous employer is usually the best source. Sometimes, a previous employer will give out information over the telephone. But it is usually best to request your information in writing and get a written reply.

To help insure a prompt reply, you should ask previous employers a few specific questions about the applicant which can be answered by a yes or no check, or with a very short answer. For example: How long did the employee work for you? _____ Was his or her work poor _____, average _____, or excellent _____ ? Why did the employee leave your employment?

After you have verified the information on all your applicants, you are ready to make your selection. The right employee can help you make money. The wrong employee will cost you much wasted time, materials, and may even drive away your customers.

A mock up of an Application for Employment

Name: ___________________ Date: ______________

Present Address: ________________ Social Security No.: ______________

Tel. Number: _______________ Driver’s License No.: _____________

Indicate Dates You Attended School:

Elementary, From __ to _________ High School, From _______ to ________

College, From _____ to _______________

Other (Specify Type and Dates): _____________

List Below All Present and Past Employment, Beginning with Most Recent (include military service, if relevant

May we contact the employers listed above? __________

If not, indicate which ones you do not wish us to contact: ________________________________________________________

Remarks: _______________________________