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Employee hiring and retentions has been sited as one of the major issues for small business owners. Unlike larger corporations, small businesses have three distinct issues related to employee hiring. A major distinction is that small businesses may not have the financial ability to be competitive, particularly in management level positions. This includes not only pay structure but also benefits such as medical and 401K options. Additionally, part of the hiring process should include the identification and prioritization of all open positions prior to posting. By prioritizing the opening, optimal hiring decisioning can be made in cases where funding may be limited. A second distinction is the level of due diligence applied to hiring. Small businesses tend to use social media and internal postings rather than utilizing a wider resource net. Thus, the hiring process may not include an adequate level of reference and background checks. The third distinction is small businesses tendency to see hiring as a single, isolated event. There is minimal HR strategy and policy in place regarding recruitment.
Developing an appropriate recruitment strategy can assist in bridging the gap. These can range from simple strategies like job boards to more advanced methods such as the use of recruiting agencies, social media, and job referral programs. The following are some effective strategies that can be utilized specifically by small business to improve recruiting programs.
- Highlight Your Company Branding - Small business are not widely known outside their client base and industry. Therefore, it is important when posting a job to provide potential candidates with a brief description of the company and what it does, value proposition, culture, and mission. Keep in mind that potential candidates will be from a wide generational group and thus each may have a different set of values and expectations. As we see the growth of the Generation Z workforce going forward, recognize the fact they are highly motivated by companies that share their values. Additionally work-life balance, scheduling flexibility and benefits are important. Including this information may be helpful in attracting potential employees.
- Effective Job Description - A clear and well written job description will sell your company to potential employees. It will attract qualified candidates and show the benefits of working for your company. In addition to an introductory section that highlights the company branding, it should include roles, responsibilities, and requirements.
- Reaching Qualified Candidates – This is a critical part of the strategy for recruitment. It may be necessary to utilize multiple avenues to reach candidates. Consider the job and where you can reach candidates with the qualifications needed. For example, if the job requires college education it may be useful to go to college hiring fairs, use job boards located at local schools, etc. In the current business environment, the use of online recruitment tools such as Indeed are helpful. These allow you to search posted Resumes that meet your requirements, thus providing more targeted candidates. It is also worth considering past candidates that may fit the position.
- Utilize Best Practices in Interviewing – An effective interview strategy can provide information on the candidate and their ability to fit the job as well as fit in the organization. The strategy should include previously prepared questions with focus on the job and responsibilities, active listening on the part of the interviewer, distraction free interview area, use of multiple interviewers, note taking by the interviewer, and finally communication of the schedule for hiring and any potential for possible follow-up interviews.
- Reasonable Decision-Making Period – Keep in mind that candidates most likely have multiple jobs for which they are interviewing and considering. To be competitive with large corporations the small business needs to have a short but effective interview schedule and process. By utilizing an effective interview process you can determine the candidates’ qualifications for the position in the initial interview. In the event a second interview is necessary or there are multiple interviewers, utilize back-to-back scheduling.
- Compelling Offer – This is the most critical part of the hiring strategy. Before putting together an offer, be sure to:
- Review market rates for similar positions within the area / state. This will provide some benchmark for the salary offer. It may be that the benchmark range is above your budget for that position. Recognizing that corporations can meet and exceed the benchmark salary, you may need to consider other incentives to include in the offer package.
- Other possible incentives include such things as flexible work schedule, remote work, collaborative culture and work environment, and accelerated advancement opportunities. When determining the appropriate “other” benefits, keep in mind the generation of the candidate and try to match these options with their expectations as much as possible.
Employee retention is the second part of this issue. During 2022, 63% of small business owners found it necessary to increase compensation. Health care costs play a major role in compensation so it is crucial to offer the best possible plan that your company can financially support. Some possible strategies that can be employed for retention are as follows:
- Creating development and/or advancement opportunities for all levels of employees. Good employees are motivated by possible promotions and/or the opportunity to take on addition challenging work. In small business especially, the opportunity for management promotions may be limited. Therefore, it is advisable to have a dual track structure for employees. For example, consider Microsoft that has a people manager and contributor advancement structure. This allows all employees the ability to advance through a defined organizational structure. The structure recognizes the limitation of management positions and the fact that advancement does not need to be centered on people management.
- Continue to monitor turnover risks. This is particularly important in times of organization or economic change. Keeping your finger on the pulse of employee expectations as well as their view of the organization is important. Open communication and employee surveys are two common methods for this. Having said that, the second part of this process is resolving concern where possible or providing appropriate reasoning for those things that cannot be changed. Without this part of the process, the surveys and communication will become useless.
- Provide adequate recognition and appreciation programs. It is noted that approximately 60% of employees indicate they would quit their jobs if they felt unappreciated or overlooked for work well done. Recognition needs to be built as part of the culture of the work environment.
- Employees feel overwhelmed and/or overworked. In todays’ work environment this can be a significant challenge as there may be a shortage of workers. Management should put in place a program that ensures direct employee communication is open and unconditional. Many times, employees feel it may not be appropriate to bring up working conditions without putting themselves in a bad position. The work environment should be built to foster open communications that will bring about positive solutions to these issues.
- Flexible work schedules where possible. It is understood that front-line workers may not have such flexibility due to their responsibilities. Other employees may be able to have staggered hours or work remotely. Each position should be reviewed, and considerations given where possible.
In the end, employee retention can be based on not only compensation but also on paying attention to workers’ expectations. They want to feel appreciated, have an avenue for some type of advancement, and have a continuous learning opportunity. Businesses that can provide this type of environment will experience loyal, hard workers and save time and money on hiring costs.
In the event your business may have a unique need for outside assistance with operational issues, growth initiatives or other business matters, SCORE mentors can offer you expertise and support. Mentors with a wide range of technical and user experience are available upon request.
The Cleveland Chapter of SCORE was founded in 1965 to foster and support the small business community in Northeast Ohio through mentoring and education. There are currently 80 volunteers with experience in the fields of business ownership, managers, accountants, attorneys, and other business fields that are ready to share their knowledge through mentoring. For more information about our services for small business visit the website at www.SCORE.org/cleveland or call (216) 503-8160.
In addition to mentoring services, there are also webinars and on-demand classes listed on the website. To attend a webinar, visit the site and register.
