Hiring Good Employees
Hiring an employee is a critical decision. To make the best decision, you need to determine whether you really need an employee, what that person will do, where to find qualified candidates, and how to test candidates. The future of your consulting business depends on smart decisions.
Do You Need an Employee?
Should you add an employee? Experts say: Only if you are certain you will increase income by at least three times the employee's wages or salary. For example, to hire an employee at $30,000 a year (about $15 an hour), make sure the employee's services will bring you at least $90,000 in business during the coming year. That's a minimum. Some service businesses use multipliers of four or even five to determine whether they can afford to hire additional staff.
Remember that about 40 percent of your income will go toward labor costs. For an employee, that's wages (30 percent of increased sales) and benefits (10 percent of increased sales). Keep in mind that to increase sales you will have to reduce your billable time, thus reducing your business's income.
As you start and grow your consulting service, continually look for opportunities where you can profit from hiring and managing employees. Consider what related services your clients need as well as how you could work more efficiently if you had qualified help.
The best way to hire the right person for the job is to clearly define what skills are needed. Once you know what it takes to do the job, you can match the applicant's skills and experience to the job's requirements. This step will probably be easy for you if you're hiring an associate, but how about office help or other support functions?
Once you have a job description on paper, decide what skills the person must have to fill the job. Then, estimate the value of this service to your business. Finally, determine how much other employers in your area are paying for these skills.
When you know the kinds of skills you need in your new employee and her market value, you're ready to contact sources that can help you recruit job applicants. Make sure you offer a living wage.
What is a living wage?
It is the cost of living in your community based on the size of the living group (one adult, two adults with one child, etc). If you've decided to pay your employees a living wage, visit the Living Wage Calculator online to calculate what that amount is for your location.
Each state has an employment service (Department of Employment, Unemployment Bureau, or Employment Security Agency). All are affiliated with the U.S. Department of Labor Employment & Training Administration, and local offices are ready to help businesses with their hiring problems. The state 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 with recruitment. However, the employee or the employer must pay a fee to the private agency for its services. This fee can be from a month's to as much as a year's salary. Large employment agencies include Manpower and Kelly Services.
Newspaper advertisements are another source of applicants. You reach a large group of job seekers, and if you use a blind box address, you can screen them at your convenience. If you list an office phone number, you may end up on the phone with an applicant instead of with a client.
Consider hiring a military veteran. Many have extensive training and experience in their fields of expertise as well as discipline. For more information, contact the U.S. Department of Labor Veterans' Employment & Training Service. VETS also offers retraining services to prepare veterans for new jobs.
Job applicants are readily available from local schools. The local high school may have a distributive or cooperative education department where the students work in your office part-time while taking trade or business courses at school. Many part-time students continue with their employer after they finish school. Consider local and regional business schools as well. The students are often more mature and more motivated than high school students.
You may also find job applicants by contacting friends, neighbors, clients, suppliers, current employees, local associations, service clubs, or even a nearby armed forces base where people are leaving the service. However, don't overlook the problems of such recruiting. What happens to the goodwill of these sources if they recommend a friend you do not hire, or if you have to fire the person they recommend?
Your choice of recruitment method depends on what you're looking for, your location, and your method of managing your business. You have many sources available to you. A combination may serve your best needs. The important thing is to find the right applicant with the correct skills for the job you want to fill, whatever the source.
A good employee is one who is skilled, reliable, and trustworthy. You may be the best judge of the applicant's skills, but how do you test reliability? Fortunately, there are standardized tests you can administer to measure potential of substance abuse, courtesy, maturity, conscientiousness, trustworthiness, commitment, and attitudes toward safety.
Wonderlic Personnel Tests, Inc. offers a variety of employee selection, assessment, training, and development tests for small and medium-sized businesses. The tests are available in paper and computerized versions. Wonderlic also offers productivity testing to ensure that employees are working efficiently. Such tests can help you find and manage better employees.