In a VERY small company (under 10 people) it is extremely difficult to find competent workers, even during high unemployment. What HR advisers never seem to understand is that small companies have very different HR issues. Usually the owner is the HR manager.
If I were to fire every problem employee, at times I would be running the entire company myself. It can literally take years to find a replacement employee who has minimal competence.
The best employees rarely want to work for small companies and headhunters don't give their best prospects to one-off clients. Therefore, I'm forced to put up with problem employees for far longer than I should.
I absolutely agree with you on many fronts: Hiring is hard. HR in a small company is vastly different than HR in a large company. Headhunters prefer high volume. And, I'll add another problem: No one in your company (including you) is an expert interviewer, resume screener, and general hiring master.
Still, jerks shouldn't be allowed. Even though they are doing the work, they are detrimental to the overall health of your workforce. The jerks will drive the best people out.
But, how can you get the work done when you have all the problems you listed, and still get rid of bad employees? Here are some things to think about.
You're focusing too much on previous experience and not potential. Hiring someone is a huge risk, so we often want to hire someone who has done, in the past, exactly what we need them to do in the future. The problems with that are two fold: 1. It's often difficult to find someone with the exact skill set you need and 2. When you find that person, they are often already bored with that and are ready to move on.
The reality is, skills are pretty easy to gain, as long as you have the right background. Sure, you wouldn't want to hire me as an engineer because I have no engineering skills whatsoever. But, if you need someone to do a specialized engineering task, it's likely that someone with a strong engineering background in a related (but not identical) area could quickly learn what you need.
Many people want to grow in their careers and when they are looking to change jobs, they tend to look for a promotion rather than a lateral move. People with exact experience aren't as likely to be interested in the job you offer.
Open your hiring practices up to include people who have potential rather than experience and you'll vastly increase your hiring pool.
Your job as the manager is to quash bad behavior. I am not a fan of firing people without much thought. It shouldn't be a one-mistake-and-you're-out situation. But, you cannot allow bad behavior to continue. Some things (like sexual harassment) are illegal and you need to stop them or face lawsuits, fines, and bad public relations. Other things are merely annoyances and many managers think they can just ignore it. You cannot ignore it.
An employee who picks on someone else, bullies coworkers, or is overly grouchy, needs to be talked to. It should be abundantly clear that this behavior is not acceptable.
You may be modeling bad behavior. People often act the way they think the boss wants them to act. If you are consistently getting bad employees, you're modeling some bad behavior. When you hire, you probably specifically seek out the jerky behavior that later drives you nuts. It may well be a characteristic that you have.
It's time for a real evaluation of yourself--to figure out what you are doing that is jerk-like and then specifically screening new hires to exclude that behavior. This may be extremely painful for you, as it probably turns your hiring on its head.
Drop the headhunters. As a general rule, headhunters can be helpful. Sometimes they are worth the money. However, if you are having bad luck with them, drop them. Treat your candidate searches like you would a job hunt. Find that new candidate through networking. Ask your current and past good employees if they can recommend someone. Use LinkedIn. Seek out the unemployed, specifically. Why? They may be more willing to work for a small business. They also may be willing to devote more time to learning new skills.
Evaluate your pay structures. If it is tremendously difficult to get good employees, you are probably underpaying. If you can't get the best employees, you aren't attractive enough. Now, small businesses often have small budgets and you may not be able to find someone with the expertise you need for the cash you have available. In that case, change your job description to fit your budget. It's better to hire a good person with less experience than it is to hire a lousy person who is willing to accept a low salary.
Have a problem employee or a people management question? Send your questions to EvilHRLady@gmail.com.