Small business confidence remains at a record high, despite declining optimism in April, according to the latest NFIB Index. Business owners' positive outlook could stem from an uptick in hiring -- small employers added over 60,000 jobs in April. Small business hiring has been on the rise since the election, indicating that owners are keen on expanding their companies. For instance, almost half of business owners have plans to hire this year, according to the Small Business Administration.
Hiring numbers support the small business community's optimism, but immediate hiring plans can also present challenges for owners -- many of whom may haven't onboarded new employees for some time, if ever. While there isn't a universal approach to hiring new employees, there are steps small business owners can take to alleviate some of the difficulty that comes along with recruiting and hiring new staff members.
What to do before you start formally recruiting
Recruiting involves much more legwork than simply reviewing resumes and conducting interviews. Thorough preparation can prevent pitfalls and unnecessary expenses in the long-run. Before pulling the trigger on proactive recruitment, make sure you cross the following tasks off your to-do list.
- Write a comprehensive job description -- but leave room for flexibility. Prior to onboarding new staff, make sure you have a solid idea of what this employee's responsibilities would be and the ideal skillset you're looking for. If you're in search of your first employee, use this phase as an opportunity to determine which assignments you're comfortable delegating and which you expect to retain ownership of. A good job description includes requirements for both technical skills (such as specific certifications) and soft skills (like ability to communicate) as well as expectations for conflict management and attention to detail. While screening candidates, use this description for direction, but don't be afraid to go off script for the right person. Remember that if a candidate is eager to learn, you can fine-tune certain skills over time.
- Establish plans for compensation and exemptions. Once you have a firm understanding of your ideal candidate profile, it's time to consider how you'll compensate and classify the new employee. Last year, the Department of Labor proposed overtime rules that would increase the salary threshold for employees who qualify to receive overtime pay to $47,476. While a federal injunction put the regulations on hold, my company Manta found that the majority (84 percent) of small business owners plan to keep the changes they made to comply. Small businesses looking to expand their staff should make smart decisions to stay ahead of future regulatory changes. For example, you may choose to hire hourly rather than salaried workers or bring on two part-time employees instead of a full-timer.
- Prepare for tax and regulatory liability. Especially for small business owners hiring their first employee, it's critical to brace yourself for the tax and regulatory liabilities that accompany an increased workforce. While some business owners file their own taxes, bringing on new employees could mean involving a CPA or other advisor come tax season. Bringing in a qualified tax professional can help small business owners navigate the complexity of forms like employee W-2s and W-3s. To ensure a smooth onboarding process, store paperwork in an easy-to-access location so new hires can complete the documents during their first week.
Finding the Best Candidate
Not only is hiring new employees a time-consuming process, it also requires a business owner to make a major investment in their company. Armed with the right documents and a thorough job description, small business owners can identify and hire top talent by adopting the following best practices:
- Tap into your network to share the job opening. Unlike large, well-known companies, small businesses usually aren't in the position to depend on brand awareness alone to attract job seekers. To ensure your job opening reaches a large, diverse group of candidates, go beyond posting on job boards like LinkedIn or Glassdoor. While it's critical to post open positions online, you should also leverage additional resources like business partners, existing employees, and peers to help spread the word. In some cases, doing so can result in high-quality referrals. Don't forget to use other channels like social media, career fairs, conferences, or local chamber of commerce meetings - tactics that put your company top-of-mind for potential hires.
- Brush up on your interviewing skills. Even if you've been running your company for years, it's critical to hone your interviewing approach before sitting down with candidates. Take some time to carefully review their materials (e.g. resume, cover letter, relevant work samples, LinkedIn profile) so you can ask specific questions about previous experience and skills. You may want to experiment with "behavioral interviewing" -- an approach that says past job performance is the best indicator of future performance. To effectively use this method, ask questions that challenge interviewees to provide specific examples, such as "Describe a time when your time management skills were put to the test." While interviewing candidates, look out for red flags such as lack of research on your company, negative attitudes, or inability to explain how their skills fulfill the job responsibilities.
Small business owners wear multiple hats, and hiring new talented employees is among their most difficult tasks. But in today's positive employment environment, now is the right time for small businesses to weather the hiring storm and expand their workforce.