These action-oriented ideas help take some of the guesswork out of bringing on new employees or letting them go.
The right team is an essential part of growing a small business, which means how you hire and fire employees can be key to your success. But for empathetic leaders, including those who focus on potential and view their business as an extended family, this process can be especially challenging.
Consider these 10 tips (six for hiring and four for firing) as you build your team.
Tips for hiring
There’s a lot that goes into the decision to hire — including money. The average cost per hire is more than $4,000, per the Society for Human Resource Managers. To make that investment successful, it’s important to consider the who, when, and how — as well as the role itself.
1. Determine the workload. Write down a list of tasks that aren’t getting done that you expect a new hire to do. Examine if it’s a cohesive role.
2. Set your budget. Think about what salary you can afford and then be sure to price in onboarding or training, employment insurance, and taxes like Social Security and Medicare.
3. Assess your options. Depending on the workload and your budget, explore the pros and cons of the different types of employees—salaried, hourly, temporary, intern, or contracted. Start to think about the type of person that would be a good fit for the role.
4. Cast a wide net. Start with a compelling job description and post to job sites, message boards, and even social media. This can help you find candidates outside your immediate network, which is a good way to boost diversity and gain exposure to new people and ideas that can help your business.
Ask for and follow through on any references they offer. It can be easy to skip these steps as a small business owner, but due diligence at this stage can pay off down the road.
5. Provide measurable objectives. This helps you match candidate skills to the position. Plus, you establish clear expectations that can help you define success later on.
6. Test the waters. If you’re not sure about the role you’re looking to fill or the skill sets you need, start with a consultant or freelancer. Either hire the person on a per-project basis or invite a candidate to work with you for a day (paid, of course) to see whether they’re a good fit.
Websites that pair companies and jobs with freelancers — such as Guru or Upwork — can help you find someone with the right experience levels and within your budget.
7. Weigh your opportunity costs. When you continue to invest in the wrong employee, you’re missing out on a chance to hire the right employee who could help advance your business.
8. Analyze the fit. If an employee is a bad fit for a role, letting them go may mean they find a new job better suited to their skills.
9. Stick to facts. One benefit of clearly defining the jobs you hire for (tip five), is that it makes it easier to explain underperformance if it happens. If you’ve discussed the issues and haven’t seen improvement, it may be appropriate to part ways.
10. Ask for help. It can be challenging to handle tough decisions on your own. If you need insight or advice, consult with a mentor, fellow business owner, or confidant. Just be sure to protect any personal details.
Remember that there are various federal and state laws and public policies involved in legally firing an employee. The U.S. Chamber of Commerce has resources to guide you through the process.
At the end of the day, the right team of employees is a critical factor in the success of your business, no matter how big your team is. Taking a strategic approach to hiring and firing employees when you’re small can help you efficiently build your business and help you create a company culture that reflects your values as you grow.