Below is an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here.
The Right People
Finding the right people for a small business with limited resources is a challenge to say the least. You probably will be offering limited or no benefits (about ⅓ of small businesses offer zero benefits or even paid time off, less than ½ offer health insurance) and a pretty uncertain future, especially as a startup. Not offering benefits or job security is going to eliminate a lot of people from the potential job pool. I would say that finding and keeping the right people is probably the number one problem in businesses both large and small. There are hundreds of books (and consultants, websites, etc.) on this topic, so hopefully we can simplify this process into the core basics.
I believe the best way to find, train and keep the right people includes:
Pay Better and Offer Non-Compensation Benefits
If you read anything about modern business management, you’re likely going to encounter an article on how to motivate millennials or young people in general. I’ve seen so many of these (and related videos, presentations and more) that I’m starting to wonder if something is in the water to make their generation so different from others. While Generation Xers like myself and older generations tend to laugh and dismiss a lot of that stuff, I believe there are some good points to be made about millennials (who are now the largest part of the workforce) and the modern workplace in general.
Think about it; this generation has inherited massive debt from the previous generations (which makes us look incompetent and selfish), their job prospects are dwindling due to global competition, outsourcing and automation (things mostly done by us), and if they try to improve the situation by going to college, they add on even more debt (and their degree may only get them a job as a barista). Social media (again, mostly invented by their elders) has taken normal human interactions and exposed and complicated them so much that anxiety, depression and various ADHD-like disorders are now rampant and many are hopelessly addicted to their devices.
To add insult to injury, they then have their elders telling them to “just get a job and work hard like I did.” As if the modern workplace is anything like the manufacturing job you could get in the 1970s straight out of high school with full benefits, rock-solid job security, a pension, and pay good enough to raise a family of four on a single income. Needless to say, I think we need to give the younger generations a break or at least the benefit of the doubt. I’m not saying that some don’t make bad decisions; I’m saying that bad decisions and lack of work ethic are not the whole story.
So what do these modern workers want? Surveys say they tend to care more about having some kind of impact at work while having a good life-work balance. By “impact,” they mean they want to contribute, see their work as valuable, and not work for a company that acts like an evil empire (and ideally is doing some good).
By “work-life balance,” they mean they don’t want to work themselves to death like previous generations (especially when there is so little company loyalty to employees these days) and would like to get some kind of benefits at the job. Notice that I didn’t mention high pay. This is consistently a lower priority to them than the things we mentioned; they mostly want fair pay and regular performance reviews.
Employers want accountable people that can get the job done, but a lot of employees want things like impact and benefits. As with most things in life, I think we can arrive at a nice balance.
I believe a small business should always pay the most they can afford for the best people possible. I see small business owners consistently offering rock-bottom wages and expecting top-dollar performance. They should know better, and frankly, an extra $1 or $2 per hour is only $40 or $80 per week extra per full-timer, and you’ll attract a much higher caliber of employee. Let me just say that the difference between a good employee and a mediocre one is usually worth way more than $40 or $80/week, and this increases exponentially as you go up the talent and pay scale.
However, many times a startup is short on cash or may work in a low-skill or low-margin industry (perhaps with many employees) and the extra $1 or $2 per hour is the difference between a profit and a loss. In these cases, and in general, I think it’s important that you offer some sort of non-compensation benefits. Offering these will help employees have a better work-life balance and will generally increase job satisfaction. The best part is they don’t cost much and are pretty easy to implement.
Some great non-compensation benefits are:
Finally, if you build a great business with great vision, values, execution, and leadership, then you’re naturally going to offer your employees a workplace where they feel like their work matters and they can contribute. Paying better, offering some of the benefits above, and building a great management system will all work toward your ability to attract and keep the right people.
Write Great Job Descriptions and Ads
If there’s one thing that will immediately improve the quality of your hiring, it is writing great job descriptions. Great job descriptions then become great job ads. Great job ads attract better quality candidates and can actually filter out lower-quality candidates, which will save you a lot of time and grief.
The Job Description
It’s important that when you go to hire someone that you’ve written a clear job description that covers exactly what needs to get done, what the definition of “done” is, and the skills and traits of the ideal person to get that job done. That’s basically it; it doesn’t have to be that hard, and many job descriptions fit on one page. Here are some quick tips for writing job descriptions:
There are other tools like the Job Scorecard made famous by the book and hiring system called Topgrading by Bradford Smart. But, like other things, it’s important to just get down some basics first to organize your thinking and tweak and improve them as you go. Writing good job descriptions will do 90% of the work in writing job ads, which is what we’ll cover next.
The Job Ad
Most job ads are terrible, and then the business owner is surprised when they get terrible applicants. For example, here’s a real job ad I randomly pulled off of Craigslist (there are many just like this) for an Office Assistant:
Office Assistant needed for real estate office. No real estate experience needed. Part time – 20 hours/week – with potential for full time at a later date. Must be able to use online websites to upload and download information, track deadlines and due dates, use Adobe, and Microsoft office. Please email resume with cover letter for consideration. Hourly pay with no benefits.
Let’s analyze this:
Now that I’ve pummeled that ad to death (sorry, this is a big pet peeve of mine), let’s see what a job ad looks like that regularly gets hundreds of well-qualified candidates and has proven to work for years. Note that it’s for the exact same title of Office Assistant. Also note that, while it is long, it can be easily shortened to be placed in classified ads with a link to a job website (e.g. company.com/jobs) to view the full description.
|Job Opening: Office Assistant|
Company Overview: Would you like to work for a small business that has its act together, believes in strong core values, is rated A+ by the Better Business Bureau and has been run profitably and ethically since 2001?
MyCompanyWorks is looking for an energetic, friendly, detail-oriented Office Assistant to work in a fairly busy but positive small-business setting. This job will consist of mostly administrative support tasks (mailing, scanning, sorting, filing, heavy email and document management, etc.), generating documents using our internal system and answering inbound phone calls and chats about incorporation and business filings (we help people start businesses, so we do all the filings to start and maintain a business). You must be willing to learn, have a great attitude, and appreciate our laid-back work environment with no dress code (shorts and flip-flops are okay!). We will fully train for this position.
We are a profitable company that is highly organized and technology-proficient so we expect our employees to be the same. Because of our small size, people who like working for large companies may not be a great fit. We work with entrepreneurs on a daily basis so we value entrepreneurial behavior and problem-solving skills. We value a pleasant work environment so we are not into being overbearing, berating or any of that nasty stuff. We will train you for the position, assist you with any questions you might have and leave you alone to do your job as effectively as possible.
Job Location: 187 E. Warm Springs Rd., Suite B, Las Vegas, NV 89119
Compensation: $13–$15/hour DOE + Bonus
Hours: 40 hours per week, Mon-Fri; 8:00am-4:30pm preferred but are flexible around those hours
Qualifications (What we want): A friendly voice and great attitude (it’s said “you can’t teach friendly,” so we *must* hire for that and a great attitude) Excellent time management skills (you love calendars and lists, keeping things tidy)Fast and efficient processing of documents, mail, packages, scans, and emails Supreme attention to detail (small spelling/grammar/style mistakes in our line of business can be costly and time-consuming) PunctualityMust complete a skills assessment and pass a background and reference check.
Disqualifications (What we don’t want):Impatience or bad attitudePoor time management: inability to multitaskUnreliableNo phone experience, no desire to be on the phone Easily overwhelmed or “thin-skinned”
Duties Include: Mail forwarding, sorting, and processing Create shipping labels and meter postageScanning/uploading documentsPreparing legal documents using our internal systemHeavy document management (computer files, attachments, shared folders, etc.)Inbound call screening/routingSending notification emails, follow-ups, forwarding mail using our internal system Preparing folders, inventory, and ordering office supplies, etc.Answer basic questions about our company and service; provide basic support to existing clientsOther duties or special projects as assigned
Experience: Typing skills, more than 50 WPM required (we will test for this) Pass our internal spelling, editing and formatting testsHighly proficient in Google Apps (Gmail for business, spreadsheets, docs, etc.) or equivalent MS Word, Outlook and Excel experience Excellent email and Internet research skills Excellent spelling and editing skills
Benefits:Quarterly bonus based on company performance (if we profit, so do you!) We promote and give raises based on skills learned; you can advance quickly. Office hours are Monday–Friday, 7:30am–4:30pm (schedule can vary around that), never on weekendsWe take all federal holidays off, paid (10–12 days!)We offer 2 weeks paid time off (PTO) to cover sick and vacation days in addition to federal holidays, which can be expanded as you grow with the company We have limited office hours between Christmas and New Years EveNo dress code: flip-flops and shorts are okay!Flex-time is available for this position (take an hour, make it up later, etc.)Open door policy (we listen to your issues/ideas), weekly meetings to address any employee issuesAnnual performance reviewFree coffee or soda of your choiceSorry, we do not provide health insurance at this time401k plan with company matching up to 4%Advancement opportunities: we almost exclusively promote from within
There is an initial 30-day paid evaluation and training period after which we will determine if you are a good fit for our company. Small errors in our line of work can be expensive and time-consuming, so it is imperative that you are a detail-oriented person if you wish to apply for this job.
Here’s how to apply:
1. Use the fields on this page to submit your application/resume. 2. Place my initials and a link to our company blog on the top your cover letter.3. Your cover letter should be written below the initials and link. Tell us briefly why you would be a great fit for this job. Generic cover letters will probably be ignored due to the volume of resumes we typically receive.
We will be reviewing applications for the next week or so. If we determine that you are a match, we will call and email you for an interview. Due to the volume of resumes received, I may not be able to respond to each individually, but I will promise to go over each resume carefully.
Thanks, and I look forward to your application.
Sincerely,Matt KneePresident and FounderMyCompanyWorks, Inc.
I believe this ad has proven to work because of several factors:
This ad has been used, with few changes, for over a decade, and it has produced very good results (we modify it for other positions but mostly it’s the same template). It’s not perfect and doesn’t always work (nothing always works when dealing with humans), but it’s served us well over the years. You may not be able to offer some of the higher-end benefits like paid holidays or a 401k, but just do what you can to attract a higher caliber candidate and pay as well as you can afford.
Good Interviews and Assessments
A good job description and job ad should hopefully generate plenty of qualified applicants. Next, you’ll want to learn some basic interview tactics and some kind of assessment or trial period so you can see if your candidate has the skills you need.
Identify your top ten or so candidates for each job, and then do a phone interview. A phone interview is a great way to filter out candidates and prevent the wasted time of too many in-person interviews. Set up phone interviews for these candidates and have a consistent way you talk to all of them (write out a script and checklist) so you can easily compare them to each other and also detect any potential issues, which we’ll discuss below. Generally, you describe the job, ask specific questions of your candidates related to the job, clarify anything about their resume or availability, and ask them if they have questions. You can find many examples of questions and scripts online.
After phone interviews, you may wish to invite your top three or so candidates for an in-person interview. This is a good opportunity to show them around, let them get a feel for the company, and hear a detailed explanation of the job and what’s expected. I often say that a good employee interview is more like “job dating;” you want to see it they’re a good match for the job, your company, and even your personality and the personalities of your current team. This will give you a good opportunity to assess their interpersonal skills as well.
In-person interviews can be quick or long depending on how important the job is to your business. Topgrading and other books recommend very long, detailed interviews (several hours long), especially for higher-level positions. My philosophy on this is that it really depends on the job and skill-level for which you’re hiring.
Lately, I have been leaning toward assessments and trial employment periods instead of very long interviews. Employee assessments are becoming very advanced and can even score employees based on how successful they are likely to be for the specific type of position you are offering (they have access to historical performance data from many other employees and companies). These can run from very simple 20-question tests to very long assessments for high-level executives. I have some listed in the Chapter Resources.
You can create your own assessments as well, but be careful about various employment laws when doing so. For example, if you are hiring for a detail-oriented clerical position, then create a spelling and editing test. If you’re hiring for a chef, see how they prepare a specific dish.
Finally, more and more companies are simply hiring an employee as a contractor or for a trial period of a day, a week, or a month to see how they do the actual job. My company does 30-day trials for most new employees, and we assess how they’re doing at the end of 30 days. If you’ve written the job description well and specified the expected results, it shouldn’t be a hard decision to make after seeing the person do a job.
Hiring and interviewing is more of an art than a science, and improving your skills over time will add greatly to your business. I’m still learning things after 15+ years of hiring people. Remember to always verify what you do against your local laws. That said, here are some good practices for interviewing and assessing:
Train and Onboard Properly
After you’ve chosen your candidate, send them a written job offer (and make sure to politely inform the candidates you took a pass on; you may need to call them back if this hire doesn’t work out). Now, you’ll want to bring this new hire onboard and train them.
This is where a lot of small businesses completely drop the ball by throwing a new employee to the wolves with zero resources or guidance. That’s terrible for a lot of reasons but mostly because it starts everything off on the wrong foot, is awkward for the employee, and shows that you don’t care that much how things operate (which also demonstrates low standards).
This doesn’t have to be hard or complex. Make a simple list (save it and re-use it for other hires) of everything a new employee needs to do starting with a nice tour of everything (where to park, eat, bathrooms, etc.), meeting the team, doing hiring paperwork, setting up email or other accounts, learning about the company, etc., then going through their job description duties and learning how to do them properly.
Obviously, documented procedures here will help greatly, but at the least you’ll want to train them personally or assign someone else to train them and be their “buddy” or mentor as they train. Show them exactly what “done” looks like and schedule regular follow-ups to check-in on their progress (or have their buddy keep you informed of progress).
People Management Best Practices
This topic also could be an entire book; it’s not only important but probably the most difficult thing about owning a business. Managing employees, especially holding them accountable and having to confront the many problems and issues that dealing with humans entails, is not most people’s favorite thing to do, especially entrepreneurs. In fact, poorly managing people or ignoring problems is how a lot of employee situations become bad in the first place.
The classic comedy movie Office Space, which details the dysfunctional management at the fictional company Initech, is one of my favorites and demonstrates the day-to-day frustrations of many modern office employees. It’s actually pretty insightful about people management and the things we’re discussing here.
Think about it, these guys just wanted some clear structure and communication (not eight different bosses and the same memo about TPS reports over and over) and some performance incentives (see the Leadership Superpower #15: Team Development and Motivation). Otherwise, why would Peter do more than the bare minimum?
Furthermore, they want the Right Tools (not a printer that was constantly broken), no silly dress code (see non-compensation benefits above), no empty platitudes about “Is this good for the company?” (try real Core Values or Principles instead), and to get rid of simple hassles around the office (the doorknob that shocks everyone and perhaps another office or location for the red-haired receptionist with the annoying phone voice).
I would even argue that they would probably have respected being held accountable for more than 15 minutes of real work a week, which would have given them a sense of accomplishment and maybe some pride in the job. Who knows, maybe Peter was just a bad hire in the first place (he did try to steal from the company after all) and could have been filtered out with decent interview skills. The point is that many of these seemingly small hassles build up and can make people crazy. However, problems can be fixed in a workplace, which doesn’t have to be a corporate dystopia.
I think there are some pretty simple rules and best practices for managing a team:
The rules are pretty straightforward; it’s the actual living by these rules that’s the hard part for almost every founder or manager I’ve ever encountered in business. People can be hard to deal with, and the better you get at it, the easier your life will be.
Managing Poor Performers and Toxic People
The final thing I want to go over on the topic of the Right People is what is generally considered the hardest part of people management: managing poor-performing or toxic employees. I think only a sociopath actually likes to tell people about their shortcomings or fire people but there are some best practices to doing this as well.
Let’s start with what I call toxic people: Get rid of them. Toxic behavior includes constant complaining (without trying to solve the issue or even present it to those that can fix it), a negative attitude in general, pessimism, bullying or intimidating others (or customers), dishonesty, and my personal pet peeves: talking negatively about others behind their back and gossiping.
Listen, I like an honest, open and even aggressive discussion of ideas and problems, but that’s not even close to what I’m talking about with toxic people. Toxic people make their teammates uncomfortable, angry or jealous (usually with incessant gossiping about others’ salary, promotions, how they are performing, who they are dating, etc.) and generally drain the energy of everyone who has to deal with them.
I don’t care if they’re the best performer on your team; they still need to go. The one exception I’ll make is if you somehow have some kind of super-genius with an incredibly rare talent working for you, then isolate that person (make them work from home) and minimize or eliminate their communication with your team. This is incredibly rare, so my default recommendation is to get rid of toxic people as soon as you can according to your employment laws. Make sure to document absolutely everything carefully because these are also the types that will “go legal.”
People who are performing poorly, as long as they aren’t toxic, are actually not very hard to deal with in comparison. The antidote to poor performance (and not hiring toxic people as well) are the many things we’ve mentioned in this chapter including clear job descriptions, expected or measurable results, hiring for good personality traits and having a good management system.
However, as any manager will tell you, even if you have all those things you’re still going to have a few bad apples get through the process. Again, when dealing with humans this is to be expected, so don’t let it ruin your day. Some simple coaching and a written plan to correct things is usually very effective.
The One Minute Manager and many other books show that a quick conversation that clarifies what’s expected and corrects the behavior is a great start. If the issue happens again then you’ll want to give a written warning specifying exactly what needs to change and by when (see examples of these online and in the book).
Finally, a “three strikes” rule is appropriate for most people: If you have to warn about the same issue three times then the person should be let go. If you do things right, this shouldn’t even be a surprise to the employee and many of them will quit before the third strike because they know they may simply not be able to meet or even want to meet expectations.
A final word on doing warnings and firings is what I call “five minutes of pain.” After you’ve clearly documented everything in writing and covered all the legal bases, just get the bad part over with as fast as possible. Don’t torture yourself or your team with bad employees. Consider that maybe you might actually be freeing this person to move on to someplace better. Some people saying that getting fired was the best thing that ever happened to them because it forced them to change careers to something better or and removed them from an environment that wasn’t ideal for them. Getting rid of toxic people and poor performers will dramatically improve your workplace so don’t hesitate to take action.
This was an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here or see our previous excerpts here.
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