According to the latest Gallup Small Business Index poll, local businesses are more optimistic about hiring now than at any time in the past four years. Business owners planning to increase jobs over the next 12 months outnumber those planning to cut jobs by nearly three to one.
That represents a major shift from what’s been happening. In 2011, for example, about 22 percent of business owners surveyed reported cutting jobs, while only 13 percent said they had added jobs, full time, part-time or temporary.
As business owners think about hiring, however, there’s a strong desire to keep costs down. Many have been optimistic about hiring before, only to scrap those plans when the economy failed to improve.
When they do hire, small businesses have a strong desire to get the best people possible in the most cost-effective fashion.
If hiring does pick up, finding qualified employees could become a bigger issue. Even now, 53 percent of small businesses say they have trouble finding employees who fit their needs. While that’s down from 65 percent in 2005, it could become a bigger problem in the months ahead as competition for talented employees gains steam.
The key to cost control is to hire people who are the best overall “fit” for your business. Most companies hire based on skill, but end up firing for bad fit. That’s the wrong way to approach it. Start by creating a detailed “definition” of the job. Most employers write job descriptions that are just laundry lists of tasks and duties.
Realize that the traditional job interview is a poor predictor of future employee success. That’s why many employers are moving to performance-based interviews that use a standard list of questions and may involve skill or psychological testing. The goal is to get at the things that don’t usually come out in an interview, such as how someone will approach their work, how they cope with high demands and what types of activities motivate them.
Compensation should include financial and nonfinancial incentives. Here are some to consider:
• Pay for performance. Set clear and reasonable goals that promise to put more cash in an employee’s pocket for reaching them.
• Flexible schedules. Many employees today prefer flexible schedules and more time off over higher pay. Flexibility also translates into greater loyalty, which saves money on turnover.
• Alternative rewards. These include small, informal spot bonuses for a job well-done, gift certificates, luncheons, golf outings and parties or happy hours to celebrate work-related successes. •
Daniel Kehrer can be reached at