Hiring Series: How to Attract Quality Employees to Your Small Business

For ten years, the biggest problem Bottle Washer and I had was attracting and retaining quality employees to our Small Business.  We can’t offer the benefits or top salaries that employees can get from a large company.  As the CEO of a rural hospital recently commiserated, “A physician is willing to take a 10% salary cut to come here for the lifestyle, but, if offered a salary any lower than that, New Jersey is looking pretty good.”  Like that small country hospital, a Small Business isn’t able to entice potential recruits with more cash; we have to offer something else.

I was reminded of this problem a few days ago.  My daughter’s softball game was two hours in, and it was only the top of the second.  The parents began to chat.  Tony was frustrated.  He is one of the few guys I know who works for a Big Company.  Tony recently got a new boss.  The newbie feels some of the current employees are overpaid and unproductive; he wants to clean house and replace them.  Tony has tried to explain to this guy that finding replacements for these employees could take a year or longer; it might be less disruptive to retrain the current employees and restructure their benefit packages.  The new guy won’t budge, and is ready to hand out the pink slips.  This got me thinking: if this Big Company has trouble attracting quality employees, even with the current level of unemployment, what chance do we Small Businesses have? 

Outlined below are some of the ways Bottle Washer and I have tried to stay competitive when it comes to hiring and retaining top employees.  Remember: when pitching a job to a candidate, sell the entire package, don’t just focus on the salary. 

When recruiting an employee, be as professional as possible.  Have a formal hiring process, present a written offer, and state an acceptance deadline.  To create a sense of urgency, Fedex the offer to the job candidate’s home to let him or her know you are a  serious contender for his or her services.

If your Small Business can afford it, offer some (or all) of the following standard benefits so that your offer is comparable with one from a major corporation:

  • Vacation pay
  • Health insurance (decide if you will pay the premium for the employee only or also his or her family)
  • Life insurance (a payout amount equal to one year’s salary is typical)

Consider these non-standard benefits, many of which do not increase your costs:

  • Continuing education allowance: This is attractive if con ed is required for the employee to maintain a license or certification. 
  • Specialized insurance coverage, ie professional liability or malpractice: Also attractive if the employee will have to pay for this out of pocket in order to practice his or her profession.
  • Allowance for uniforms or other required work gear
  • Coverage for commuting expenses
  • Unpaid time off: If you have other staff to perform the same job functions, unpaid time off for an employee does not hurt your productivity or your bottom line, but is a compelling carrot for an individual who likes to travel or has extensive unpredictable personal responsibilities, such as caring for an aging parent.  This is an attractive benefit when your employee’s income is secondary in the household.
  • Simple IRA: You should have one of these already set up for your company.  (If not, see your accountant, one of your Small Business’ four best friends!)  A retirement plan helps your company to be viewed as a legitimate enterprise, not a fly-by-night operation.  Adding an employee to the plan does involve a small amount of monthly paperwork, but not much cost, especially since you can control the employer’s annual matching amount.   
  • Flex time:  Does it really matter to your business if an employee needs to be home in time to meet their kids at the school bus or have off every Wednesday for dog obedience classes?  Probably not.  As long as you have the coverage you need, adjust employee schedules to their lives.  This will make the job you offer immensely more attractive and your current employees less likely to look for work elsewhere.  
  • Opportunity for making extra money:  In our Small Business, several patrons began to ask for a related service that Bottle Washer and I did not have the time or staff to cover.  However, one of our part-time employees had a related background and more than enough time to provide this service.  He started a side business exclusively from referrals from our office.  Of course, Bottle Washer and I could have added this service to our business’ offerings, but we consciously decided to focus our efforts elsewhere.  This can be a win-win situation for a real hustler.  
  • Greater opportunity to be involved in and learn more aspects of the business.  A Small Business is, well, small.  An employee will be exposed to more aspects of the business than if he or she were compartmentalized in a large corporation.  Point that out to your candidate, especially if they have expressed an interest in expanding their knowledge base.
  • Greater input into decisions and operations. If you are looking at a candidate that wants autonomy and responsibility, show how they can have greater input into final decisions in a Small Business, with fewer layers of decision-makers than a large company. 

Be creative!  Remember you are hiring a person.  Find out what is important to them and cater to that.  These are things we or other Small Business owners we know have done to make a job more attractive:

  • Allow employees to bring their dogs to work.
  • When stuck for childcare, allow employees to bring kids to work.
  • Provide housing.
  • Allow use of facilities, computers, or other business assets after work hours for personal use. (Check with your accountant that you are not violating tax laws and with your insurance agent to be sure you have appropriate liability overage.)
  • Pay for relocation expenses.
  • Provide free products or services.
  • Allow employees to work at home.
  • Adopt a casual dress code.
  • Allow employees to do personal activities when you need floor coverage and there are no other tasks to perform and no customers.  (Personally, I never allow this; I always can find something for an employee to do, however Bottle Washer studied himself through graduate school during the graveyard shift at a gas station.) 

 As a Small Business, flexibility is your secret weapon when hiring staff.  Use it to your advantage to custom-design a position and compensation package for a desired candidate.  Cash is not always king when a potential recruit evaluates a job offer.

What have you done in your Small Business to make a job offer more attractive?

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