Hiring for a small business is tough. You know what you do inside out, and you’re excited to expand, but you’re probably not a recruitment expert. With 32% of Australians unlikely to be rehired if their employer was given the option, hiring managers desperately need guidance during this important initial process.
This article will help you prepare for the recruitment stage. Whatever your reason for hiring, AbilityMap is here to make sure you’re ready.
When to Make Your First Hire
Your first hire is a huge milestone for small businesses. It represents a 33-100% increase in your workforce. It’s a decision you need to get right. Hiring someone too early could be catastrophic for cash flow, but regularly turning work away means stunted growth and wasted customer acquisition costs.
To work out whether you’re ready to make your first hire, consider the following:
- Are you turning work away?
- Are you giving your customers the attention they want?
- How much time are you spending doing what you do best?
- Do you need someone with alternative expertise?
- How’s your work-life balance?
- How does your growth compare with your forecasts?
- Can you provide adequate workflow, training and career development?
- Are you ready to delegate?
- What do you expect this employee’s ROI to be?
- Can you afford a new hire?
But how do you know if you can afford a new hire?
Chartered Accountant and Founder of Fullstack Advisory, Stuart Reynolds, says you should only make a hire if you can set aside 2x the employee’s monthly salary “based on new, confirmed and secured revenue within the same month”.
Remember to also take training and onboarding costs into account. You can also consider whether or not a part time appointment could be appropriate as you grow and scale.
Important First Roles for a Small Business
Depending on the nature of your business, you might need someone to take over roles like marketing, accounts or operations.
Common roles to consider hiring first:
An operations manager or administrator can handle day-to-day administrative tasks, manage office operations, and help ensure the smooth functioning of your business.
Sales and Marketing Specialist
If your business relies on sales and marketing to generate revenue, hiring a specialist to head this up is essential for driving growth.
Customer Service Representative
Providing excellent customer service is crucial for building a positive reputation and retaining customers. A customer service representative can handle inquiries, complaints, and support, leaving you to focus on what you do best.
Maintaining accurate books is essential for financial health. A bookkeeper or accountant can help manage this, as well as budgeting and tax compliance.
IT or Technology Specialist
In today’s digital age, having someone to manage your IT infrastructure, software and technology needs can be crucial for efficiency and security.
An administrative assistant can help with scheduling, email management and other admin, freeing up your time to focus on strategic aspects of the business.
If content is a key part of your marketing strategy, a content creator or copywriter will engage your audience and keep your messaging on-brand.
Legal Advisor or Consultant
Legal experts handle contracts and ensure your business operates within the law. You may also need to protect your intellectual property.
Product Development/Research and Development (R&D)
If your business involves developing new products or services, an employee dedicated to research and development can speed up growth.
Business Development/Sales Manager
If you’re looking to expand, a business development or sales manager can identify growth opportunities and build partnerships.
Quality Control/Quality Assurance Specialist
For businesses that produce physical products, a quality control specialist will help ensure consistency and customer satisfaction.
Social Media Manager
If your business relies on a strong online presence, a social media manager can help create and manage content across various platforms and engage with your audience.
A project manager helps oversee and coordinate various tasks and projects, ensuring deadlines are met and allocating resources efficiently.
For more information on defining the critical roles in your business, check out this article.
Outsourcing vs. In-house
Knowing when to outsource vs. make a hire is tricky. Consider whether you have enough work to fill a person’s full or part-time work week, and if your budget allows for the commitment of making your first hire.
Budget aside, there are benefits to both types of professionals. Consider the pros and cons of external contractors to weigh up whether agencies or freelancers might be better for you at this stage.
Pros and Cons of Using External Agencies or Freelancers
|– End-to-end management
– Specific expertise
– Flexible financial commitment
– No training or incentive costs
|– Higher fees
– No business commitment
– Longer turnaround times
– More detailed briefs needed
Hiring on a Budget
If you’ve done the maths and know you can afford your first hire, and you’re sure you need an employee rather than a contractor, you can reduce your recruitment spend with a few considerations.
8 ways to reduce your hiring costs
- Employee Referral Programmes:
Employee referral programmes (see page 15) are a great way to find suitable talent without paying high advertising fees.
- Free Job Boards:
CareerOne, LinkedIn and Indeed are all free for organisations to post job ads.
- Cut Surplus Interview Stages:
No one likes excessive rounds of interviews, so cut the 3rd and 4th rounds in favour of initial phone screening calls or virtual meetings and stick to just one face-to-face interview.
- Focus on Retention:
If your employee churn rate is high, this should be addressed before you waste more money on hiring, onboarding and training.
- Offer Flexibility or Remote Working:
Offering part-time work reduces payroll. Research also suggests a relationship between reduced hours and increased productivity. You could also look at hiring remote labour from areas with lower living costs to reduce your spend on office cleaning and supplies. Hiring remote workers also lets you hire more employees.
- Use the Latest Technology:
Harness the tech you need to make recruitment faster, whether that’s a candidate management platform or an AI CV-sifter. (AbilityMap removes guesswork from defining what you need and how people compare to that.
- Consider Interns:
Interns are cheaper than graduates, and often grow into their roles. Younger candidates are usually very keen to work hard and take on the values of their first employer. The skills and experience you can offer a younger workforce are critical at this time in their careers.
- Use Internal Talent:
Someone in your team may already have what it takes to do the role you’re looking to fill.
Finding Someone Internally
As your business grows, you might want to fill senior positions with people who already know the business.
To find the right people to pivot or expand into the role you’re hiring for, start by defining what you need and compare that with the skills of your current employees. If you aren’t sure what you need or what skills your current employees have, AbilityMap can help. The AbilityMap software assesses the innate capabilities needed for success in a role. Then, it identifies the capabilities of each person and maps these against each other.
AbilityMap’s advanced algorithm lets you:
- Identify skills gaps in your teams
- Assess whether current employees have the innate capabilities your business needs
- Guide training and development goals
Defining Your ‘Fit’ Needs
When your business is small, it’s difficult to know how to define your culture. What makes someone suitable for a tiny team? Or one that doesn’t exist at all yet?
As you start to define your unique company culture, you’ll quickly realise it’s drastically different from competitors. Your culture is unique to you and your business. As are your needs.
Your culture is an important consideration in your hiring decisions because the capabilities that make a salesperson or a software engineer thrive in a similar environment may not equal success for them in your organisation.
It’s important to get this stage right because hiring the right people depends on knowing what will equal success in your business. If you’ve never created a job or culture profile before, use the following methodology to guide you through this critical first step.
A Methodology to Define Your Needs
The first step in finding the right people is identifying the human capabilities you need your new team member to perform. Then, you must find the people who will display these consistently. Using a science-backed methodology, you can drastically reduce your error factor.
Use a combination of the following methodologies to clarify the capabilities you are looking for:
Understand the array of human skills that exist within the course of work
For decades, larger businesses have used capability frameworks as a reference to define the capabilities required for their roles. You can usually find these in the second or third paragraph of a job advertisement.
Organisations do typically charge for these, but AbilitiyMap’s 31-point Capability Framework is available if you’d like it. Using this framework, get an understanding of the types of capabilities that exist, and start considering how these relate to your role.
This is the starting point for any methodology, regardless of which following steps you choose to take.
Ask an expert what capabilities they think are critical to the role
For this step, you need someone who knows the role well. It may be you or a line manager, but they will likely be involved in the hiring process already. This ‘expert’ then selects the capabilities they believe are critical to a person’s success in that role.
They will probably select numerous capabilities, so ask them to trim these down to a shortlist of 12 or fewer. Once you have your shortlist, ask your expert to review the selections and prioritise the top five most critical. Then, rank those in order of importance.
This process is challenging. But considering it seriously is critical for successful hiring.
Ask multiple experts what they think is critical to the role
The same process described above can be applied to a group of experts who you think have an important contribution to make. These people collaboratively define the skills needed in the new hire.
Each person goes through the same process, and the most common selections by the group are rank-weighted to identify what they believe (as a group) to be most critical.
This is ideal when you don’t have one clear expert, or when you have many with different areas of expertise.
Ask high performers to complete their own Imprint
If you have an employee or group of employees that consistently perform in their roles, you can use their Imprint to guide the capabilities you’re looking for. This method gives you the highest rate of accuracy but is only possible if these people already exist within your organisation.
The high performers complete an Imprint, which takes 45 minutes each. AbilityMap then compiles all their data and identifies the strongest capabilities across the group. It also priority ranks them so you can clearly see what skills are most important for your future hire.
Use a profile from the library and adapt as needed
If this is your first hire, and you have no idea what makes someone successful in a role, our profile library is a great starting point. The library contains profiles of qualities such as leadership and remote working, as well as specific job roles.
Each profile consists of 8 capabilities ranked in order of importance. Use these to define the capabilities that commonly predict success in these roles, then adapt them to suit your organisation’s unique needs.
Soft Skills vs. Hard Skills
Although every hire needs specific technical skills for success in their role, ‘soft skills’ are equally important and harder to assess. Unlike ‘hard skills’. which include qualifications such as certain coding languages or chartered accountant status, soft skills are more subjective. They refer to the behaviours and human capabilities needed to get work done.
The innate capabilities that make a person right for a role vary considerably depending on what that role is. A salesperson, for example, needs great communication and persuasion skills. How does that compare to someone in a project management role?
The saying goes: “Hard skills get you hired, soft skills get you fired”. Traits like a strong work ethic and great leadership skills are indeed more difficult to pick up and develop. So, hiring employees with these innate skills is important from the start.
Examples of soft skills:
- Team Work
- Problem Solving
- Planning and Organising
- Managing People
- Initiative and Enterprise
For more information on how soft skills impact business performance, have a look at the AbilityMap Capability Framework.
Skills Gap Analysis
When looking to hire or transform your current team, you need to critically compare the skills you have (at an employee or team level) with the skills you need. A skills gap analysis is an effective way to lay out what those skills are so you can take a holistic view of what training and development opportunities you might need to open up.
Skills gap analysis template
Conducting a skills gap analysis involves cataloguing the skills and capabilities of your employee or team. You then compare those with the capabilities and skills you need in the roles you are trying to fill.
You will need to decide how to assess the skills – some managers know their team well enough to fill out this information themselves, but others may want to use objective tooling.
Use the simple template below to conduct a skills gap analysis for each employee or team you want to assess. In the final column, write your initial thoughts on how you plan to close any gaps.
How to use AbilityMap for your skills gap analysis
AbilityMap helps organisations with their skills gap analysis because it identifies cognitive and behavioural capabilities in a single 45-minute assessment. It can also help you work out what skills make a person likely to succeed in your role and organisation.
Once all your candidates or team members have completed their imprint profile, AbilityMap’s sophisticated algorithm evaluates their capability for the role you’ve defined. Each will be grouped according to capability, so you can easily shortlist anyone you want to talk with further.
The ability to shortlist candidates in this way means you can interview everyone for personality and cultural fit, safe in the knowledge that they have the skills needed to get the job done.
Employment Laws & Regulations
As an employer, you have legal responsibilities to ensure you’re providing a fair working environment to all employees. These range from paying minimum wage to allowing time off to deal with personal matters.
Complying with these isn’t just a legislative matter, though. In return, good employers get better employee retention, motivation and productivity. Productive employees that stay with the business for longer mean less money wasted on hiring. It also means the people in your business know it very well.
Fair Work Act 2009: This is the primary legislation governing employment relationships in Australia. It covers a wide range of employment matters, including minimum wage, working conditions and termination of employment.
National Employment Standards (NES): These are a set of 10 minimum employment entitlements that apply to all employees in the national workplace relations system. They include provisions for maximum weekly hours of work, flexible working arrangements and parental leave.
Modern Awards: Modern Awards are industry-specific legal documents that set out minimum pay rates, working conditions and other entitlements for employees in certain industries or occupations.
Minimum Wage: Australia has a national minimum wage, which is periodically reviewed by the Fair Work Commission. Employers must ensure that they pay their employees at least the minimum wage.
Unfair Dismissal Laws: The Fair Work Act provides protection for employees against unfair dismissal. Businesses with less than 15 employees have modified rules on this. There are also specific laws and requirements regarding terminating employees and making employees redundant.
Work Health and Safety (WHS) Laws: Employers must provide a safe working environment for their employees. WHS laws cover workplace safety, including obligations related to hazard identification, risk assessment and incident reporting.
Superannuation Guarantee: Employers are required to make superannuation contributions on behalf of eligible employees. The current rate is 10% of an employee’s ordinary time earnings.
Paid Parental Leave: The Paid Parental Leave scheme provides financial support to eligible working parents when they take time off work to care for a newborn or adopted child.
Anti-Discrimination Laws: Various federal and state laws prohibit discrimination in employment based on factors such as race, gender, age, disability and sexual orientation.
Employee Entitlements: Employers must ensure that employees receive their entitlements, including annual leave, sick leave, public holidays and long service leave. Bear in mind these vary by state/territory.
Record-Keeping and Payroll: Employers are required to maintain accurate records of employee hours worked, wages paid and other employment-related information.
Employment Contracts: You should provide all new hires with a written employment contract that outlines their terms and conditions of employment, including job duties, salary and termination information.
Employee Rights to Union Membership: Employees have the right to join a union, and employers must not discriminate against employees based on union membership.
Visa and Immigration Laws: If you employ foreign workers, you must comply with immigration and visa requirements.
Privacy Laws: Employers must adhere to privacy laws when collecting and handling employee personal information.
Bullying and Harassment Laws: Employers have a duty to prevent workplace bullying and harassment.
Long Service Leave: Long service leave entitlements vary by state or territory, so you need to be aware of your location’s requirements.
You can find out more about your obligations and best practices on the Fairwork Ombudsman’s website.
Diversity & Inclusion
Diversity and inclusion mean creating equal opportunities for everyone.
Australian anti-discrimination laws prohibit organisations from treating anyone differently because of their race, gender, medical status or nationality. It also covers any other factors not related to their ability to carry out the job.
But being inclusive doesn’t just benefit candidates.
The Financial Benefit of Building Diverse Teams
Just as creating a compliant workplace is in your best interest, fostering a diverse and inclusive culture is too. Numerous empirical studies show diverse teams are more productive and valuable than non-diverse teams.
Mckinsey’s iconic 2020 research project found that diverse teams consistently outperform non-diverse teams. And this difference is becoming more extreme for both groups.
Likelihood of the most gender-diverse businesses to overperform:
- 2014: 15%
- 2017: 21%
- 2019: 25%
Likelihood of the least gender-diverse businesses to overperform:
- 2014: -9%
- 2017: -15%
- 2019: -19%
But why do diverse teams perform better?
The bottom line is that diverse teams are more likely to come up with diverse ideas, diverse solutions and diverse ways of getting things done.
The Society for Human Resource Management takes a neuroscience perspective on why that is. We are all subject to cognitive biases, and diverse teams have diverse biases, they explain. When team members all have different biases, giving each of them equal opportunity means one group’s biases don’t dominate the solution.
Getting Diversity Right
It isn’t enough to just tick a few boxes with a token hire or two.
To get the business benefit of diversity – and foster a truly inclusive workplace – you need to create a culture of inclusivity where everyone feels welcome to speak up. Here are some tips on getting it right:
- Start at the top – take advantage of ‘the multiplier effect’
- Be consistent. From the language you use to the way every team member behaves
- Make flexible work arrangements available to anyone who needs it
- Make diversity and inclusion a company-wide objective
- Encourage minority groups to speak up
- Measure and track your progress