The current US labor market is among the most competitive in the country’s history. In January 2023, the US reported 25 consecutive months of job growth, and unemployment was the lowest since the 1960s. Although this boom in job growth was a boon for job seekers, this makes life harder for small business owners with hiring needs, as there are fewer people to fill a vacant role.
The following five steps can help small businesses that want to hire and retain the best employees.
The employee hiring process
- Define your needs
- Post the job and recruit
- Screen and interview candidates
- Check references and do background checks
- Make a job offer and onboard
Attracting and hiring the right person can seem like an overwhelming ordeal for small businesses. However, breaking down the process into five steps may make the hiring process more manageable.
1. Define your needs
The hiring process is more likely to succeed if you have a clear idea of your business’s needs and what you expect the employee to contribute to your company. For example, an ecommerce clothing store that falls behind on its orders will have to figure out why this happens before it can successfully hire employees. Are orders not being filled because the packaging and shipping department is short-staffed? Or, is it because factory workers can’t produce the items fast enough? The skills needed in a shipping operation are different from those on a factory floor. So it’s important to know where to fill in the gaps before making hires.
2. Post the job and recruit
Once you know what your business needs from a new employee, you can post a job listing and begin recruiting. Start by writing a detailed job description outlining the prospective employee’s desired qualifications and responsibilities, and telling job seekers how to apply. Popular job websites include LinkedIn, Indeed, and Hired.com. Also, consider posting the listing on smaller online communities, sharing with personal networks, and asking current employees, if you have any, to post and share. Consider asking your employees if they can recommend someone.
3. Screen and interview candidates
After candidates start applying, it’s time to begin the screening and interview process. To sort through a large number of applicants, do a cursory read-through of résumés to weed out anyone without the desired experience or qualifications. You can also filter candidates based on more selective criteria, such as professional certifications. Business owners should shorten their list to a handful of applicants for each position. It’s important for a hiring manager or business owner to interview several candidates in case the preferred applicant turns down the job offer. If you are hiring when the supply of qualified candidates is small, you may want to consider reposting the listing, offering higher pay, and doing a new round of job interviews.
4. Check references and do background checks
Once you have a preferred candidate and at least one alternate, contact their references and/or do background checks to verify the accuracy of the information they provided, confirm they’re not misrepresenting themselves, and check that they don’t have a criminal history they didn’t disclose. During the reference check, verify the details the employee provided, but also be aware of the process’s limitations: For legal reasons, past employers rarely will discuss current or former employee job performance.
5. Make a job offer and onboard
If everything looks good, extend a job offer to your top candidate that includes a competitive salary and benefits. Take note when making an offer: Most localities have labor laws mandating a certain minimum wage, vacation days, and pay periods for employees. Also, many employees will try to negotiate a higher salary than the one you offer. You may want to provide an employee handbook to help inform employees of your expectations as well.
Before extending a job offer, make sure you already have a federal employer identification number (EIN) and have consulted with a tax professional on paying the proper payroll taxes.
A clear and thorough onboarding process can clarify your new employee’s responsibilities, teach them how to use any equipment or computer systems, and set them (and your business) up for success. If your new employee feels uncertain or uninformed about their responsibilities, they may become frustrated and leave.
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How to get (and retain) the best employees
- Use a variety of recruitment methods
- Recruit a more diverse applicant pool
- Try out potential employees as contractors first
- Set clear job requirements
- Provide competitive pay and benefits
- Provide training and support
- Adhere to local labor laws
Finding and retaining great employees can be challenging, especially in a highly competitive labor market. Here are some tips to make your recruiting process as successful as possible.
Use a variety of recruitment methods
Using a wide array of recruiting methods will increase the chances that more people see your job posting and apply. The more people who apply, the bigger the pool you have to choose from—and the greater the odds of finding the right candidate. You can post the opening on major job boards such as LinkedIn, Indeed, and Monster.com, or on more niche job platforms such as Wellfound (formerly AngelList), which is dedicated to job opportunities at startups. Ask employees for candidate referrals and let your professional network and friends know that you’re hiring, because they might recommend job candidates.
Recruit a more diverse applicant pool
During the recruiting process, take steps to increase the chances of getting a diverse pool of candidates. Clearly state that you are an equal opportunity employer and welcome applicants without regard to gender identity, race, ethnicity, disability, sexual orientation, and age. Make sure to offer reasonable accommodations to people with disabilities. This can include providing wheelchair-accessible rooms for interviews and making sure your advertisements and emails are compatible with screen-magnification readers for the visually impaired.
Try out potential employees as contractors first
If you don’t need or want full-time employees, you might consider alternatives. One option is to first hire individuals as independent contractors. This may cost less than a full-time position because your business doesn’t need to provide employee benefits.
Set clear job requirements
In your job description, the more specific you can be about expectations, the more likely it is you will find a candidate who meets those requirements. If the descriptions of what you’re looking for are vague or general, you may not attract the right candidates, wasting both your time and that of the job seekers.
Provide competitive pay and benefits
Providing competitive pay and employee benefits is essential to retaining top employees. Studies have shown that companies that provide more vacation time and sick days have higher rates of employee retention and productivity. Remote work and schedule flexibility are also high on many employees’ wish lists of company benefits.
Provide training and support
Well-planned training courses or assigning mentors that guide new employees can help ensure job satisfaction and worker retention. Also consider training on inclusion and diversity, which can help new workers from underrepresented groups feel welcome. If you are hiring remote employees, it’s especially important to make sure they feel supported and have the tools they need to do their jobs, because it’s more difficult to give these workers hands-on instruction. You may also want to provide employees with occasional perks like office parties and bonuses during the holidays to boost morale.
Adhere to local labor laws
Most localities have ecommerce labor laws and other labor laws that mandate minimum wages, vacation days, and pay periods. Following these standards is essential to the success of your business. Failing to follow the legal requirements could lead your employees to file complaints with government authorities or sue your business. You could be forced to pay fines or even close your business, depending on the localities where you operate.
Employee hiring FAQ
How can I attract a diverse pool of candidates for my open positions?
First, your job postings should include language reflecting your commitment to having a diverse workforce. To draw a diverse pool of candidates, you can post listings in trade publications dedicated to supporting underrepresented groups, use a diversity-focused recruiting agency, and make sure your advertisements use inclusive language.
What are some effective ways to advertise job openings?
You can advertise your job opening on websites, newsletters, or trade publications for your industry. The most common work-related websites include LinkedIn, Indeed, and Monster.com. You can also ask your current employees and broader network for candidate referrals.
How can I navigate the hiring process without discrimination?
Taking a course in unconscious bias and maintaining a commitment to hiring a diverse workforce can help mitigate discrimination or bias in hiring. Another step can be to make the initial screening process blind by sifting through applications that have been stripped of the candidate’s name, age, race, gender, or disabilities.