When you run a small business, you can’t afford to make mistakes. Every client interaction, product and invoice reflects on you and your company, and one bad experience can make or break your reputation. And that’s why, even though growing your business is a good thing, it’s natural to feel a lot of pressure when you’re hiring new employees who will represent your company to the world.
We chatted with several small business hiring experts, who suggest you avoid the following.
7 Small Business Hiring Mistakes to Avoid
1. Hiring Out of Desperation
First, check your hiring motivations and make sure you’re planning ahead for your staffing needs. It’s one thing to realize it’s time to expand your team because you have a reliable busy season coming up in a few months and need the extra support. It’s another thing entirely to realize that busy season is upon you and you need extra help right now:
Among the most common small business hiring mistakes that Heidi Lynne, Global Human Resources Consultant & Founder of Heidi Lynne HR Consulting, sees is making a hire out of desperation. “They hire the skills they need right now and neglect character, when skills are trainable and character is not. This ends up causing more frustration and a clash of personalities because in the long run they find themselves with a diverse range of personalities on staff that are not aligned with the mission, vision and values of the company — and have no real investment in the company.”
2. Hiring Without a Clear Job Description
The first step in hiring intentionally is to prepare a clear job description that outlines what you’re looking for in a new employee and what they can expect from the job. But you’ll quickly find that this step has major benefits for your whole company, not just your new employees:
“Sometimes the first step in making a new hire is understanding how your current staff is performing,” says Diana George of By George HR Solutions.“ If you feel that your current staff is not getting the results you expect, you need to focus on developing a clear job description that you can use to make new hires. Unfortunately, many small business owners have everything in their head and expect the employees to be able to do the job even though it is not documented anywhere how to do the job correctly.”
3. Improvising the Hiring Process
Speaking of job descriptions, they should be the first of several steps towards formalizing your HR process, even if you’re only hiring one or two new employees — otherwise, you might find yourself rushing through the process and making bad hires simply because you weren’t thorough enough at the start of the process.
“When you're starting a small business, you always have a lot on your hands, so it's tempting to want to rush the hiring process to get the wheels in motion,” says Jerry Haffey, founder of Ambrosia Treatment Center. “But, too many new or small businesses fall short when hiring their first few employees because they skip crucial steps in the process, like background checks, following up with references and multiple interviews. It can be annoying to follow HR protocol when the candidate feels like the right fit right away, but it's well worth it to catch bad hires before they slip through the cracks.”
4. Hiring a “Mini-Me” of the Business Owner
A powerful side benefit of building out a formal hiring process? You're more likely to hire based on talent, drive and potential — not because you see yourself in potential hires.
“I see it happen all too often that a small business owner will try and build a team of people just like herself,” says Noelle Johnson, founder of My Interview Buddy. “But new hires will never be her — so she is constantly disappointed when the staff is unable to live up to her unrealistic expectations. Over time, important pieces fall through the cracks because the business doesn’t have people in place that are strong where the owner is weak.”
5. Not Hiring Enough Positions
If you’re like most small business owners, you waited to grow your permanent staff until you were sure you could keep them busy for the long term. But once you decide to expand, make sure you’re bringing on the number of team members you really need, not just the number you can get by with.
“Small business owners often push their existing employees too far before they bring in new hires,” says HR Analyst Laura Handrick of Fit Small Business. “Then, because they're understaffed, service suffers, existing employees get burned out and new employees aren't given enough time for training before they're thrown into daily operations. The new employees are likely to fail, existing employee are overwhelmed and the culture and business suffer.”
6. Not Anticipating Churn
One thing small business owners often don’t realize when they first start hiring new employees is that even high-quality new hires may decide to leave the company within a few months or years — and you shouldn’t take it personally.
“I've seen it time and time again that companies hire for culture when they are 10, 20 or 30 employees, but then that culture changes dramatically when they grow to 100, 125 or 150 employees,” says Mike Astringer, Talent Acquisition and Human Resources Consultant at Human Capital Consultants, Inc. “There is a particular mindset of the person who goes to work in a startup or rapidly-growing small company that may not work as well as your organization [matures]. And so for all of the reasons someone joins a startup, they’ll want to seek that out again in another small company and may not stay with yours. ”
7. Misclassifying Employee Status
This is one of the small business hiring mistakes that can be particularly devastating for owners who aren’t up-to-date on employment law: misclassifying employee status as exempt when they’re non-exempt, or vice versa.
“Misclassification of employee status can be one of the most costly mistakes business owners can make when hiring their first few employees,” says Ivelices Linares Thomas, Founder & CEO of HR & Beyond. “One situation I see frequently is a business misclassifying an employee as exempt and ineligible for overtime pay, yet the position is really a non-exempt position. In this example, a business will not have paid the misclassified employees correctly, especially when considering any missed overtime payments for hours worked over 40 hours. The penalty for failing to pay overtime can equal up to double the total overtime owed, and the Department of Labor has the ability to issue additional penalties per violation, which can add up very quickly.”