Started in 2003 to consult with small business owners

Indeed vs. Zip Recruiter

We recently did a hiring campaign for one of our clients for security guards, and we used both Indeed and Zip Recruiter.

Of the two, we preferred Zip Recruiter, because it turned out to be cheaper for the client, and we found Indeed a little deceptive in their claims.

First, both sites do offer free periods, and we were able to find enough qualified candidates inside the free period.

However, there was a qualifier: Indeed tried to charge us for each resume submitted, regardless of qualifications, which they didn’t disclose on their website, and $99 per resume passed through to the client. These two charges make Indeed quite pricey relative to Zip. Indeed did, however, refund the per resume charges when questioned, because they agreed they didn’t disclose them

Zip said straight away that their cost was $16 per day, regardless of how many resumes the site found for us. And they stuck to that. Using the same ad on Zip, results weren’t quite as good as Indeed, but there wasn’t enough difference to justify Indeed’s higher price.

As it turned out, our client also recruited from his existing employees, which produced as many applicants as either Zip or Indeed.

So, if you’re using one of the recruiting sites, read the fine print!

7 Ways to Deny a Promotion W/O Demotivating

OK, It’s January, and everyone is back at work in most states.

I’ve shamelessly purloined much of this post from Ivy, which has good articles from time to time on running your business.

I’ve seen this scenario play out many times among our small business Solutions Forum clients, so I’m passing along their article paragraph headers (you can fill in the paras):

The person who wants to be promoted doesn’t really have much basis for his/her belief, other than Johnny/Susie down the corridor got promoted.
They’re not very entrepreneurial, which means they haven’t bugged you lately about the idea they had about improving xyz.
They’re not a team player, but in a small business that might not be too important, as long as they do what they’re asked to do. Do they do more than asked?
They come to you with problems, not solutions to your challenges. You’re not Dr. Laura.
They ask for a lot of overtime. If they can’t get their job done in regular time, there’s a problem, and you should discuss it.
Conversely, they’ve got track shoes on ready to bolt at 5 pm. Normally, a little overtime should be expected by you.
They do their job exactly as they’re asked, with no ideas for improvement. Everybody has ways to improve their job, even on an assembly line.

Who’s on the Bus?

With a little digression into vaccines, which relate to this personnel blog, which will be about what people you need going forward, and some (we hope) good tips on how to find and recruit good people.

If you are growing (and you might decide you want a lifestyle job, so you make enough money to support the lifestyle you want), you will need to hire people.

These people might not do the jobs you formerly did as well as you did them, but having them on board frees you to do other things that are seemingly more important. If you’re doing a lifestyle business, then you might continue doing what you’re doing and be perfectly content.

A convenient way to look at what employees you might have to add is what they’re going do do, how much revenue they can generate (not just in sales, but in even allowing you to do things that are more meaningful to the firm, versus how much the employee is going to cost in terms of pay and benefits. The revenue/cost figure is presumably positive, otherwise, why hire the person?

To give you an example, a client we have decided recently to hire a new person. Their financial calculus was that the person would cost about $50,000 per year in pay and benefits, but the two founders could, through more sales and higher end sales, create another $90,000 in revenue. So, the revenue/cost calculus is $40,000. Now, nine months later, they are about to add another laser cutter and hire another production operator. The calculus is a little different, because the total expenses are $82,000, so the short term benefit is only $8,000, but there is the future benefit of another $40,000. At some point, demand might slow down or the people might be more expensive, but as long as their is a positive profit generator, employees should be added.

It should be noted that, at some point, the $40,000 calculus per employee might be reduced somewhat because a supervisory person has to be hired to look after the operation. This should have a positive return too, because he/she further frees the owners to make more revenue.

We are presuming that you have the financing to hire more people and buy/lease more equipment, but if you don’t you’ll have to subtract financing from your overall cash positive.

And you do a Solutions Forum meeting, either face to face or via Zoom every two months or so to iron out any problems that have arisen, such as maybe not making the best hire and whether to cut said underperformer loose. (The answer is that as long as his/her cash contribution is positive, you keep him her around and look for another, better person and refine your hiring parameters.

When you make the decision to hire, don’t expect to put the ad in indeed.com on Thursday and have someone report bright and bushy tailed for interviews on Friday and work on Monday.

When they show up, you first put them through a DISC test (available on the internet) to find out if they have the ability mentally and emotionally. You might also run them through practical tests, such as running the laser cutter, to see how they do, while making allowances that they should get better by ‘x’ after they start.

All told, if you fire any employee, it will cost you about $15,000 to hire a new person, in terms of training, possibility of firing and management time in getting the person up to speed.

In the present high demand labor conditions, your positive revenue contribution of a new employee might be reduced from where you would like it, but it should still be positive. Don’t be hiring just to be hiring unless you have a burning desire to walk around your plant and see a bunch of smiling (you hope) faces.

KPI’s

Somewhere around five employees, with one or two people in every job function, you can develop KPI’s, or ‘Key Process Indicators’ of what a good employee is and does. Things like attitude, dependability, independent working, creativity and the like could be measured. KPI’s might be different for each positions. You can weight each of the KPI’s in terms of traits you’d most like to see.

And yes, in the current climate, you should use diversity as one of your KPIs. How much weight you give it is up to you, but it does need to be explicitly incorporated.

ARE THE PEOPLE IN THE RIGHT SEATS ON THE BUS?

Again, as you grow, you might find that various people want to do different things from what they were hired for. That’s fine, because personnel satisfaction is key to your success, and not only because personnel might be 30-70% of your total costs.

You have to interview the person and find out why they want to do the new job, and what positive contribution they can make financially that they’re not now making. Yes, you have to be fairly ruthless about it, unless you’ve decided that you’re really running a social welfare agency. You have to make the employee realize that the new job they want may or may not work out, and what the financial consequences of each alternative on their future might be. No sugar coating.

You might also find that a person wants to ‘downshift’ in their corporate career, and take on a job that’s more personally meaningful to them at the time in their life where they are or expect to be going. For example, one of my clients sold his highly successful business because he wanted to focus more on his world class photography, after doing his business for some 30 years. So, he sold a majority of his business to his two sons, who are running it quite well, and he’s photographing things all over the world. One of your employees might want to work less hours for you and more hours for his/her favorite non-profit. That’s fine, too….a greater social good has been achieved.

PERSONNEL RECORDS

OK, no one likes to do or keep them, but it’s a fact of life these days that you’ve got to record all interactions with your people, because there might be controversy brewing somewhere down the road.

There might be trips to the labor commission to resolve fired personnel grievances, or there might be disputes among people or yourself as to who said and did what to whom. ALL interactions involving personnel should be documented, and the person should sign off on the documentation so they can’t later come back and deny they said or did what they did.

Or, you and a person might come to a parting of the ways. We advocate trying to work things out, but sometimes things don’t work out, and a termination is best for all. Acknowlege the mistake, learn from it and move on. But document that the person is being terminated and why, and have the person sign it, so there’s no misunderstanding.

PERFORMANCE REVIEWS

No one much liikes performance reviews, but, in our experience, if they’re handled with sensitivity and objectively (no harsh words), they can actually be enhancing. People find out what they’re doing right, and what they could be doing better, especially in relation to the job they were hired to do.

Everyone deserves to know how they’re doing, and as objectively evaluated as possible. If you’re using KPI’s, as we recommend, the performance review becomes somewhat more routine and more objective, because you’re rating your people against the ideal, whatever that is.

How frequent should personnel be evaluated? It depends on a variety of factors: complexity of job, time on the job, and time to do a review (there are times you just can’t do a review when one is due, but don’t defer it forever) Point out to the employee that you can’t do it right now, and you’ll reschedule it for next Thursday. Reviewer and reviewee should both be comfortable and relaxed when the review is done.

We think quarterly reviews are about right.

Again, employee and employer should both sign the review. If one of your supervisors is doing the review, they sign it. After all, your supervisor is evaluated by his/her superior, and so it goes up the line.

The CEO, by the way, gets evaluated by his Board of Directors, in case some of your more inquiring personnel want to know. Partners should evaluate each other, too, again in a friendly setting, such as and offsite lunch or dinner. Coupling the evaluations with goals for the next reporting period is a good practice that we’ve used and coached.

TURNOVER

That some of your employees will leave is a fact of life. More money, better job, downsizing, the reasons are diverse. Don’t be shocked, but do interview the ones who left to let them know that you valued their contribution (assuming that you did) and wishing them well. Sometimes they will come back after the new opportunity didn’t work out, and all should be forgiven and a personal growth moment should ensue.

There is no ‘right’ turnover number. For stable organizations, it’s probably about 10%.

In high growth situations, it can be higher, because of the demands that will be placed on people; but then again, if you did your initial hiring ratings correctly, there shouldn’t be many surprises. One of my clients just had about 8% of his workforce quit in one week, all of whom are going to a competitor, and all for financial reasons, so he’s got some rethinking of his compensation plans to do.

When I took over my family business, my first year turnover was about 75%, but it was mostly because of moving from a relatively slow growth, almost paternalistic culture to a high perforumance culture. We tried to forster a sense of family, but we didn’t let family get in the way of hitting the numbers. We could do both, because by the end of the first year of my seven as President, we had most of the right people on the bus.

And, having the right people on the bus makes your job a lot easier.

People in Your Startup

The popular image of the startup entrepreneur is Jobs, Gates or the HP guys slaving away in their garage, or back bedroom, lone wolfs, trying to get their businesses off the ground. They don’t hire people until the business is off the ground.

The reality today is different. Startups write business plans, raise money and hire people in various disciplines to do functions like marketing and sales, finance and production.

Odds are you’ve worked with the people you’re launching with. And, presumably you’ve got non disclosures in place for all of them, once they have agreed to their compensation package.

You should strive for diversity, but more important, you want the best people you can find for the price you can pay. COVID status can be one of the screens when you’re interviewing people, but that’s about all it should be. The same with Critical Race Theory but, this topic should be avoided, because it’s so highly charged politically, and you don’t make politics intruding into the workplace.

You do want your people to be socially responsible, which means in this context that they be proud of the company they work for, and your company not engage in socially irresponsible behavior, such as insider trading or overt or covert theft of competitive secrets.

As one of my clients once said, could you discuss your business idea in a cocktail party?

All the employees should be of good character, too, so they don’t engage in socially iresponsible acts, such as sexual harassments. You don’t need a lawsuit to sink your company as it’s getting started, or cost you dearly in legal fees.

Winnowing out bad behaviors, even in your startup, means that you should test your employees for these behaviors, and for Key Personnel Indicators (KPI) which cover teamwork, creativity and various other attributes.

Also, in the COVID era, where more people are working remotely, and probably will for some time yet, you need to test for independence. One of my clients now has 1/3 working from home, 1/3 working from an office, and 1/3 who go back and forth. This seems like a sensible model you can use.

You as the founder need to look inward, too, to ensure that you’re the leader that the company needs. I’ve worked for more than one startup where the founder wasn’t the best person to work for; the marketing positioning was generally sound, but the founder was just difficult to work for. You want to engender loyalty and trust, so you must have those attributes.

One of the areas that is frequently neglected in a startup among people is sales. Your salespeople, or persons should be able to sell effectively and ethically, and should be graduates of one of the sales academies, such as Sandler or Brian Tracy. They should have a proven record of closing deals, too (this is a trait that is often overlooked in sales)….it should be in excess of 25%..

If you have your product or service positioning right, and your promotion is right, sales ought to be relatively easy. You should have an idea of what your sales cycle (the time from sale to money collection looks like so you have enough money to fund sales.

We should also discuss how much space you will need. You will pay a premium if you lease a small space in, say, and Executive Center, but you don’t have much downside risk.

You should allow yourself growing room, but how much may take an educated guess. Your people should be able to help: when I entered manufacturing with one of my companies, I had no clue now much space I needed, but my production manager (and future business partner) did.

We always made sure that we leased from firms that had lots of different properties, because we regularly underestimated how much we would grow. Try to ensure that your lease has options to renew, and relocate. We moved twice in seven years, despite having allowed for growth (we thought) in each of our spaces.

If you need to raise money, you should base how much you need to raise on your worst case business plan (we have advocated doing a best case, a worst case, the odds of each happening, and that becomes the business plans and goals). But use the worst case to raise money, because you never know what might happen. It’s better to have too much money than too little.

As an example when we started the American School of Entrepreneurship, we did so using standard university classrooms we rented from University of Phoenix. It became apparent, with the advent of online delivery methods, that we could actually record the classes and the PowerPoint presentations, put them on a website and there was an international market awaiting. Home run for about three years, until Harvard, Stanford, Penn and Coursera caught on and ran over us.

We recovered our investment, but the change to online needed more capital. We are still discussing how we’re going to reinvent the School; all I will say is that it comes down to people.

So, in reading the last three posts to Entrepreneurial News, you’ve got everything you need to start a business!

Return the Call!

Those who know Solutions Forum know that we built this company on talking to business owners directly.

In 17 years, we’ve helped about 50 companies solve problems in all sorts of fields. On average, we’ve added about $100,000 of value to the companies who’ve been members, over an average of 18 months.

This value added works out to about 20 times the dues that they’ve paid us.

Not all the value comes from groups, either. About 25% of our business is from one/one clients, where we discuss how we can help them, or we discuss how they can do things better than they are now.

Sometimes, as recently happened to one of our one on one clients, they did what we suggested, and it helped create about $100,000 more sales; they invested about $500 in consulting fees. So, they called us again to help them hire some more people and solve over sales problems.

Even though the two owners are so busy they can hardly relax during the day, they took a couple of hours on two consecutive Monday mornings to talk over what’s going on. One result is they’re going to borrow an person from another client to do invoicing at the end of their day, because they had about $15,000 of unbilled work. She might do some accounts receivable collection, too. They are also going to hire another machine operator. We know each machine generates about $150,000 in revenue, paying for itself in about a year. But, at some point, they’ll run out of space, wo we’ll deal with that when it becomes a problem.

We have other stories of success that we’ve facilitated.

We never know in advance what’s going to come out of one of our client meetings, whether they’re groups or one/one’s.

The bottom line is, when we leave you a voicemail it’s worth returning the call!

Not returning our call might cost you $100,000.

Avoid These Hiring Mistakes during COVID Era

Don’t move too slowly, because the available labor pool is smaller than the number of jobs available. We’ve in the past counselled deliberation because the cost of a bad hire is high, but it might be time to temper that deliberation.
Don’t rely on ‘post and pray’, e.g posting your job on a hiring board, even an online one, and pray that the right person shows up. Use multiple job boards, and talk to your employees about who to hire. Many employees come from within your company’s circle..
If you interview on Monday, and the candidate seems good, make an offer; don’t wait all week to think about it.
Don’t insist on office interviews, since not all the people who need to interview a candidate might be in the office. Use virtual interviews over Zoom or some other video platform.
Don’t assume the hiring process over when the offer is accepted. There is less ethical behavior among employees, because they know that they’re in demand.
Start your onboarding process as soon as the offer is accepted; corral the people that the newbie will be working for/with and have them start making the newbie comfortable.
Don’t nickel and dime the offer; guess at what the competition is offering and raise it 10% if you really want the newbie.
Don’t make a big deal of a new hire’s vaccination status: there’s some question legally about how much you can ask. You can get them vaxed later if they’re proving out well.

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