August 4, 2014

The key to hiring great staff

The single biggest expense (both financially and administratively) to any small business is its staff.

However, recruitment and management of employees is often the area that most businesses put the least amount of effort into and do not manage effectively. Often recruitment is a reactive process, rather than a planned one. Staff are often hired in response to a real or perceived urgent need. This approach to staff can set the tone for the relationship (one of unplanned and chaotic reaction, rather than strategic and organised).

Common mistakes that many small businesses make in relation to hiring and retaining staff are:

1. Hiring too quickly – most key (successful) decisions are made with a clear goal in mind after some careful research and analysis. Picking a location for your café is usually based around objective analysis such as foot traffic, available parking and population density. However, many recruitment decisions are based on reactions to subjective experiences, such as being “too busy”.  Not being able to keep up with customer volume can be (and usually is) a result of a number of contributing factors (of which too few staff is but one possible cause). Other potential causes include inefficient allocation of resources, shop layout and overly complicated processes. Before hiring any staff, you should be very clear as to why you need the added position in the business in the first place. Some positions are easy to assess – a restaurant needs a chef. However, other positions can be more complicated to value. How many waiters does a café actually need? An essential criteria for successful and effective recruitment is to have a clearly mapped out organisational structure with up to date and detailed job descriptions for each position in the structure. This might sound like overkill for a small business; however, finding efficiencies in every aspect of operations is critical to the success of every small business. Even a simple organisation chart will help identify whether there are gaps (which should be filled and therefore justify hiring new staff) and where there is duplication (which can suggest that you have too many staff).

2. Firing too slowly – no one wants to be the bad guy. But persisting with a non-performer/lost cause hoping that they will spontaneously improve is a low percentage play. More often than not, the poor performance will continue (if not get worse) until such time as a conflict event occurs. Often there is a lot of emotion associated with such events and, as such, it can be difficult to make smart commercial decisions. There are often two consequences for small business owners who fire an employee in the heat of the moment:
firstly, they end up filling the gap in staff resources, working longer hours and taking on more day to day responsibility;
This, in turn, can often lead to the first mistake mentioned above, in hiring a replacement too quickly, thereby running the risk of perpetuating the cycle.
Generally speaking, once you get that feeling that someone is not working out, it is the right one and it is time to implement a plan. This plan should always be based around honest communication.
Step one: explain clearly what your expectations are and why you feel they are not meeting these expectations (an organisation chart and job description will be invaluable in this situation). Give them the opportunity to respond … they might have valid reasons that you were not aware of as to why they are not delivering, which if fixed actually solves the problem;
Step two: map out a clear path to improvement. Some call this performance management, others call it mentoring. Regardless, if you show an employee how you want something done, you will either solve the problem or make it that much easier to remove them from the business. It is not only about fairness, it is strategic and planned management.
Step three: reward positive improvement (communication is the key). If the employee responds positively to the improvement pathway, maybe they are a keeper and you can give them more responsibility (this rewards you as the owner also, by the way). If they don’t, don’t muck around … make the call and remove them from the business. Sounds harsh, but you can’t be fairer than (a) telling them honestly how you feel (b) giving them the opportunity to tell you how they feel (c) agreeing with them on a pathway to improvement that responds to both yours and their frustrations. If, after all that, they still do not improve, there is not really anything else that can be done.

3. Hiring on assumed technical knowledge/skill and experience (Resume and reference check) – I’m yet to see a resume that wasn’t gilded a bit, and I would be gobsmacked if a prospective employee offered up a referee who wasn’t going to paint them in glowing terms. Every prospective employee is a bit of a gamble, but hiring on attitude (you can always teach knowledge) is a safer strategy than relying on resumes and reference checks. The guy who comes to the interview well-presented and prepared and is enthusiastic is usually giving off the right signals of someone who will be engaged and committed to learning how you want them to work. Attitude is generally the key differential in performance. If someone wants to do a good job, they usually will!

The final piece of the puzzle? Documentation! After everything is said and done, the employer/employee relationship is still a contractual one with legal rights and responsibilities (on both sides). A clearly worded, complete contract of employment can avoid many problems (as both parties know upfront exactly where they stand and what is expected of them (job descriptions should always form part of the employment contract). There is no need, however, for this to be a complicated and wordy document – quite the contrary; the simpler the document is, the easier it is to understand and enforce.  Given that most, if not all, positions in a café will be covered by an Award of one type or another, an employment contract (whether for a full-time, part-time or casual employee) should not be any longer than three pages.  There are some basic essentials that should be included in every employment contract, such as job title, pay rate, status, hours of work and termination provisions. Including these essential criteria in the contract often avoids the necessity to cross reference the contract with the Award (which can be confusing and fraught with misinterpretation).
In my next article I will go through the key components to a hospitality focused employment contract and show you how to create your own document.

Michael Drummond – Director of Corporate Services, Di Bella Coffee.
“Michael Drummond is a qualified lawyer who owned his own practice (focused on the hospitality industry) for over 10 years before he decided to enter the corporate world (instead of just consulting to it) by taking on his role at Di Bella Coffee (a position he has held for nearly two years).

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