Chapter 1

Looking at the Big Picture - Before You Employ

In This Chapter

Working out what staff you really need

Finetuning your recruitment strategy and process

Understanding the importance of an employment contract and other rules

Getting the best from staff

Remunerating staff appropriately

Avoiding discrimination, bullying and workers compensation in your business

Ending the employment relationship properly

This business would be perfect if I didn't have to manage staff.

Anonymous small-business owner

D?eciding to introduce an employee into the business is a really important move for small-business owners. The commitment is similar to the other financial investments made toward the success of your business but with one important difference: You're employing a person, not buying a piece of equipment.

I often use the analogy of a personal relationship to explain to small-business owners the nature of the relationship that you enter into when you employ staff. You start with the search for the ideal person, and then experience the initial joy at having found someone who seems to satisfy all of your desires. Next, you get to know each other and (hopefully) develop a rapport and solid foundation to your relationship. Then you settle into the long (sometimes short) journey towards what, in a working relationship, is the inevitable end of that relationship. During this employment relationship, you'll experience highs and lows, learning experiences, personal growth, exciting events, great achievements and regrettable mistakes. The lifecycle of employment has myriad rules and regulations that must be followed and every phase of the employment relationship creates unique challenges. Hopefully when you look back over the life of the employment relationships that you have with staff, you'll have only (or at least mostly) good memories.

In this chapter, I briefly take you through the employment relationship, from the initial search to the (hopefully) amicable end.

Understanding Your Reasons to Employ Staff

Some employers incorrectly assume that because a job has been performed in a particular manner in the past, that is the way it should be performed in the future. Nothing could be further from the truth. When a vacancy arises in your business or when you experience a moment of inspiration linking more staff to more business and profit, take the opportunity to test your thinking before you go ahead and employ someone.

Analysing what you really need

Deciding to employ staff for a job should arise naturally from a rational analysis of the operational needs of the business. If the analysis shows you don't need to employ, don't do it. However, if the analysis suggests that employing someone would be a good idea, go ahead with a clear understanding of the reason you have for doing so.

Job analysis is a basic tool to determine what type of job is needed for your small business. This means applying a simple procedure known as workflow design combined with an understanding of the chain of command (organisational relationships) to identify how tasks and decisions should be grouped to create a job. These concepts are covered in greater detail in Chapter 2.

Perhaps you're wondering what phrases like 'job analysis' and 'workflow design' have to do with you. 'I'm just a simple small-business owner who can't be bothered with this techno babble!' I hear you scream. While these terms may seem rather remote and daunting, analysing the flow of work within the context of a thorough understanding of who does what and when, and who decides what should be done and when, enables you to understand the reasons to employ people and the responsibilities that they must perform when employed to provide the best return on your investment.

Putting workflow design to work

In Chapter 2, I show how to conduct a simple job analysis using workflow design. Here, Figure 1-1 shows how the process works just to whet your appetite. The skills, knowledge, personal attributes and abilities of the people that you employ are applied in an organised operational system combining raw materials and business infrastructure to produce goods and services. The areas that you concentrate on for the job analysis are shown in the shaded boxes in Figure 1-1.

Figure 1-2 shows how you can outline your business organisation structure. Doing so allows you to visualise:

• Accountability of people in the business to each other
• The efficient allocation of tasks and responsibilities
• The lines of communication necessary to keep the business coordinated and production moving
• Who has authority in making the key decisions

Of course, the information highlighted in the preceding list isn't all written down on your organisational chart. But to these building blocks you can add your analysis when deciding to recruit new staff and designing the job to best suit your business. Very large businesses tend to apply very complex methods to this task. Your small business has the advantage of being able to perform this task simply and more swiftly, thus enabling you to move quickly to adopt a competitive advantage.

See Chapter 2 for more on job analysis and designing a job that best suits your business needs.

Your Recruitment Strategy: The Key to Successful Employment

You must complete three fundamental tasks to help you select the best person for the job. The first task is describing the nature of the job including its purpose, range of tasks, and organisational context in which the person will work.

The second task is creating selection criteria that explain the skills, attributes, knowledge, experience and ability required to successfully perform the job. This criterion provides a template against which every candidate may be assessed.

The third task is to objectively rate the candidates to decide which one is most suitable for the job - that is, use a scorecard. These three tasks must be completed before you interview prospective employees.

Describing your ideal employee

You want to attract the best person to perform the job, so you need to describe the job and promote it in a way that attracts the right type of person. In Chapter 2, I explain how to build a job description, dividing it into sections that reflect the important elements of the job such as:

• Accountability
• Authority
• Business context
• Conditions
• Job title
• Purpose
• Responsibilities

Describing the elements of the job using these headings (drawn from the work that you do analysing the workflow and organisational relationships - refer to preceding section and see Chapter 2) makes the task much easier for you and ensures consistency in the way that you engage employees in your business.

Separate the selection criteria from the job description because each has a different purpose. This may sound unusual but think about the two in this way. The job description states what the person must do. The selection criteria states what the person must be.

When outlining your selection criteria, you should decide on your mandatory selection criteria and desirable selection criteria. Your mandatory criteria may include a relevant tertiary qualification, trade or certificate or driver's licence. You then need to clearly state these mandatory requirements in the selection criteria. Sifting through applicants who can't satisfy a fundamental criterion is pointless. The desirable criteria should include a mix of personal attributes (such as leadership, team player, good communicator, honesty and diligence), experience and competency (that is, how proficient the person is in performing the required skills, such as machinery operations, plumbing or haircuts).

The selection criteria should be drawn from the job analysis conducted before you decided to create and advertise the job. See Chapter 3 for a more thorough commentary on how you complete this task.

Investment in staff can be profitable

The employment relationship is fundamentally an economic relationship. But don't be fooled into thinking you can treat it purely as such. Employing someone is both an investment in the financial success of your business and an investment in the growth and well being of another person.

The reason I like to view the employment relationship as at least in part an economic investment is because this invokes the useful (and, as experience has shown, accurate) analogy of how most people like to invest their money. Chances are, you only invest your money after rigorous research and then subsequently monitor and nurture the investment to ensure the best possible yield.

The actual calculation of working out whether a new employee is worth the investment depends on the nature of the job and the person you employ. For example, a person employed to build furniture in a small factory could be expected to contribute a sufficient increase in the production of furniture supplied to the market to cover the costs of...