How To: Hire Great Employees Without an HR Department

by Sharlyn Lauby on January 8, 2013

(Editor’s Note: Today’s guest post is sponsored by Vistaprint, a leading provider of marketing products and services for small businesses all over the world.)

Here at HR Bartender, we spend a lot of time talking about hiring and managing employees with the help of human resources. I thought you might find it interesting to hear about how business owners manage HR functions like recruiting when there’s no HR person/department around.

hire, recruiting, hiring, advice, tips, HR Department, Vistaprint, mistakes, business, Katie McCaskeyKatie McCaskey, is the co-owner of George Bowers Grocery, a neighborhood grocery, café, and beer garden in Stauton, Virginia. She’s also a freelance journalist who covers small business topics for Vistaprint. I hope you enjoy her story:

Hiring your first employee is a major milestone for any new business. Yet, it is a process that can potentially lead to major problems for a new business and its owner(s), too. This is especially true if the business owners are inexperienced in the hiring and/or management process. I learned this the hard way, and it’s given me a new perspective on future hiring practices.

In retrospect, my mistakes are classic small-business hiring mistakes.

Mistake #1: Not hiring the person yourself

If you don’t have the benefit of an HR department (or even a dedicated HR person) on your team you cannot allow anyone else but the owners to make a hiring decision.

In 2008, my husband and I started a boutique grocery business with another couple. The majority partners owned several other businesses at the time. By comparison, this was our first time at the rodeo, so to speak. So, when the majority partners suggested we hire someone who also worked at their coffee shop, we said, “Sure.”

We learned immediately that inheriting an employee that we did not vet ourselves — and whose loyalties were personal to our partners, not our business — was a big problem.

Solution: Make sure you interview and investigate every hire yourself. Do not rely on others to make the judgment call on employee capability — and that includes your business partners. Too much is at stake.

Mistake #2: Hiring too soon

Employees are expensive from the moment you print their business card or they punch the time clock. This is especially true during the startup phase of building a business when there is typically more outflow than inflow of cash. Yes, the employee “bought” us time to work “on” the business rather than “in” the business. However, she did not offer that in correct proportion to the value she brought the business.

The cliché “Slow to Hire, Fast to Fire” is appropriate. We added to this mistake when we kept her longer than we could justify the expense. Each business is different, but we should have stabilized our startup expenses first and instead used the time to fully immerse ourselves in the operational realities of the new business.

Solution: Avoid hiring until it is clear that your profits will pay for the employee and they will more than pay for themselves. Growth can be impeded if you choose to do it all yourself. So, investigate other options in the meantime such as 1099 contractors or virtual assistants for project-based assignments or other cost-conscious assistance.

Mistake #3: Making managerial assumptions about employee duties and expectations

The final mistake associated with this employee was assuming that the managerial expectations she worked under with our partners at the coffee shop were transferrable to a boutique grocery setting.

In hindsight it’s obvious that these are different businesses with differing target customers and expectations. For example, an employee reading a book on the job might add to a coffee shop atmosphere. However, doing the same while a customer debates the merits of two different olive oils — a hands-on, personalized, and experiential sales process — is quite different. This was not the fault of the employee but rather our faults as managers.

Solution: When you hire — and especially if you inherit existing employees — be sure to begin by setting clear management expectations from the start. This holds true for more than “service” businesses because all businesses are “service” businesses.

What else did this experience teach us about hiring the right people to make our small business grow? Here are five insights. 

1)  Hire based on natural interests and proficiencies.
Taking someone from stranger to trusted employee is a process, and you can’t be expected to figure out natural talents and other intangibles at the interview. However, interests and proficiencies leave clues. You can train for specifics, but training can rarely overcome a lack in relevant interest or experience.

2)  Remember: Professional expectations must be explicitly set.
You cannot blame employees for their behavior if you have not clearly set the expectations from the start. If you would prefer something be done another way, this must be communicated.

3)  Leaders must lead and set standards by example.
“The beatings will continue until morale improves” summarizes the timely and costly process I’ve watched other business owners employ hiring and firing repeatedly. If you are unwilling to work hard, or convey a negative attitude, so will your staff.

4)  Employees respond best when you give them latitude to perform against set benchmarks as they see fit.
A true ROWE workplace (Results Only Work Environment) may be impractical for some businesses, especially restaurant and hospitality sectors. However, where possible, it is important to instill a “paid for results, not paid for hours worked” environment. Giving employees your trust to perform work can inspire creative, efficient solutions. It also provides greater employee satisfaction and retention.

5)  Open books make for greater employee confidence.
Similarly, it is easier to gain the loyalty and trust of an employee if they know how they are paid relative to other employees and why, and if they understand how their efforts contribute to the overall operation and success of the business.

As we begin to plan our next business we’ve given serious thought to what we’ve learned from our first. At the core, business is about the people involved and the people a business touches. To make your business grow, be sure you attract and retain the right people — and quickly make adjustments if the wrong people are involved.

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