Managing Employees and HR

Taking One for the Dream: Paying Yourself Nothing

SBOCTeam — Thu, 02 Jul 2009 13:15:00 GMT

When, if ever, does it make sense for an entrepreneur to stop taking a salary?

By Reed Richardson

It's a long-held rule of running your own small business: don't forget to pay yourself. However, in an upside-down economy that continually provides exceptions to all the old rules, many entrepreneurs are finding that paying themselves is yet another piece of conventional wisdom worthy of reconsideration. But before you go cold turkey on salary, it's important to ask yourself several questions to make sure you don't unnecessarily risk both your own future as well as your company's.

What are the rules about how much salary a small business owner can/must take?

For most entrepreneurs, there really are no hard and fast legal rules about what they can pay themselves. As a general rule, it's best to pay yourself close to a "market rate" salary for your profession or industry. In fact, a good business plan should already figure in an owner's paycheck as a top-line expense because deferring that salary is, in effect, ignoring a real liability of the company. Still, many sole proprietor and general partnership startups launch with no one on the official payroll and some will end up paying their first few employees a salary before their owners see a substantial return.

Incorporated small businesses, on the other hand, have much clearer rules. Even the founder/owner of a C Corporation is considered a company employee, and so, according to tax laws, he or she must draw a market rate salary. A small business CEO that draws a suspiciously low or zero salary is in danger of arousing interest from the IRS, which might suspect the company of trying to avoid paying its fair share of employment taxes. (Too-high salaries also raise tax alarms, as they could be seen as a way of disguising dividend payments to small business owners.)

Is it really necessary to take $0 as salary?

While salary.com's 2007 Small Business Executive Compensation Index found that the median annual salary for a small business owner was $233,500, most budding entrepreneurs make far less than that. As a result, going "all-in" and accepting no salary to help your struggling startup survive might seem even more necessary, but, by the same token, a consistently lower annual salary also suggests having less money socked away to go income-free for long periods of time.

Instead, small business owners could consider taking a significant pay cut rather than a pay freeze. One tactic might be accepting only enough salary to pay your personal overhead-mortgage/rent, food, car loan, light bill, etc.-and forego any other investing or saving for retirement. This decision particularly makes sense if you're also asking employees to sacrifice a percentage of their salary to buoy your business's chances in tough times. After all, you would never expect them to work everyday for no pay, so to be fair, you shouldn't ask that of yourself either. Also, it's important to recognize the singular role that many small business owners' personal credit score plays in their company's ability to access capital-wreck your own credit rating by skipping a few car payments and, in effect, you've wrecked your company's credit as well.

If I do decide to forego all salary, am I crazy?

Any entrepreneur that foregoes any salary in the early days of his or her company should never feel alone. But in this bleak economic climate, even stable, well-established business owners are joining the club. In fact, a recent American Express Small Business Monitor survey (http://home3.americanexpress.com/corp/pc/2009/mtr.asp) found that 30 percent of small business owners were not currently taking any salary and 27 percent had done the next best thing, by enlisting a family member to work at the business for free. Retail entrepreneurs, in particular, were more than willing to sacrifice a personal paycheck, as more than four in ten-42%-reported taking no salary to help their business survive the recession.

Taking no salary functions like a periodic personal loan you give back to your business. And in an era in which many of the traditional fallback sources of capital for budding entrepreneurs-home equity lines of credit and personal credit cards-have dried up, temporarily recycling all of your salary back into your company offers the advantages of being both simple and immediate. By helping your business's cash flow remain robust enough to meet payroll, keep up with sales demand, and pay vendors in a timely manner, your company will remain attractive to its customers and suppliers, while building solidarity and loyalty among its employees. And by preserving your business's morale, reputation, and credit position, this short-term sacrifice makes your company more attractive to those constituencies that often determine long-term growth and success-lending banks and equity investors.

What are the broader drawbacks and disadvantages to taking a $0 salary?

Make no mistake, if foregoing a paycheck becomes more than a short-term, emergency measure, you are no longer running a business as much as you're running a benevolent employment agency. So, if after several months of no salary your company's fortunes still haven't turned around, that might be a signal that it's time to seriously examine the long-term sustainability of your business. This is particularly true if multiple business partners are subsidizing the company by refusing a salary. In addition, potential capital partners like banks or equity investors will be reluctant to inject any capital in a company that continues to rely upon this cash crutch to survive, even if the money is being plowed back into research and development or expanded production.

From a personal standpoint, taking no salary represents a dangerous, slippery slope for small business owners. For dedicated entrepreneurs, forgoing a paycheck for a few weeks or even a few months can seem like a small price to pay to keep a dream alive. But at some point, reality must set in. Even if your only retirement plan involves selling off your business in forty years, that future sale of your successful business won't put food on the table today. After all, if your company sinks and ends up bankrupt, you can always start another one someday, but that's much harder if your personal fortune goes down with it.

Travel Smart

CommunityTeam — Fri, 05 Jun 2009 18:38:00 GMT

Travel Smart
Ten tips for travelers on a budget

By Max Berry

Travel can be hard on a small business owner's budget, especially now that airlines are charging fees for once-complimentary services like checking a bag. But with a little forethought and a willingness to root out the best deals, your next business trip could take you through friendlier-not to mention more cost-effective-skies than your ever imagined. Here are ten tips for business travelers on a budget.

1. Appoint a travel guru
Assign someone in your office the task of compiling a bookmark folder of Internet travel tools and discount sites. Sites like Priceline.com and Hotwire.com come in handy for discounted airfare and hotel rates, while Hopstop.com maps public transit routes and offers taxi fare estimates for America's largest cities. When the need to travel arises, save yourself some time by letting your travel guru hunt for the cheapest fares and discounts. Once they've narrowed the options, you can select the itinerary that works best for you.

2. Research your destination

Base your travel budget on realistic destination costs rather than an arbitrary per diem. If you maintain a set budget for every trip you take, you may find yourself running out of money fast. Likewise, if you bring a Manhattan-sized roll of bills to Tulsa, you may find yourself with far more than you need. Do some research on the city you'll be traveling to; how extensive is its public transportation system? What constitutes eating on the cheap in your destination city? Sites like Yelp.com and Citysearch.com will help you gauge just how much your stay will cost you.

3. Negotiate

Priceline's name-your-own-price option is a valuable tool for budget travelers, but many hotel managers will negotiate rates directly with customers. Most innkeepers won't advertise this fact, but if you'll be staying with them for a prolonged period of time, you can use that as leverage to get a better price. Angle for your own "corporate rate" by telling the manager that the slight discount you're seeking may make the difference between staying with them or going to another property nearby.

4. Take advantage of special offers

Frequent flyer programs and credit cards that award points for hotel stays and airfare are smart moves for any frequent traveler. Also consider signing up for a mailing list or two. Sites like Orbitz.com send regular e-mails detailing featured discounts on airfare while most major hotel chains offer special deals to frequent customers. Not every offer will be of use to you, but if it gets you a deal on your next business trip, it will be well worth sorting through the bulk mail.

5. Plot a course

If you are flying to your destination and will need to take a car from the airport, check the likely cab fare ahead of time (Hopstop.com is good for this). You may also want to use Mapquest or Google to familiarize yourself with the most direct route. Some cabbies will take a more circuitous path in order to drive up the fare if they sense you don't know your way around.

6. Pack light

This is sage advice now more than ever. Many airlines are charging $15 and up to check even one bag on domestic flights. If you can squeeze everything you need into a carry-on, consider foregoing baggage check altogether. Or, if possible, fly one of the discount airlines (like Southwest or JetBlue) that still allow you to check a bag for free.

7. Car rental tips

A general rule of thumb for saving money when renting a car is to reserve the smallest model at the lowest price. If the agency runs out of compact cars, they will be required to rent you a larger model at no added cost. You may also opt to waive the insurance. While the added precaution couldn't hurt, chances are you won't need it. Plus, you may already be covered through your own auto insurance or the credit card you used to book the car.

8. For short notice

When traveling on short notice, check airlines' special offers pages first. If your schedule is flexible and you are open to the idea of odd departure and arrival times, you may be able to snag a last minute deal. This is especially true for flights in the middle of the week. Some discount airlines also offer walk-up fares that are considerably cheaper than those of their large competitors.

9. Exercise some discipline

It may seem obvious, but resisting temptations like the mini-bar, room service, and in-flight cocktails will add up to big savings. Just as little expenses you'd barely even factored into your budget account for much of your day-to-day spending, small services like these are designed to turn a profit on travelers who are tired, unfamiliar with their surroundings, and lack a better option. Don't fall for them.

10. When in Rome...

Once you arrive at your destination, try to take some cues from the locals. There will be no better authority on how to eat, shop, and get around cheaply. If the people you are doing business with live in your destination city, ask them for some advice. If the city you're visiting has them, local blogs and Internet message boards-not to mention Yelp-are excellent sources for advice on how to do as the Romans do.

How to handle workplace gossip

CommunityTeam — Wed, 06 May 2009 16:37:00 GMT

By Reed Richardson

"Have you heard the latest?" Every day, this phrase or one similar to it, can be found in nearly every workplace, whether it's written in the subject line of a discreet intra-office email or spoken in hushed tones across the water cooler or behind cubicle walls. What follows this conspiratorial come-on is more often than not unverified, unsubstantiated, and occasionally unseemly information, the type of office chatter that can appear, on its face, as harmless speculation or good-natured ribbing but that, if left unchecked, could ruin someone's career or wreck someone's business. Smart business owners, in other words, should recognize that office gossip and workplace rumors can have a profound effect on their bottom line and that not having a strategy to handle them could be a recipe for disaster.

"You're never going to erase gossip altogether," acknowledges executive coach Peggy Klaus. "Still, I really counsel people and businesses to stay away from it as much as possible because it's an energy-suck, a time-waster, and it's very debilitating for morale." A recent Randstad survey of more than 1,500 U.S. employees found that most employees recognize the pernicious effect of gossip. In that survey, three out of five adult workers listed gossip as their top workplace pet peeve. But if so many of us view gossip as annoying, unwelcome behavior, why then did the survey also find that only 8 percent of workers complained to their boss or supervisor about it?

A natural tendency
"It's just human nature," explains Klaus. "We are social, and gossiping is seen as a way to build relationships and alliances with people. It also lets you feel like you are in the know and more in control." And she points out that this tendency for employees to secretly speculate about who's up and who's down or what a company's future holds is exacerbated during turbulent economic times. "Anxieties are at an all-time high right now," she notes. "And the recession is like a giant Petri dish for gossip."

Coupling this economic uncertainty with a small business can make for even more trouble, says human resources trainer Hunter Lott. "Think about the potential effect that one or two gossips in an office of 20 can have versus an office of 200," he says. "Because of that, it's more imperative for small companies to stay on top of office gossip and rumors."

Gossip may be at least somewhat true
It can be a challenge to do that, however, since office gossip often begins as a slight embellishment of the truth. In fact, social scientists Nicholas DiFonzo and Prashnat Borida, authors of the book Rumor Psychology, found during their research that "most workplace rumors are 95 percent accurate." Matt Shollenberger, a licensed counselor from West Chester, Pennsylvania, who has worked with several victims of workplace gossip, agrees. "If the gossip is something that's believable, it's harder to defeat," Shollenberger says. "Whereas outrageous rumors are usually able to be squashed very quickly."

Still, business owners ignore outrageous rumors at their peril, he notes, as those have the greatest potential for harm. Shollenberger says he has counseled several clients whose careers unraveled because they could not shake nasty personal rumors about themselves, many of which put them in a kind of a Catch-22. "Despite denying all the gossip and swearing a rumor isn't true, co-workers and supervisors can still remain suspicious of a gossip victim because, well, what else are they going to say in their defense?" Shollenberger notes. "And if an incendiary rumor about an employee goes unaddressed by HR or management for too long, the victim can start to feel isolated and betrayed, like everyone knows the gossip." That kind of poisoned work climate-where petty office politics outranks productivity-can soon lead even well meaning companies astray and makes a company ripe for a lawsuit.

Make your values clear
To combat an out-of-control gossip situation, business coach Klaus counsels her business clients to first give a "state of the union" speech. "You come out and reiterate your company's culture and values and be very clear about what will and won't be tolerated," she says. In addition, she recommends that small business owners then follow up by providing their employees with safe, non-judgmental ways of dealing with serious, hurtful rumors, like a confidential suggestion box, an open door policy, or, in cases that might directly involve the boss or business owner, third-party mediation. "The more transparent the process and the more feedback you give, the better," Klaus says.

Human resources consultant Lott notes that, to be effective, any anti-gossip effort must not play favorites. "What I tell bosses now, especially those in small businesses, is that there is a performance aspect to every job and there is a behavior aspect to every job," he explains. "They are separate, but equally important elements." If this clearly becomes a company's standard, Lott says it becomes much easier to discipline that obnoxious salesman whose customers love him but whose rumor-mongering is detrimental to the office atmosphere. "It's great to have a behavior policy as a benchmark," he adds, "but it doesn't have to be an official policy as long as there are clear, commonsense consequences to bad behavior."

A teaching opportunity
To prevent minor office rumors from spiraling out of control (and to save small business owners from constantly refereeing petty squabbles), it's also a good idea to teach employees how to address or deflect gossip on their own. The number-one way to do this, most experts agree, is confrontation-+diplomatic+ confrontation. "Gossips typically don't like being confronted," says licensed counseler Shollenberger. And he adds that gossips will typically back down and think twice about doing it again if they're faced with the prospect of repeating their rumors directly to the subject or if someone else calls their bluff and suggests they take action instead of complain behind another employee's back.

Nevertheless, confrontation, while good in theory, rarely occurs in practice. The Randstad survey of workplace pet peeves found that just barely over one-third-34 percent-of workers were willing to express their displeasure directly to the gossiper. This unwillingness to confront a workplace gossip often arises from two distinct worries.

The first of these, Klaus acknowledges, is the very real fear of being ostracized, something she says she has experienced first-hand. "I was teaching at a graduate program in England and a colleague kept trying to get me to provide him with some personal information about someone else," she explains. When Klaus wouldn't comply, she says she quickly became persona non grata among most of the staff and, for a couple of weeks, no one would really talk to her. "You're suddenly seen as a self-righteous prig or goody two-shoes and you're not one of the cool kids anymore," she explains. "So, it's not surprising that when it comes to confronting or rebuking a gossip, we often don't do it."

The right way to confront
The other main obstacle to directly addressing a nasty office rumor revolves around the fear of instigating an ugly shouting match at work. But confrontation, Shollenberger explains, doesn't have to turn into a conflagration. "So many clients, when they come to me, don't know how to diplomatically confront someone," Shollenberger acknowledges. "I teach confrontation with a small ‘c.'"

To do this, he counsels against using the word "you" when addressing a potentially gossiping co-worker. "That word puts people on the defensive right away," he says, heightening the chances of a conversation escalating to something unprofessional. In addition, he recommends following up with sets of what he calls "facts/feelings." "For example, you might say ‘I've heard a nasty joke is being told behind my back about my recent absence from work and that makes me feel angry and hurt." This strategy, Shollenberger explains, gives the gossiper the benefit of the doubt and prevents minor misunderstandings from erupting, while, at the same time, making clear the repercussions of the rumor and the fact that it won't go unanswered.

In the end, perhaps the best way to reduce gossip and workplace rumors is to preempt them from happening in the first place. "When employees don't know what's going on or why certain decisions are being made, that's when gossip and rumors start up," says Lott. "So if a business wants to prevent gossip and rumors, a simple solution is to talk with employees as much as possible to fill that communication gap instead." After all, gossip doesn't tend to go very far around the office if the answer to "Have you heard the latest?" is always "Yes, I have."

Getting Help: Employee vs. Independent Contractor

CommunityTeam — Tue, 14 Apr 2009 12:32:00 GMT

As much as we may think we can handle a multitude of tasks in our business, the reality is that we need help to work efficiently and grow our companies. With the unemployment rate high, there are many talented workers that you can tap for the work you need done. How you set up the work arrangement can have important business and tax consequences, so do it right!

by BigIdeas4Biz

Your options
You can hire employees and grow your payroll, use independent contractors, or rely on temporary workers who report to you from agencies.

Practical considerations. If you foresee a continuing need for help, then hiring an employee is probably the way to go. You can train the person and develop employee loyalty. It doesn�t make sense to hire someone only to fire him shortly thereafter; it�s unfair to the employee and you�ll needlessly hike your employment costs. If you only need someone for a special project or are unsure whether your business can make a long-term commitment to an employee, then consider using an independent contractor (IC) or turn to an agency for temporary help.

Cost. Having an employee is more costly than using an IC. With an employee comes an employer�s obligations to pay the employer share of Social Security and Medicare (FICA) taxes, federal unemployment (FUTA) tax, state unemployment insurance and workers compensation. You also have to withhold income and FICA taxes from an employee�s wages, include the employee in any health, retirement or other benefits program you maintain, and file returns with the IRS and states. In contrast, there are no tax payments or benefits obligations for a business that uses an IC. For a temporary worker, you pay the rate charged by the agency; there are no additional tax payments or benefits obligations on you.

Employee versus IC?
When engaging a worker, you can�t arbitrarily put a label on the person to suit your needs. You can�t call someone an IC and avoid employer obligations if they are really an employee. The IRS and states are on high alert to make sure you properly classify workers.
The IRS wants to be sure you are properly withholding taxes and paying your share of FICA as well as FUTA (federal unemployment tax).
States want to be certain you�re paying state unemployment insurance and workers� compensation.
Proper classification of a worker turns on your degree of �control.� If you have the right to tell the worker when, where, and how the work is to be performed, then the worker is probably your employee. While there is no single factor that nails down worker classification, here are some factors to consider:

Factors indicating employee status:
You can say when and where the work is performed (even if the person is working from his or her home).
You provide job training.
You dictate the order or sequence to follow in performing the work.
Your evaluation system measures the details of how the work is performed.
Factors indicating IC status:
The worker uses his or her own tools and equipment and purchases his or her own supplies.
The worker is allowed to hire assistants.
Your evaluation system measures the end results.

Note: A temp worker is the employee of the agency that arranges the placement with you. The agency, not you, has the employer�s obligations.

Protect yourself
When you engage an IC, have him or her sign an independent contractor agreement to spell out the work relationship. The agreement is not a guarantee that the IRS won�t question your arrangement, but it serves to remind the IC of his or her tax responsibilities.

Be sure to provide the IC with an annual information return, Form 1099-MISC (a copy of which is sent to the IRS). The return is required if payments for the year to an IC are $600 or more.

Be consistent with your treatment of workers. If ICs are doing the same work as people on your payroll, the ICs are probably employees too.

If, despite your best efforts, the IRS reclassifies your workers as employees, you can avoid tax penalties if you rely on �Section 530 relief� (the title comes from the section in the law that created it). There are no penalties as long as you provided the 1099s and had a reasonable basis for treating the worker as an IC. �Reasonable basis� means that it is common practice in your industry to treat such workers as ICs, there was a court decision or IRS ruling supporting your position, or you had a prior audit that did not change your worker classification.

Bottom line
Whether you�re prepared to take on help now or anticipate doing so following an economic recovery, be sure to keep worker classification issues in mind. When in doubt, consult your tax advisor.

Tell Me About Yourself

SBOCTeam — Thu, 19 Feb 2009 14:29:00 GMT

Great interview questions that get to the heart of a job candidate's capabilities

By Reed Richardson

Be prepared
You would never run right from a conference call into a job interview if you were trying to get hired, so you shouldn't engage in the same, careless behavior if you're going to be the one doing the hiring. Instead, spend at least 15 to 30 minutes before an interview going over a job candidate's resume so you can prepare some intelligent questions specific to their background and experience. After all, if you're really interested in hiring this person, you don't want them walking away from the interview thinking that you and your company are so disorganized that they don't take hiring employees seriously. Dianna Podmoroff, author of 501+ Great Interview Questions for Employers, notes that she has seen many of the same small business owners who agonize for weeks over the purchase of a new server or whether or not to switch cell phone plans turn around and spend almost no time at all preparing to interview an employee they might end up paying $50,000 a year.

Set an agenda and follow through
To make the job interview run smoothly, stay within the applicant's time limits, and don't get sidetracked. Mary Massad, managing director of recruiting services at Administaff, says it's imperative to set an agenda at the start of an interview. Doing this builds rapport with candidates and immediately makes them more comfortable because they have more of an idea of what to expect, she explains. This, in turn, means a candidate's answers will be more relaxed and truthful. Massad counsels to take a personable, but professional approach to the interview. "You can make a little small talk," she says, "but then it's important to dive right in."

Match candidate to boss
Interviews conducted by the human resources department-if your small business is large or lucky enough to have one-should be thought of as screening interviews only, says John Kador, author of The Manager's Book of Questions: 1001 Great Interview Questions for Hiring the Best Person. In other words, HR can weed out questionable candidates early on, but they should rarely, if ever, be used to make a final hiring decision. That should only happen after the potential employee has had an in-depth interview with the actual supervisor or boss that he or she would be working with. "Any company that doesn't conduct job interviews with managers or supervisors is making a huge mistake," he explains. "That's the only real way to figure out if a candidate is a good fit."

Conversations, not clichés
"Use questions that prompt conversations," explains Kador. "Try to keep candidates off of the canned, formulaic quotes or answers." To do this, avoid using old-fashioned questions like "What is your greatest weakness?" or "What would your former boss say about you?" Instead, Kador recommends employers have the interviewees describe themselves using one-syllable words and then give a reason or example that supports that word. Or, Podmoroff suggests eliciting real-life situations from the interviewee's past and how he or she handled them. "The best indicator of future performance is past performance," she explains. "So rather than asking a job candidate about what they would do, ask them what they did do."

The devil really is in the details
To better make sense of a candidate's answers and get sufficient information to make a hiring decision, Administaff's Massad says it's a good idea to employ the STAR (Situation, Task, Action, Result) or SHARE (Situation, Hindrance, Actions, Result, Evaluation) formats when taking notes. "What we get in many instances from candidates are great sounding answers, but, in fact, they are really vague about their specific role or the outcome," explains Massad. Consequently, she says it's important as an interviewer to set a goal of always getting as specific an answer as possible, so you can determine if that given example or referenced skill set would be transferable to your organization.

Look for job fit and culture fit
This is essential, notes Administaff's Massad. "Most companies use job openings as the beginning and end of their search," she says. But smarter companies also ensure that the decisions made when filling staff positions also adhere to a larger vision of what the business is all about. As a result, interviewers should not only be thinking about whether a particular job candidate can handle the job but whether or not he or she would be happy and satisfied while doing it. "You screen for aptitude," she says, "but interview for fit."

Let the interviewee ask some questions, too
A promising candidate should have things they are looking to find out, things that likely won't be found on your web site or in your corporate literature. Specific questions about the co-workers and supervisors related to the position or current and upcoming projects as well as broader, long-term growth inquiries are signs that a candidate has done their homework and is legitimately interested in joining your team, says Massad. By the same token, she says that interviewees that display a more self-centered focus and only ask questions about pay, benefits, and vacation time may be telling you just as much about themselves as their earlier answers.

Employer Interview Resources
-Sample job interview questions for employers
(humanresources.about.com/od/interviewing/a/one_stop.htm)
(http://www.career.vt.edu/JOBSEARC/interview/questions.htm)
-10 common job interviewer mistakes
(articles.techrepublic.com.com/5100-10881_11-6179941.html)

Get Out of the Office

SBOCTeam — Tue, 10 Feb 2009 16:06:00 GMT

Providing your employees with a reliable social support system is a key way to ensuring they stay happy and productive

By Max Berry

The link between work stress and serious depression should be a concern for every small business owner, but the way to keep your employees happy and productive may be simpler than you think. A 2007 study conducted by researchers from the University of Rochester Medical Center-and subsequently published in the American Journal of Public Health-found that, while five percent of those surveyed had struggled with serious depression, employees who felt socially supported at work were far less likely to be afflicted. Scheduling some social time for you and your coworkers away from the office is an excellent way to keep your own support system strong.

No Job is ‘Just a Job'
"Our work defines who we are. It defines you in a way you don't realize," says Dr. Emma Robertson-Blackmore, an Assistant Professor of Psychiatry at the University of Rochester and one of the leaders of the medical center's study. With so much of a person's life spent at work, the dangers of feeling isolated or unsupported at the office are very real. Employees who are unhappy in their lives are going to be unhappy in their work. That equates to unproductive time at the office and an increased number of sick days, both of which spell bad news for office morale and a company's bottom line.

Employers are often leery of encouraging office fraternization, fearing it could become a distraction. However, an office friendship is far less treacherous a distraction than isolation or unhappiness. As Robertson-Blackmore puts it, "Having someone to blow off steam with is an instant pick-me-up."

And, while the office may not be the ideal place for blowing off steam, Robertson-Blackmore contends that, wherever the steam is released, being able to release it with coworkers is important. "If you tell a spouse or family member about something you're going through at work, obviously they'll listen to you," she says. "But they're not in your work environment. [Your coworkers] get where you're coming from."

Oh, The Places You Could Go
To both encourage personal bonds between coworkers and perhaps pave the way for more socializing outside the office, consider taking your team on regular field trips. Where you go will depend on who's going with you, but here are a few ideas.

The company picnic is a tradition for a reason. A picnic is informal and may make for a good first outing, since no one will be intimidated or inhibited by the surroundings. This goes doubly for employees' family members who, presumably, will be meeting for the first time. Picnics can also be potluck, which makes for an inexpensive day.

A formal sit-down dinner at a nice restaurant may be appropriate once coworkers have already had a chance to bond and are comfortable enough with one another to enjoy the more upscale environs. A nice dinner is also a good way to celebrate an achievement at work. Plus, employees with families may appreciate the chance to have a kid-free night out.

If you are looking to include the kids, an amusement park is a viable option. Many offer discount packages for large groups or corporate events. Note, however, that roller coasters and water rides aren't everybody's speed. Gauge your staff's enthusiasm before booking the group package.

A ball game is the perfect idea for the sports fans on your staff, and even the non-sports fans will likely be interested in taking in the atmosphere. Many companies also take part in office sports leagues. This can be excellent team-building for the right group, but a word of caution: Many of your employees aren't athletic, and many others may possess a heartier competitive streak than their coworkers. Both scenarios can lead to more division than unity amongst your staff. Tread carefully.

If you're looking to bring some culture into the equation, consider a concert or a play. Many people don't make time for cultural events on their own, and would appreciate the thought. This is another good option for a first foray into extra-office socializing since it eliminates the need for small talk at the start of the evening and gives coworkers an instant conversation starter once the show is over.

A Supportive Home
Still, for any of these activities to be successful, social support must begin inside the office. Robertson-Blackmore advocates open channels of communication between coworkers and, perhaps even more importantly, employees and managers. "It comes back to a supervisor, someone invested in what you do," she says. "Being aware of an employee's needs can make such a difference."

The workplace need not turn into an arena for venting personal problems, but the knowledge that a certain degree of moral support exists is important, as is making the conscious effort to foster that support. "The facts of a workplace play a role in the health and wellbeing of employees," says Robertson-Blackmore. "A supervisor or manager has to make the [work] environment as supportive as possible so that their staff will be as productive as possible."

How Many Current Employees are in Your Departure Lounge?

SBOCTeam — Thu, 29 Jan 2009 15:19:00 GMT

By HRExpert

Nobody likes to talk about it, even though it is happening in workplaces all across America - employees who have decided it is time to fly the coop. Departure lounges are overflowing with these types of employees - all waiting for their final boarding call.

Employees rarely start a job thinking they will tour around the company for a while and then seek greener pastures, and yet it happens all the time. Here are five things you can do to prevent employees from taking flight:

Guard Your Exits

Are employees exiting as quickly as you are hiring them? If this is the case, there is a malfunction in your hiring system. Closely examine all the parts of your hiring process to determine which pieces must be fixed. For example, suppose turnover is particularly high during the first 90 days of service. Ask yourself the following:

Are we hiring the right types of people for these jobs? Yes, it is nice to hire Ivy League graduates, but are they really well suited for beverage sales?
Are we accurately representing our jobs to candidates? If your administrative job descriptions sound more like the CEO's job, then it is time for another re-write.
Are we over-promising and under-delivering? Perhaps it is time to get real. Sure, we would all like to operate like Google, but few companies actually do. Accurately describe your work environment and let candidates decide if the fit is right for them.

Now is a great time to dust off plans you may have designed for a formal exit interview process. Start asking exiting employees what you could have done differently to have prevented them from leaving. You will then have the information you need to make changes before others fly out the door.

Formally welcome everyone onboard

Imagine a place where employees are welcomed before they even set foot on company soil. This would be a place where employees feel connected before their first official day of work. Some might even start recruiting their current co-workers to join them on this new journey. Welcome to the world of Onboarding.

Onboarding is the one chance you will get to create a positive new employee experience. Just think how productive you might have been during your first few weeks or months of employment had your current or former employer taken the time to make you feel welcomed, valued, and prepared. Come to think of it, if they would have done this, you might still be working there.

You might be thinking that you don't have time to hold someone's hand or that all employees should have to suffer just like you did. Would you feel the same if you knew that with a little effort, you would have more time to focus on other initiatives besides replacing newly-hired employees?

Make checking-in easy

Could your check-in systems use some improvements? Do your employees have to stand in long lines just to have a conversation with their manager? Are employees fully aware of how well they are performing? Or is last year's performance review still on your desk waiting to be completed?

Checking-in is a two-way street. When it comes to performance, both employees and employers should know what the other is thinking. Provide feedback throughout the year so employees can adjust their performance, while seeking feedback from employees regarding ways you can improve the management of the company.

Drop the Excess Baggage

Nothing weighs a company down more than excess weight. Do you have marginal performers hiding out behind strong team members? Are employees still in your employ who have received their fifth final warning?

In this economy, you cannot afford to have anyone or anything slowing down the momentum in your organization. Look around and begin the process of eliminating excess baggage. You will be surprised how many top performers change their travel plans once they see you are committed to building an organization of outstanding employees.

Throw in some perks

The trend of slicing and dicing employee benefits seems to be quite popular during lean economic times. Many organizations have started to charge employees for items that used to be free. But is this really a way to retain the people who you will be asking to take on more responsibility during tough economic times?

Show your employees you care. Figure out what types of perks motivate your team and then start thanking them properly.

Make these changes now and you will not have to fret the next time you hear the phrase, "This is the final boarding call..."

Bio

Roberta Chinsky Matuson is the President of Human Resource Solutions (http://www.yourhrexperts.com) and has been helping companies align their people assets with their business goals. She is considered an expert in generational workforce issues. Roberta publishes a monthly newsletter "HR Matters" http://www.yourhrexperts.com/hrjoin.cgi which is jammed with resources, articles and tips to help companies navigate through sticky and complicated HR workforce issues. Click here to read her new blog on Generation Integration http://generationintegration.typepad.com/matuson/. She can be reached at 413-582-1840 or Roberta@yourhrexperts.com.

Campus Candidates

SBOCTeam — Tue, 20 Jan 2009 15:43:00 GMT

Hiring recent college grads makes great business sense. Plus, given the chance, they could even teach you a thing or two

By Max Berry

Despite what some recent figures from America's job market would have you believe, companies of all sizes are hiring new college graduates at a higher rate than in years past. A recent survey conducted by CollegeGrad.com found that 60% of American companies surveyed plan to recruit more grads in 2008 than they did last year. The reasons for the upswing are many, as are the potential benefits of hiring some new grads of your own.

Graduate Perks
"Small companies drive the engines of job creation," says David Bedard, author of Graduate and Grow Rich. "Up and coming companies need young grads." In sluggish economic times, this may be truer than ever. Recruiting and training a new graduate at an entry-level salary is much more effective for a small business owner on a tight budget than seeking out a more experienced prospect who is already used to higher pay. Factor in the number of baby boomers reaching retirement age-not to mention the salary space they leave behind-and hiring an energetic young grad begins to look like the smartest move of all.

"More than anything, grads are looking for a break and a mentor," says Bedard. And a mentorship should not be taken lightly, especially when a young employee, just beginning their career and eager to make an impression, is so amenable to the ideas and strategies of a mentor.

There are logistical benefits to hiring new graduates as well: They're more tech savvy than generations past; they haven't had time to put down roots and are more willing to relocate than someone with a family; many of them are in debt, and will be extra motivated to get themselves back in the black. Plus, after 18 years of the classroom, new graduates are anxious to apply all that hypothetical knowledge to a real-world job-and they have the energy to do it.

The New American ‘Intrepreneur'
For all that new grads have to offer, an employer needs to offer just as much in return. "There is no such thing as a cradle-to-grave job anymore," says Bedard. "If [new grads] have any entrepreneurial spirit at all, they're going to want to test the waters."

This entrepreneurial desire to "test the waters" may have helped propagate the myth that Generation Y is a flighty bunch; pampered, demanding, ready to give their two weeks at the faintest whiff of a better offer. While Bedard concedes that the reputation may be earned in isolated cases, more than anything these children of the entrepreneurial age are, as Bedard puts it, "looking for the fit," the job that will satisfy their independent, hands-on ambitions.

When it comes to courting America's brightest graduates, the ability to offer them that may be the key advantage an independent entrepreneur has on a major corporation. A national or multi-national corporatioin is regimented in a way that may not appeal to this generation, one that subscribes to what Bedard has dubbed the "make-a-job instead of take-a-job mentality."

A small company can't offer a new graduate the signing bonus or inflated salary that a large company can. What it offers instead for a young person, hungry to find their fit and test their skills, is a stake in the future of a company, be it through stocks, profit sharing, or simply a more tactile handle on day-to-day operations. According to Bedard, a small company offers a twenty-something the chance to "be an entrepreneur within a job, to feed their desire to make decisions on the front line." Employees who look for the chance to do just that are what Bedard likes to call "intrepreneurs."

Small companies are also more likely to offer their employees flexible hours, providing for a better work-life balance, which, according to a recent CollegeGrad.com survey, now surpasses financial considerations for employees aged 21 to 30.

A Turning Tide
"More graduates are going for newer and younger companies rather than blue chips," says Bedard. He's right. Another CollegeGrad.com poll, conducted in February 2006, found that 70% of recent graduates surveyed would prefer to work for a small or mid-sized company than a large one. This may be due to growing suspicions-after years of corporate reorganization, downsizing, and, in the worst cases, outright scandal-about the scruples of many large corporations. "I see more emphasis in college and business school on ethics," says Bedard. "Ethics is a buzz word on campus and that's a good thing."

But as America's graduates begin to think outside the box as to where, and with whom, their first jobs can be found, America's entrepreneurs should keep their minds just as open. Don't rule anybody out too soon. Bedard recommends looking to smaller schools-those prowled less frequently by major corporations looking to make hires-and community colleges. "Community colleges are way ahead of four year schools when it comes to teaching entrepreneurship," he says. "They make it a part of their culture."

The benefits of making Generation Y a part of yours could be substantial.

Firing the Right Way

SBOCTeam — Tue, 28 Oct 2008 16:13:00 GMT

How To Make a Difficult Task a Little Bit Easier

By Christopher Freeburn

There are few tasks less pleasant than firing an employee. There are bound to be hurt feelings and often emotions can run high. As difficult as losing a job is for the soon-to-be-former employee, however, informing him or her of that fact can be profoundly upsetting for the employer as well, particularly in a small business setting. Worse, terminating employment can produce more than simple emotional risks. Wrongful termination lawsuits can be costly for a small business-in terms of both time and money-even if successfully defended.

So how can you minimize the stress and potential legal risks of terminating an employee?

Document your reasons
Though many states still maintain the "at will" doctrine of employment (which states that an employer can fire an employee at any time for almost any reason), many other states place some restrictions on employers regarding job termination. "Realize that even an ‘at will' employment status has an implied covenant of good faith and fair dealing," says Dr. Joanne Sujansky, founder and CEO of Key Group, a Pittsburgh-based consulting firm. "Due to this, fire with cause whenever possible and make sure to document poor performance or disciplinary offenses as they occur." Sujansky advises issuing written warnings to the employee that outline the consequences should he or she fail to improve. "If an employee's performance doesn't improve, he or she will be prepared for the consequences and you will be protected when firing the person."

Check your state's labor laws to make sure you are within your legal rights before terminating an employee. Additionally, anti-discrimination statutes common in most states can provide the terminated employee with a possible basis to pursue a legal complaint. Thus it is important for an employer to maintain sufficient documentation to clearly demonstrate that the job termination was for a valid cause and did not involve any form of legally prohibited discrimination.

For this reason, it is important for employers to keep good records on their employees and to have explained, in detail and in writing, to each employee exactly what their job entails. Having some form of employee handbook, spelling out unacceptable workplace behavior, and providing a structure for evaluating employee performance is especially helpful. If an employee has been warned about their performance, maintaining a written record of those warnings is important.

It is equally important that employers demonstrate consistent behavior toward all employees. If you tolerate tardiness from one employee, but fire another for the same, you are risking a lawsuit.

The firing process
The actual act of firing someone is rarely pleasant, but you can take steps to make the process as painless as possible.

Plan ahead. Know what you are going to say before you meet with the employee. Be able to explain your decision clearly and simply. Get to the point right away, and keep the meeting as short as possible. Dragging out the conversation only makes it worse for everyone involved.

Don't do it publicly. Firing an employee in front of his co-workers is unprofessional. Worse, it can lead to lowered office morale and become a factor in any potential litigation. Remember that juries tend to be sympathetic to workers. The firing should be done in private away from other workers.

Don't waste time. Get right to the point. "Don't start the conversation with idle chit chat, such as talking about the weather, the kids, the newest client, etc.," says Sujansky. "Don't offer the employee coffee or water or food. You want him out quickly." The sooner the firing is over, the better for all concerned.

Have a witness on hand. If you company has a human resources manager, then he or she should be present, as well as the employee's immediate supervisor.

Be clear. Explain exactly why the employee is being fired. Concentrate on his or her failure to perform according to expectations. Provide a written statement, spelling out the reasons for the termination.

Pay them. Have a check ready covering any final salary owed to the employee. If a severance package is to be offered, that should also be put in writing. In most states an employer is required to pay any outstanding salary by the next scheduled payday. Money owed by the employee to the firm cannot be deducted from the paycheck. Some states require payment for accrued vacation days. Check the labor laws in your state to make sure you pay the terminated employee everything he or she is owed. "Failure to pay terminated employees in accordance with state laws can result in civil and criminal penalties," Sujansky warns.

Be polite and professional. Losing a job can be an emotional experience. Be sympathetic, but firm.

Collect company property. This includes company IDs, company credit cards, office or company car keys, or any company owned materials that the employee may possess.

Change passwords. If the employee has access to the company computer network or online systems, cancel his or her password immediately to prevent any potential theft of company information or malicious tampering.

Keep if Confidential. Office gossip is a fact of life in any business. However, allowing the details of an employee's termination to become common knowledge in the office is unprofessional. Simply inform your other employees that the terminated worker is no longer employed at your firm and leave it at that.

An ounce of prevention
Of course, the best way to avoid the unpleasantness that accompanies firing an employee is to make sure the people you hire are a good fit for the job in the first place. A rigorous screening procedure during the hiring process, including a background check, detailed interview and clear description of the position, will go a long way toward making sure you attract the best employees for your business.

Engaging From Afar

SBOCTeam — Wed, 08 Oct 2008 17:49:00 GMT

Keeping remote employees engaged can be a difficult task for a small business owner. But when managed well, your off-site employees can be just as productive as the ones you see every day.

by Max Berry

Sometime during the 20th century, the water cooler assumed a crucial position in the American office-it became a trading post not only for gossip and recaps of last night's television shows, but also for ideas and advice. With a growing number of 21st-century employees working remotely, the water cooler is a quieter place, its role more often filled by e-mail and instant messaging, videoconferences and webinars. Trading ideas used to be simpler, but that doesn't mean your small business has to endure a communication breakdown. Here are a few ways to keep your remote employees engaged and the conversation flowing.

Remote Connection
"It's all about staying connected," says management consultant Carol Hacker of managing remote employees. Regular contact via phone, e-mail, VoIP- or instant message is of course necessary for monitoring work flow and hashing out ideas, but members of a team who aren't working side by side need an established forum, one that can be accessed around the clock, on which to collaborate and check in with their colleagues.

Remote access services like those provided by Citrix (citrix.com) allow for remote workers to securely access and update centrally maintained information from their computers as easily as if they were working in the home office. Microsoft® Office Groove® offers a similar service, along with the capability to share files and create a workspace accessible to every member of your team.

With remote access to company information comes an increased security risk. However a manager chooses to keep his or her employees connected, an annual consultation with an IT specialist will help to ensure that remote connections to sensitive company and client data remain secure.

Being Clear: The Golden Rule
Once a reliable system is in place for remote employees to connect to the central office, a manager needs to set specific protocol for relations between the two entities. Since a manager can't be on-site to monitor remote employees directly, Hacker recommends creating a reference manual for remote workers. The manual should provide detailed summaries of company policy regarding data security and backup, project deadlines, appropriate use of company-issued equipment (especially notebook computers and other portable devices), the frequency with which a remote employee is expected to check in with the manager, and appropriate response times to requests and inquiries from the central office.

As Hacker puts it, "The most critical thing a manager can do is manage expectations." This means delineating, on a project-by-project basis, the objectives, deadlines, and anticipated challenges of every task a remote employee takes on.

Of course, the value of a remote employee's work can't be judged by hours logged in the office. Since they are not able to observe the way a remote employee goes about his or her task, managers must set clear guidelines pointing their employees to the desired end result. Assessing a remote worker's job performance requires a manager to trust the employee to meet company standards using his or her own strategy and technique. "Managers need to measure success by results," says Hacker, "not activity."

Keeping The ‘I' Team
A major component in job satisfaction is working with others toward a common goal. Feeling isolated from the rest of the team can diminish a remote employee's morale and hurt job performance. It is up to the manager to keep a sense of camaraderie and singular purpose among employees, remote and otherwise.

The first thing to remember is that some employees simply aren't cut out for remote work. Either they need supervision to be productive or they simply get listless if they aren't around a surplus of people. Managers looking to hire remotely should address these issues during the interview phase to make sure a new employee can handle the remote environment.

Regularly scheduled face-to-face meetings and social events can stave off the disconnected feeling in remote workers, as can the occasional "just because" call. "Don't always call [remote employees] when there's big news," advises Hacker. "Call to check in." Informal gestures like this quash the potential for a Charlie's Angels dynamic, in which a recognizably named-but eternally unseen-leader provides instructions only when necessary, and only by telephone.

But the opposite tack can be problematic as well. Hacker warns of becoming a "helicopter manager," an employer who compensates for a lack of face time by checking in too often, hovering from afar. This can be just as damaging as infrequent or impersonal contact. "It speaks to a manager not trusting his or her employees," says Hacker. "If you do that, you're going to alienate your best people."

Of course, employing remote workers also offers myriad benefits to employees, managers, and clients. A satellite office in a different time zone means staggered hours to help meet customer needs. A prospective employee who would have faced a long commute to a company's central office may be closer to a satellite office or, if both manager and worker are okay with the idea, may even be willing to telecommute. Remote offices with small staffs appeal to workers who prefer quiet and detest interruptions. And this is to say nothing of what working remotely can do for an employee's confidence. "Remote employees have the ability to approach their work according to their own strength and preferences," says Hacker. "They're almost entrepreneurs."

The Buck Stops Here

SBOCTeam — Thu, 17 Apr 2008 13:03:00 GMT

By Chris Freeburn

Setting your employees' salaries can be a challenging task for first time employers, or even established employers who are recruiting for a newly created position or trying to keep the employees they already have. Salaries that are too low will fail to attract new qualified candidates, and may cause current employees to begin to look to your competitors. Conversely, salaries that are too high will put a strain on the business's budget and may disgruntle other employees, if they are not distributed fairly.

Figure out who's doing what
Before you start trying to set the right salary, it's a good idea to define the job. "Employees who work for small business often wear many hats," says Ann Swigart, president of Small Business Recruiting Solutions. "And jobs often change over time, with people taking on new responsibilities or moving into new roles altogether." The person you hired to keep the office's computers running may also be handling data entry and answering the company's telephones as well. Figuring out exactly what each person does, will help you decide how much they should be paid and how their salary should be adjusted over succeeding years as their workload increases or remains the same.

Research, research, research
"Generally, the best way to figure out the right salary for a given job is to find out what other companies in your area are paying for the same work," says Swigart. One useful method of finding out what your competitors are paying their employees is to network with managers or owners of similar businesses in your area and learn what salaries they set for positions like the ones in your company. Consulting a local accountant can also be helpful since he or she probably has a grasp on the typical salary range for most jobs in your community. Regional trade associations usually publish surveys of salaries for various positions within their fields, though salary levels can sometimes vary significantly between even neighboring communities. The U.S. Bureau of Labor Statistics (www.bls.gov) publishes a nationwide survey broken down by region and occupation, but the data is often dated. Consulting the employment listings in your local newspaper or employment office is also a good idea since many such listings will offer a suggested salary, providing a yardstick with which to assess your contemplated offer.

Setting the salary for a new hire
When looking at add a new employee, you should set a potential salary range with a defined floor and ceiling, rather than simply a specific number. This gives you room to negotiate with prospective employees, permitting you to adjust your final salary offer based on the particular applicant's experience and skills.

Given the time constraints and complexities of modern life, potential applicants may be interested in more than just a straight salary quote. You should emphasize any benefits that may accompany a position in addition to the base salary. Perks like flexible work hours, health insurance, bonuses, childcare, compensation for transportation costs and retirement plans, if available, should be mentioned in tandem with any proposed salary. It is also advisable to budget ahead when setting a new employee's salary. Remember to include room for future raises in the budget.

Finally, it's a good idea to spell out all the details of a new employee's salary and perks in an offer letter, which should state the employee's start date, salary, benefits, bonuses and vacation time. Putting these elements into writing can prevent future misunderstandings and disputes between you and your new employee.

Chris Freeburn is an associate writer/editor for Priority magazine.

Be Sure Whom You Hire

SBOCTeam — Fri, 24 Aug 2007 17:16:00 GMT

Big Business has long relied on personality tests and behavioral interviewing to find the right employees. Now small businesses are making use of these administrative power tools.
By Reed Richardson

Here's the unhappy truth: There is no surefire way to hire a perfect employee. No matter how thorough you are ... no matter how many references you check ... no matter which personality tests you administer, you still never know precisely what you're getting until the person waltzes into the office and begins working.

That said, it is possible for small businesses these days to get a pretty good sense of who's being hired-and whether that person is likely to be a good fit-using some of the same tools and techniques that have long been used by major corporations. This will require investing a little extra time and effort. But most small-business owners feel that the results are worth the investment-and some even consider the additional steps a mandatory part of the hiring process.

"If you're a small business, making a poor choice is much more devastating than with a big company," says Francie Dalton, founder and president of Dalton Alliances Inc., a business consulting firm in Columbia, Md.

To help business owners avoid such land mines, many companies provide diagnostic and personality tests that assess a candidate's "personal style"and, theoretically, his or her ability to blend in with the company culture. Typically, these tests focus on integrity, aptitude and personality-and are based on benchmarks that can help establish which personalities are suited for which jobs. For instance, you likely don't want a reserved person who's a stickler for standard practices in a freewheeling sales job.

Tons of testing choices are available to assist in the recruitment process. Business owners can administer written questionnaires that they can mail or fax back to the testing company for results. An increasing number of online testing and scoring services as well as software packages let owners score results on their own.

For instance, Hire Success (www.hiresuccess.com) provides free software that enables users to administer tests themselves, and features an online option that sends the applicant's answers to the employer's e-mail account almost instantly. Inscape Publishing (www.inscapepublishing.com) offers CD-ROM-based training and assessment kits. Wonderlic Inc. (www.wonderlic.com) and Birkman International Inc. (www.birkman.com) provide tools and consultants to help companies achieve personnel effectiveness.

Prices for these services vary, but most are affordable to small businesses-especially considering that the price tag for a bad hire ranges from an estimated $8,000 to $10,000. Wonderlic, for instance, offers a package of five "comprehensive personality profiles"for $125. Hire Success customers pay between $10 and $30 per report, and some in-depth tests can run as much as $500 each.

And some testing companies are now tailoring their products especially for small business. PI Worldwide (www.pi worldwide.com), for instance, offers a scaled-down version of its famed Predictive Index (PI) for small business. "This test is valuable because it does more than measure qualifications,"says Dennis LaRosee, senior vice president of PI Worldwide in Wellesley Hills, Mass., which publishes, administers and scores the test, and also offers consulting and training. "It assesses fit in relation to a job position and a corporate culture. The more a new hire is in sync with his workplace, and the more a position meshes with his innate personality traits, the happier and more productive he'll be-and the longer he'll stay."

When Dave Ratner, owner of Dave's Soda & Pet City, a (you guessed it) soda and pet shop with four locations in western Massachusetts, is looking to hire employees to work in his shops, he uses another small-business-oriented testing product, the National Retail Federation Customer Service Assessment, which goes for about $20 at www.nrf.com.
"The NRF test is great for customer service and customer ‘attitude' skills in general,"he says. "And it asks some hilarious questions like, ‘If a customer is annoying, should you yell at them?' You'd think they're pretty obvious answers, but it's amazing what some people say."Bonus: You can score the test yourself-or have NRF score it for you.

But you can't rely on diagnostic tests alone. "There are pros and cons to using personality tests or emotional IQ testing,"says Smooch Reynolds, CEO of the Repovich Reynolds Group, a recruitment firm in Pasadena, Calif. "A lot of people consider diagnostic tests to be the defining factor for whether or not they should hire someone-and there's real risk in that. People should use them as just one of several lenses through which they analyze a candidate."

According to Ben Dattner, Ph.D., a business consultant and adjunct professor in the Industrial and Organizational Psychology M.A. Program at New York University, one of the biggest problems many startups and small companies face is that they don't have standardized systems or human resource departments in place.

"Consequently, they use superficial criteria to hire people, such as how they look or how they come across in an interview,"he says. "Basically, they are looking for a certain stereotype that has been successful in similar roles. Not stereotypes based on gender or other demographics, but more on the order of a person who went to a certain school or has a certain professional background."

So, before you do anything, start with a clearly defined job description. "It doesn't have to be etched in stone. But until members of the organization reach a consensus about the tasks, responsibilities and level of authority for the position, it's not even worth placing a job ad,"he says.

Truth or Dare?

Background checks are equally vital. Recent studies have shown that 34 percent of résumés and 73 percent of job applications contain false or embellished information-even at the highest professional levels. To counter this trend, Gerard Major, Ph.D., an organizational psychologist in Manhattan, suggests that employers get at least nine references. Yes, nine.

It's also important to get work samples. "The best predictor of future performance and behavior is past performance and behavior,"says Dattner. "If you want them to write business plans for you, have them submit one they did in the past. Or get them to write a new one."

You also should have other people interview the candidate-ideally, those who know your value system. And make sure all interviewers prep for the big face-to-face meeting. "Too many employers interview candidates without first compiling a list of questions,"says Marc Savage, who runs Cohn Executive Search in Manhattan. "Begin the interview by giving an historical outline of the company, then get into the specifics of the position and why it is currently available,"he says. "While the candidate responds to your questions, take copious notes. Observe the candidate's demeanor. Discern how well he or she knows your business. Note details like, did the candidate do research, take notes and ask relevant questions?"

Francie Dalton suggests conducting "behavioral interviews"-that is, not just asking standard questions but framing them in a way that seeks clearly defined examples. "If I ask whether you are someone who takes initiative and you say yes, what good does that do me?"says Dalton, who suggests asking applicants to describe specific scenarios when they took initiative and succeeded-and at least one example of when they failed. "If a person is only comfortable talking about successful outcomes,"she says, "that can be significant."

When inviting serious candidates back, Savage recommends doing second interviews in a different venue and including lunch. "This allows for a more relaxed encounter where the candidate is more likely to reveal himself or herself,"he says.

Finally, don't overlook intuition. If you get a feeling about a person one way or another, pay attention to it. "I can't tell you how many times my gut has said something is wrong, and I say, ‘Oh, forget it,'"says Dalton. "And then I really regret it."

Reed Richardson is managing editor for Business 24/7 magazine.

Raise or Bonus?

SBOCTeam — Sun, 29 Jul 2007 23:45:00 GMT

Can you keep employees motivated and compensated without annual salary increases?
By Reed Richardson

With workers harder to come by, salaries seem destined to keep rising. But one way to offset this expense is to consider opening up more of your employees to performance bonuses rather than simply handing out cost-of-living increases every year.

This trend is increasingly popular across the business spectrum. A Hewitt Associates study from September found that 80% of U.S. companies now offer some kind of bonus plan to their workers. By setting aggressive sales or productivity targets to trigger the bonuses, the extra money paid out often provides a much greater return on investment than standard merit raises. Plus, it strengthens the psychological link in employees’ minds between increased performance and increased pay.

Still, there are pitfalls to shifting employees from a strict salary-based pay system to one that includes bonuses. Initially, many workers can feel demoralized and see the move as a ploy to reduce overhead, particularly if the bonus’s goals appear unreachable or arbitrary. Experts suggest continuing to offer a raise, albeit a more modest one, along with bonuses to allay employees fears that their income won’t keep up with inflation. Then, over time, it might be appropriate to move some employees to a base salary plus periodic performance bonuses.

Small businesses tight on cash, however, might consider tying employee bonuses to the overall success of the company rather than to individual performance. Mark Cuban, who turned two start-up companies into billion-dollar enterprises, says he always approached bonuses this way. “If the company is making money—actually cash flow positive— then I’m always open to paying bonuses.” But, he notes that if the company is struggling or not yet profitable, then he curtails payouts as a way to drive home the idea that each employee’s success is tied to the success of the overall business. In other words, Cuban says, “When the company makes money, you will make money.”

Reed Richardson is the Managing Editor for Business 24/7 Magazine.