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Human Resources

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Performance_Reviews_body.jpgby Debbie Griffin.


Few small business owners enjoy giving performance reviews—especially when they’re negative. But it’s important for managers to understand the most effective ways to give feedback to employees. Tom Spencer, president and CEO of Aubrey Daniels International, a 30-year-old consulting firm, helps clients do just that. His company works with business owners to understand how to do performance reviews in the most constructive way. Spencer earned a doctorate in psychology from West Virginia University and a master’s degree in applied behavior analysis from Northeastern University. He started with Atlanta-based ADI as a consultant before taking over the top spot in January. In a recent interview with writer Debbie Griffin, Spencer explains why performance reviews are important and the best ways to do them.


DG: Let’s start with the basics. What is the purpose of a performance review?

TS: A performance review helps to develop the person and should enable them to perform to the best of their ability for the organization. It identifies the behavior you’re looking for from the employee and ensures that workplace conditions will support it. An ideal performance review sets up multiple opportunities for reinforcement of those behaviors and should prompt a manager to look for those opportunities.


DG: Who should conduct a performance review?

TS: An employee’s direct supervisor should do a performance review, but it should be a two-way conversation. It’s a 50-50 responsibility to make sure expectations are clear, and it should be more performance management than review or evaluation. The purpose is to get the behavior you want from the employee and make yourself available to them.


DG: How do performance reviews affect the bottom line?

TS: Typically performance reviews won’t support the bottom line unless the performance goals of individuals are aligned with overall goals of the organization. Pinpoint the results you’re looking for and the behavior that will drive those results. After that, there needs to be frequent follow-up and reinforcement of the behavior required to achieve those goals.



DG: How often should performance reviews be conducted?

TS: If it’s important enough to have a goal around it, it’s important enough to talk about every month, or at least quarterly. An annual performance review is a challenge especially if that’s the only time you do it. And those goals defined annually tend to be so general or broad that they’re misaligned with day-to-day activities. The goals need to be measurable, and there should be agreement on how they’re measured. The most important thing is providing frequent, positive, reinforcement of desired behaviors and opportunities to engage employees in general.


DG: How should a manager address issues that an employee needs to improve?

TS: You describe the behavior and the impact of the behavior on the organization. It’s important to be conversational rather than confrontational, and a manager must have employees’ respect and trust in order for those conversations to happen. For example, asking a worker to perform a particular task better but reacting adversely when he or she asks questions in order to learn actually provides negative reinforcement of a desired behavior. Conversely, good behaviors are extinguished all the time because nobody notices or says anything.


DG: How does ADI conduct its own performance reviews?

TS: ADI holds monthly meetings and defines measurable outcomes for each team position, some of which are tasks, while others are behaviors. Take the hypothetical examples of marketing and IT, where the measurable outcomes are more leads and improved server up-time. The behaviors or tasks involved might be meeting a quota through cold calls and implementing a server-redundancy plan on schedule. ADI has sit-down meetings, continuous one-on-one conversations, and frequent team meetings via Skype. The company uses scorecards and progress graphs to track results, measure progress, and set new goals, and the scores can earn profit-sharing money. At the end of the day, people should know if it’s been a good day or a bad day, and it’s good to have daily reinforcement.


Always_Interviewing_body.jpgby Erin McDermott.


A small business owner is already performing many roles—star, producer, and director. But how can you possibly play talent scout, too?


The competition for your next great employee never stops. With highly qualified candidates increasingly scarce, the task often can be even harder for smaller firms, as the fits and starts of growth make the addition of another salary a perilous financial leap. For many, it’s no longer only a rival across town that’s hiring from the same talent pool, technology has enabled national and global competitors to search out the same folks as well.


“With skilled-worker shortages increasing, the need to build a company talent pool is a necessity,” says Ira Wolfe, president of Wind Gap, Pennsylvania-based Success Performance Solutions and a recruiter for small firms as well as blue-chip clients. “The problem is supply and demand—small business owners want to hire just-in-time, but the supply isn’t there. You can’t think you’ll run an ad and have a position filled within two weeks.”


New tools like LinkedIn and other social-media sites have become a virtual resume bank and Rolodex of every colleague you and your staffers have ever known. But that seeming abundance also makes those hiring more optimistic than they should be. While these sites can be a valuable tool, they also are rife with incomplete, out of date, or outright inflated information, making searches frustrating and unreliable.


So how can small businesses best keep a finger on the pulse of their real talent pool? Technology can make short work of some of it, but there are also time-tested techniques and insights that small business owners, and the recruiters they work with, swear by. Here’s a look at four approaches:


Try new technologies

LinkedIn and its 225 million users is a good place to start, but know the limits. Combined with Facebook, CareerBuilder, Monster, the Ladders, and Glassdoor, the “sharing” updates can be a 24/7 window on the comings and goings of staffers—who’s leaving, who’s unhappy, and, importantly, who’s looking. Still, it takes an effort to learn the etiquette and build a presence—time and energy that busy small business owners likely don’t have. Two new alternatives comb LinkedIn and other boards’ data and cut to the chase—for a price. HiringSolved works like a search engine, spanning global sites and industries, to constantly filter candidates and send the best to your attention. (Prices start at $199 a month.)


There’s also the startup NextHire, which works with small businesses to set up the search criteria, runs its algorithms across the various resume boards, then narrows down the field and presents a list of eight to 10 pre-screened finalists. It charges a flat rate of $4,000—a fraction of the 25 percent of first-year salary that many traditional recruiters command, says CEO Bob Myhal. Among NextHire’s cool tools: a one-way webcam interview with candidates that offers a glimpse of the character behind the resume. “We’ve come to realize that a resume is limited. It’s just one view,” Myhal says. “We set out to give clients multiple views. This gives another piece of the puzzle.”


Cast a wide net

Remember the old yarn about not putting all your eggs in one basket?  Don’t rely on a single niche job board posting, either. In the budding tech city of Nashville, talent coordinator Heather Neisen says she hits all points in search of candidates for TechnologyAdvice, an IT adviser for B2B. Her most recent list of scouting spots: local chambers of commerce, career fairs, career centers, networking events, college faculties, industry associations, paid posting boards, and even Craigslist. It’s about building a contact list and keeping in tune with which sources are the most helpful, Neisen says. “Just one is not going to be enough for a small business,” she says. “You never know where the one perfect applicant is going to come from. The answer is everywhere—there’s not one pattern that we’ve found. And that’s why you constantly have to keep looking.”


Keep the lines open

The minimum time to fill an open spot is 45 days, says Wolfe. Small business owners need to be constantly recruiting, watching the local openings and closings and keeping track of talented individuals who might be looking. One way to build an internal network: Set up your company’s website to always accept applications, which can build a go-to pool of preferred and interested candidates. (And even if they’re not available, they may know someone who is.) One smart tip from Wolfe: Keep an open mind when it comes to skills that might unexpectedly translate to other industries. He had an arborist client who was always looking for people available to take care of trees. Their solution: They started posting job openings at a rock-climbing center, where people who likely wouldn’t mind scampering up a tree would gather. Wolfe knows a bit more than most about abilities with other applications. He spent 15 years as a dentist before he started getting paid to find the right people for companies in need. His one common strength in both fields, he says: Diagnosis.


But don’t let ‘the one’ get away

Is this person smart? Someone who’s good to be around? Then hire them and the business will come. That’s the advice that family lawyer Randall Kessler says he’s followed for 30 years for his Atlanta firm (and he wrote about this recently here). It’s wonderful if a candidate has great skills, but the bigger goal is to find someone that you respect and trust to add value to your team. Kessler says it’s hard for small firms to know when the next emergency might come or when it will be imperative to add on, so he’s found it’s just wise to always keep track of who’s making a good impression. “Even if I’m not hiring, I’m keeping them in mind,” he says. “Sometimes you don’t need to post a job application to know they’re the person to tailor a job to.”

Provided by Aetna

When you own a business, sleep can become a valuable commodity.

How many times have you tossed and turned, hashing over the events of the day? Or stayed up past midnight on the computer, trying to resolve a billing issue?



We all have a bad night every now and then. But when you don’t get six to eight hours of sleep most nights, it can take a serious toll on your life – and on your business.



Here are five reasons why sleep matters.

  1. Your memory is better
    “Now where did I put those invoices?” “Did I place that order or not?”
    Scientists have long known getting a good night’s sleep helps us learn and remember.
    And, obviously, poor memory can turn into lost time – and money.

  2. You are less accident prone
    Sure, accidents happen – but experts agree, when you cheat sleep regularly, you are likely to have more lapses that turn into accidents.2
    Trip over a stepladder and fracture an arm – and suddenly you face losing a day’s receipts or profits.

  3. You are better at problem solving
    Studies show that people are more creative in their problem solving after getting a good night’s rest.

    Ever have a problem that has bugged you during the day – only to “sleep on it” and come up with a solution the next morning?
    Solving a problem can mean saving your business money. Lots of money. 

  4. Your moods are better
    Ever snap at a customer and regret it later? Lack of sleep can make you moody or irritable – and more likely to say something you really shouldn’t.  No one should ever lose a sale because of a lack of zzz’s.

  5. Your overall health is better
    The studies here are scary. Lack of sleep can lead to heart disease, obesity and a weakened immune system.

    Any of these can mean expensive trips to the doctor – or the emergency room.
    If you stay healthy, your business has a better chance of staying healthy, too.



Learn more about Aetna insurance solutions.

1. Miller M.D., Michael Craig. How Sleep Affects Learning and Memory, InteliHealth, Sept. 24, 2012. Available at http://www.intelihealth.com/article/how-sleep-affects-learning-and-memory?hd=null. Accessed November 10, 2013.

2, 3, 4, 5  Six Reasons for Good Sleep. InteliHealth, Sept. 6, 2010. Available at http://www.intelihealth.com/article/6-reasons-for-good-sleep. Accessed November 10, 2013.

Aetna is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies, including Aetna Life Insurance Company and its affiliates (Aetna).

This material is for information only.  Health benefits and health insurance plans contain exclusions and limitations. Information is believed to be accurate as of the production date; however, it is subject to change.

Hiring_Best_Practices_body.jpgby Iris Dorbian.

As CEO of Steinreich Communications, an 11-year-old PR firm in Fort Lee, New Jersey, Stan Steinreich often works with headhunters. Usually they are tapped to help him fill top-level spots at his firm, such as media relations professionals or department heads. For the most part, this hiring strategy has worked out well for Steinreich although he does offer a few words of caution to small business owners:

"Use headhunters for very specialized or targeted searches," he says. "When they're selected in that context, they can be very valuable and really add an expertise to those different situations."

Yet not all extol the use of headhunters for small business hires. Tom Armour, co-founder of High Return Selection, a consulting firm that helps small to medium-sized businesses attract and retain talent, feels that headhunters have become largely antiquated thanks to professional social networks such as LinkedIn.

“Fifteen years ago before social media, you needed a headhunter to access a network,” he says. “Now with LinkedIn, that network of accountants is totally searchable.”

How then can a small business owner determine if it’s worth the time and money to retain a headhunter? Here are a few tips to consider before bringing on a recruiter.

Communicate expectations clearly
When meeting with a recruiter to discuss a possible working arrangement, be clear. State specifically what you are looking for in a job candidate as well as your expectations for the agency.

Elisa Sheftic, president and managing partner of The Right Executive Search, a four-year-old, search firm, concurs. Early on, she says, there needs to be “a conversation that defines expectations on both sides.”

She continues: The client needs to know: How long will it take to receive viable candidates? How do you source and screen candidates? What is the fee structure? What is the guarantee period? Do you do a background check or drug testing?

“[Similarly], the agency needs to know the skill requirements for the position and the compensation parameters. What is the interview process? How long will the interview process take? What is the process for submitting candidates? Will there be feedback in regard to each candidate so the agency can tweak the search if need be?”

Once all these questions have been answered, get it in writing. A contract, signed by both parties before the search begins, ensures that each side is clear on what to expect from the other.

“[A small business] should not work with any agency who cannot clearly define their process verbally and on paper,” insists Sheftic.

Consider the expense
Before signing on with a headhunter, determine if you can afford it. Recruiters usually get paid one of two ways: either upfront on a retainer basis, or on a contingency basis, which means after the client has hired one of their candidates. For the latter, the headhunter often takes a certain percentage of the hire's salary as well as any related cash bonuses.

Armour says the cost for a contingency search “typically ranges from 15 percent to 25 percent depending on the person they hire.” For a position that pays $100,000 a year, that fee can amount to anywhere from $15,000 to $25,000. Although some small businesses can afford it, that sum may be too steep for many.

Don't rush the interview process
Once a headhunter begins sending over viable candidates, be sure to do your part. That means taking an appropriate amount of time to meet with and evaluate each person. It’s a smart idea to bring other people into the process as well.

Steinreich says at his firm, job candidates, even those interviewing for junior-level spots, always meet with three or four people first before getting hired. The team will then discuss the strengths and weaknesses of each candidate—a committee approach that Steinreich maintains is essential to the vetting process.

Further, Steinreich says he will meet with job candidates during the first round of interviews as opposed to later on. The reason is simple: “I don't like being in a situation in which my team members have invested a lot of time in looking for somebody and that person gets to me and I say [to myself], ‘Oh my goodness. What were they thinking?'”

Trust the headhunter’s judgment—and yours
Hire a recruiter who either specializes in your industry or has a keen understanding of the nuances of the job you want to fill. Because they’re familiar with the kind of business you have, their recommendations of candidates should be trusted.


“A headhunter saves us a lot of time because they know who's out there and who's available,” explains Steinreich. “By the time we get those couple of candidates to come and see us, they are all fairly qualified. We know that in advance. It actually is very cost-efficient in that situation for us to go with a recruiter.”

In addition to trusting your recruiter's judgment, you should also trust yours. If you have a question about a candidate being the right fit for your business, ask him or her about it during the interview. In addition, do your own due diligence. Search engines such as Google or other social media can be used to verify an applicant's credentials.

The hiring process is never easy and a recruiter—when chosen wisely—can be a tremendous asset. Taking the time to be as selective with a headhunter as you are with a job candidate is smart business and can prevent costly hiring mistakes.


OrgStructure_body.jpgby Erin O’Donnell.

Your business might be small, but the way you structure it is a big deal.

Organizational charts aren’t just for big companies. Defining the structure, roles, and processes in a small business can make it more efficient, clear up communication issues, empower employees to make decisions, and keep the team accountable.

That’s certainly been the case for Sara Sutton Fell. She started FlexJobs.com from her home in Boulder, Colorado, in 2007 to create a better resource for freelance and telecommuting jobs. Today, the company has 40 employees who work virtually, just like their clients do.

Yet, even with such an unconventional arrangement, Fell realized her growing business needed some basic structure. Today, FlexJobs is organized functionally. The company has a layer of directors in areas such as client services and job research, with employees like writers and researchers reporting to them. “As entrepreneurs, we’re always wearing most of the hats,” Fell says. “I needed to have other people help me with the hats, or take over the hats. When you’re used to having your hand in everything, it’s hard to delegate.”

Define roles

Creating structure allows business owners to institutionalize the things they take for granted and the expectations they may not have expressed, says Dr. Michael Woodward, an organizational psychologist who coaches entrepreneurs and executives. “You can’t just tell somebody ‘Your job is everything,’ because then it becomes nothing,” says Woodward, author of The YOU Plan: A 5-Step Guide to Taking Charge of Your Career in the New Economy.

Woodward says structure provides clarity, consistency, and certainty. Your employees trust you when your expectations are clear and you’re consistent with them. Uncertainty is a hallmark of small businesses, but “as the owner, it’s up to you to shoulder that and create certainty for your employees,” Woodward says.

Types of organizational structure

Most businesses organize in one of four main ways:

  • Bureaucratic: The classic org chart setup, with top-down authority and one or more layers of managers. Most large businesses are still structured this way because their hierarchy is very tall, flowing from the CEO, COO, and CFO.
  • Functional: Employees are grouped by their functions, such as production or marketing. This works for small companies that specialize in a single product or service. The functional units aren’t accountable to each other, only to the top authority.
  • Divisional: Teams are organized by product lines or markets. Each division is somewhat independent, and the company has flexibility to create new products or expand into new regions and markets.
  • Matrix: A blend of functional and divisional. Employees are grouped by roles and divisions in teams that work on a project basis.

The risk of no structure

Business coach Mandi Ellefson says organization flows from your mission and values. Make sure both are well defined and known to all. “It empowers your employees to make good decisions based on your value system,” Ellefson says.

The biggest mistake you can make is having no structure at all, Woodward warns. Your staff might be small, but is your customer base? What about your vendors? Organization makes things clear for your external audience, too. They’ll know who to contact in any situation, instead of getting passed around. Says Fell: “It can be very disconcerting when it looks like you have too many cooks in the kitchen.”

Business structure experts recommend that small business owners put functionality ahead of personality. “Don’t mold things around people too much,” Woodward advises. “People gravitate to what they like or what suits them. And then you have a lot of things fall through the cracks because nobody owns it.” Without a structure for accountability, all decisions have to funnel through the boss, and that causes efficiency to plummet.

A process for everything

The proper organization also helps to define the processes that run your business. That, in turn, can make you more efficient. When Paul Kortman started digital marketing firm ConnexSocial three years ago, he employed a handful of contractors, but was still heavily involved in the day-to-day operations.


After listening to a podcast about creating strategic operating documents and processes, he changed his whole approach. “It warmed me up to being strategic about my business and having processes in place to have people do these things for me,” he says.

With Ellefson’s help, Kortman began writing processes for everything, then delegating those tasks. Within six months, he had 40 processes, and a staff of eight people following them.

Ellefson says the role of the owner or president is to build the structure and then hire the right people.  “It’s not the owners’ job to do the processes, but to understand them, so they can create the structure,” she says. “Business owners need to get out of the mindset that they are going to be doing the work. That’s micromanaging.”

Coach or quarterback?

Woodward says business owners must also accept that they’re no longer the star players of their team; they’re the coaches.

“It’s rare you will find a great coach who was also a great player,” Woodward says. “There’s a reason for that. Star players get their glory out of scoring the goal, being the one to do what they have to do in a clutch situation. Coaches enjoy seeing people go out and do what they taught them.”

Leanne King faced that choice in the early stages of her human resources firm, SeeKing HR. Founded in 2007, the San Antonio-based company provides third-party HR to other small businesses.

“I had to figure out, did I want to be a business owner or an HR consultant?” King says. She chose to be the president and stick to the numbers side of the business. Then King hired a second-in-command who is strong where she is not, in roles such as networking.

Today, SeeKing HR has 15 employees in three divisions: HR program management, employee development, and employment service. As the company grew, King knew she had to honor the structure she had imposed, which meant she had to redefine herself to her oldest clients. “They still think of me as their rep, and I can’t be,” King says. “I can’t be the point of contact for every single employer, but I’ve been the constant.”

Structure can be flexible

Woodward says structure doesn’t have to be rigid, as long as it provides a reliable framework.

Tennis friends Jayne Drew and Kelly Daugherty started Smashing Golf and Tennis in 2009 because they couldn’t find athletic clothing with built-in shapewear. Both came from industries that organized around projects, so that’s how they structured their company.  But they had never mapped out their organization until they decided to seek funding. “Our lines were going everywhere. We realized we were doing a classic matrix management and we didn’t even know it,” Drew says.

Smashing has about 10 employees who come together in teams around projects, then reform to work on others. They report to whichever partner oversees the type of work they’re doing. Drew says they have learned to be very detailed about assignments. An employee juggling multiple projects, for example, will be told how many hours to spend on each.

“I’m sure a lot of small companies have figured out how to make it work with a more traditional structure,” Drew said. “We look for people who are more willing to work in this kind of environment.”


QAsharonarmstrong_Body.jpgby Robert Lerose.


Over this past summer, the unemployment rate has slowly been ticking down and, increasingly, employers seem to be in a hiring mode. But as small businesses restart the hiring process, the challenge to find qualified candidates will likely take up more of their time and energy. Where should small business owners look for new hires? How should they assess applicants? What skills are important today? Recently, business writer Robert Lerose spoke with Human Resources expert Sharon Armstrong, president of Sharon Armstrong and Associates, a Washington, D.C.-based career coaching firm and referral network. (Armstrong's report on how to master behavioral interviews100 Best Interview Questionsis available as a free PDF download.)


RL: What, if anything, is different about hiring today than before the recession?

SA: I think it's almost getting harder to do. Years ago, you just ran an ad in the newspaper and applicants mailed in a résumé or applied in person. But now, you're hearing from many more folks. So number one, there are more job hunters in the market. Number two, applicants have access to your job listings through the Internet, so you're being bombarded. It puts the onus of that search on the employer—where it always was—but you've got to be even more diligent. To make a successful hire, you want to do some pre-work.


RL: Could you elaborate?

SA: You want to make sure you have a clear understanding of the job you're filling and the skill sets you want. Make sure you have written or updated a job description to match that, and then think about the most cost-effective ways to get word out. Because there are so many people in the market, employers have the opportunity to be selective in their initial screening. 


RL: What are your thoughts about interviewing?

SA: Interviewing is a group sport. I think it's a good thing to have different people talk to applicants and then fill out some type of applicant evaluation form separately. Then come together to evaluate what they heard and reach some consensus as to who might be the best fit. I love that process.


QAsharonarmstrong_PQ.jpgRL: Tips for interviewing?
SA: You've got to prepare what I call targeted behavioral interview questions. Behavioral interviewing is an interviewing technique based on a principle that past performance is the best indicator of future success. So it's a way for interviewers to fashion questions that will draw out from individuals exactly what they've done, to prove that they'll be able to do that for you. The key—it's in my free PDF—is the four ways to start a good interview question that forces the interviewee to give you real examples. If the applicant can't, then they haven't prepared for that interview sufficiently, so they're probably not someone for you either.


RL: Are there some essential questions that should be asked?

SA: There are four questions that employers should ask in some form: Can you do the job? Are you going to fit in? Do you want the job? Can we afford you? So no matter what employers are actually asking, those are the things they need answers to. And you've got to be a good listener—that has not changed. Then get down to the business of interviewing people. That's where I think a lot of small businesses might need help. I'm not sure managers are as skilled in doing good interviewing. Big companies fall into this trap, too.


RL: How can a small business distinguish itself in the minds of job applicants?

SA: I think a small company needs to stress the benefits of working for their company—what sets their small business apart from others that are hiring for the same type of position. They've got to tell job seekers something that is going to excite them enough to contact their organization: the job requirements, what's expected of that applicant, but also why they might be an employer of choice. What are some interesting or unique benefits they might offer that a bigger company can't?


RL: Are there particular job search sites that you like?

SA: My favorite one is Indeed. It will give you pages and pages of jobs that it pulls from different sites. ZipRecruiter is another one. I'm going to make you laugh with one of them: Craigslist. Believe it or not, Craigslist is doing everything, and they are also in the job listing space. LinkedIn is a critical job search tool. I push all my clients to get on LinkedIn. From a small business point of view, they should be looking at that individual's LinkedIn profile. There are also some sites that you pay for, but I don't recommend them.


SBC newsletter logo.gifRL: Some unpaid interns recently made news by successfully suing their employer for wages. What advice would you give to a small business that is thinking about bringing on an intern?

SA: I would have them check out the FLSA—the Fair Labor Standards Act—at the Department of Labor. The other place I would recommend small businesses get familiar with is the Society for Human Resource Management, which can answer questions like that. But I'm always of the mind that you want to have a good labor lawyer in your pocket, no matter what size business you are. You might even have an outsourced HR person that you can tap.


RL: Final advice?

SA: All businesses—big or small—have to have a clear understanding of the job, they have to prepare the targeted behavioral interview questions, and they have to be good listeners. During the interview, their job is to objectively assess the applicant by describing the job and the work environment, positively and honestly. They ought to also want to create goodwill for their company, whether the applicant is hired or not. And lastly, once a candidate is hired, it's time to celebrate with them and orient them thoroughly and assimilate the new staff member. Give them all the tools they need to be successful.


This interview has been edited for length and clarity.

Culture-Fit_Body.jpgby Erin O’Donnell.

Finding employees that mesh well with your company’s culture is just as important as matching up a résumé to a job description–maybe even more so. Research shows that ignoring your culture can cost you, in real dollars, as it influences everything from people to profits.

Gallup, which has been surveying American businesses about employee engagement since 2000, defines engaged employees as “those who are involved in, enthusiastic about, and committed to their work and contribute to their organization in a positive manner.” In this biennial analysis, Gallup research has shown time and again that engagement leads to better productivity and profitability:

  • The top 25 percent of teams, the most engaged, had nearly 50 percent fewer accidents and 41 percent fewer defects in quality, compared to the bottom 25 percent surveyed.
  • Firms with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147 percent higher earnings per share compared with their competition in 2011-2012.
  • Companies with high engagement also tend to have lower healthcare costs.

But according to the organization’s 2012 analysis, 70 percent of American workers are not engaged or, worse, actively disengaged. And a bad hire can cost you. The U.S. Department of Labor says the average cost is nearly one-third of that worker’s first-year potential earnings—a $15,000 loss for an employee making $50,000 a year. It costs about $10,000 to replace a mid-level employee. About 49 percent of new hires quit within the first 18 months because of a poor culture fit, according to the Corporate Leadership Council.

Predicting engagement

Hiring managers and recruiters are turning more and more to technology and tools that claim to uncover a job candidate’s personality, teamwork traits, and leadership style, to name a few. They use surveys, role-playing, and mini-projects to gauge what lies beneath a skill set.

At Situation Interactive in Brooklyn, New York, job candidates are screened for signs that they’re adaptive and collaborative, traits that are embedded into the company’s core values. “If someone is not adept at change or needs a very structured environment, they’re not going to succeed here,” says Beth Taylor, human resources supervisor.

The digital marketing agency specializes in experiential brands, like Broadway shows and special events in Las Vegas. Launched in 2001, the agency now employs more than 50 people. Taylor says the firm gets high marks for employee satisfaction and enjoys low turnover because of a culture that values passion, risk-taking, and accountability. “When you’re a small agency, everyone is very visible about what they do,” she says. “You can’t hide behind mistakes or try to point your finger.”

Culture-Fit_PQ.jpgKnow your culture

Before you try to find employees that will fit within your culture, you’ve got to know what your culture is. Often, that’s easier said than done, which is why tools have emerged to help small business owners with the challenge.

Kelsey Conophy says most companies focus on their perks, benefits, and broad mission statements to identify their culture. But if you’re not asking employees about it, you’re not getting the true picture. That’s why she founded workZeit, an online tool designed to help companies zero in on their internal culture much like they would their own brand.

The workZeit metrics go beyond the old Myers-Briggs personality test, which catalogued and compared individual traits, such as extrovert vs. introvert or judging vs. perceiving. Using workZeit, you can measure complementary factors, such as how one new person changes the dynamic of a group. It starts with an online assessment of what they call the Cultural Fingerprint—a unique profile of work style, preferred work environment, and the process with which a group or individual works best.

The goal is to aggregate years of research by organizational psychologists and HR managers and deliver a more simple and manageable tool for hiring. “We’re enabling them to all speak the same language,” says Conophy, workZeit’s CEO.

Some of that research originated with behavioral scientist Dr. Janice Presser, CEO of the Gabriel Institute. Presser is the co-inventor of the Teamability metric, which uses a role-based approach to aptitude and predicting how people will perform in a group dynamic. People tend to fulfill the same roles whether they’re in a boardroom or a book club, Presser says, and each role benefits an organization in different ways. For example, the CEO may be a brilliant idea person, but she’s going to need a chief strategist to get things done.

If you have the right mix of roles, Presser says, you get a coherent organization. If not, chances are you wind up with a culture of high stress, which is essentially fear-based. Top-down, rigid companies like this don’t have what she calls a coherent human infrastructure. “Even if you’re in a tent, you want the walls to meet and be interdependent,” she explains. “When people are interdependent, they are supporting each other for the achievement of something bigger.”

Interviewing for fit

Once you have a grasp on your culture, or what you want it to become, you can improve your recruitment and interviewing process. Elizabeth Lions, author of Recession Proof Yourself, recommends benchmarking your best people before searching for coworkers to complement them. Who are your top performers? What are their traits, skills, and attitudes? When you know, you can look at resumes and ask interview questions that seek out good matches. “This gets the guessing game out of hiring,” Lions says.

SBC newsletter logo.gifAt King Retail Solutions in Eugene, Oregon, job candidates go on a bit of a test drive. Andrew Swedenborg, EVP for corporate development, is a fan of creating “working projects” for people who interview with the company, which designs retail spaces. Clients include major corporate brands like Safeway, Walgreens, and Starbucks. After a phone interview, the candidate gets a little homework—a task to complete in a couple of hours that simulates a challenge they might face in that position. It’s especially useful, Swedenborg says, with positions in accounting or marketing that don’t come with a built-in portfolio like designers do.

“The purpose isn't to use the end result, but to gain insight into their problem-solving approach, the quality of their work, and their overall thought process,” Swedenborg says. “Often, people abandon ship when asked to do this kind of project, and that's actually great. We want the go-getters.”

As culture evolves

Conophy says companies should continue to take their cultural temperature on a regular basis just as they would plot the ROI of a marketing campaign.

At Situation Interactive, where flexibility is highly prized, the company’s core values remain constant. But the culture conversation goes on. Human Resources supervisor Taylor says when she was hired, she assumed her role would be the conventional one: recruitment, payroll, and benefits. The company president had other ideas.

“He hired me to be the voice of the people, from more of a cultural standpoint,” Taylor says. “I think people need to start using HR in that way, to be the voice of the team, especially in a small agency. It changes what HR can do.”

MultipleLocations_Body.jpgby Robert Lerose.


When Hurricane Sandy hit the Northeast last year, thousands of businesses suffered devastating damages, prolonged power outages, and disrupted sales. Now, imagine a small business owner who operated at multiple locations, some far removed from the hurricane's path and you'll see an unexpected benefit from having several business locations.


Of course, avoiding a natural disaster is probably not the first reason that a small business owner would open secondary locations. But whether you set up in a distant geographical area or just across town, success in managing multiple sites ultimately comes down to formulating prudent strategies, installing competent people in leadership roles, communicating clearly and frequently with key team members, and tracking results.


Consistent procedures

Expanding your business provides many advantages, such as not starting from scratch. You can use some of your existing infrastructure and systems already in place for the satellite locations.


"If you open up another location, most likely you aren't going to have to duplicate everything that's in the company," says Tim Smith, principal of The Plaid Group, a Houston-based operations consultancy. "You could add sales by building on what you have without having to increase as much back office [support]."


Putting some standard operating procedures in place can result in a consistent, streamlined organization that delivers the same efficient response at each location. For example, Smith says, having a procedure for handling seven to ten core daily activities of the business is a great foundation.


Establishing measurable targets and making sure that every employee knows what the business owner expects is vital. "The person who is responsible for the second location needs to share the definition of what good performance looks like," Smith says. "It could be customer service, profitability, on-time performance—whatever criteria the owner uses to determine that the second location is doing well."


https://smallbusinessonlinecommunity.bankofamerica.com/servlet/JiveServlet/downloadImage/4542/Image-CTA-v2.1.gifSmall business owners must also stay in touch regularly with the teams in the branch locations. In one scenario that Smith was intimately involved with, the operations manager at an industrial distribution company has a conference call with the managers at all his locations every other week. On off weeks, the ops manager checks in with the branch managers individually. The calls serve multiple purposes: they announce initiatives that are underway, and they also allow managers the opportunity to talk about things that they might be wrestling with. "It creates collaboration," Smith explains. "The next time that a branch manager has a problem, they'll turn to their peers before they go to the owner to borrow his time."


This kind of collaboration and relationship building can lead to handsome payoffs. For example, Smith once worked with a company that was suffering because it had 15 locations, and each one had their own individual protocols. Smith got all the branch managers to hammer out consistent procedures for their core activities, document them, and train everyone uniformly across the company.


"One of the concrete benefits that came from that is we reduced inventory losses by 75 percent within two years," Smith says. "We also improved our relationship with our suppliers, because the accounting department now had proof that they received the product and could pay the invoice."


MultipleLocations_PQ.jpgPractice the basics

Besides a hedge against turbulent weather, having more than one location may increase your buying power.


"Since you're buying for multiple locations, you should be able to participate in some additional discounts from your vendors," says Bert Martinez, president of Bert Martinez Communications, who operates offices in both Houston and Phoenix.


In some instances, it may not be possible to come up with a mirror image of the main office in an outside location. "The mistake most people make is that they don't investigate the new area enough," Martinez says. "Opening up that second store needs to be treated like a brand new business—not like you're duplicating an existing business—because typically that new store has a new neighborhood and a new set of demographics. You might have to market that business slightly differently."


Still, like Smith, Martinez sees the big secret to success as having a documented system that can be replicated and taught to the key people in your workforce—then verified that they are using the system properly. For example, retail small business owners could send a secret shopper into a store location to see if sales members are following established selling procedures. Or, have a friend call a business site and take notes on the conversation to see how the in-office customer service team handles phone calls and other issues. Lastly, test your managers—literally.


"When you're having your weekly meeting, drop down a pop quiz," Martinez explains. "And be open-minded enough to know that you might have to make a system change. Little problems can be addressed and dovetailed right into the system."


Managers who depart from proven protocol on their own might be surprised at how fast things can turn sour. For example, Martinez was hired by a CBS affiliate in Los Angeles to improve the sales for one of their radio programs. After implementing a comprehensive new set of procedures, sales jumped from around $10,000 a month to $50,000 a month in only three months. But when Martinez did an audit of the program six months later, he discovered that the manager had begun to deviate from the system and to cancel the weekly meetings. Result: sales plummeted by almost half.


"Your results get better and better and better as long as you continue to get brilliant at the basics," Martinez says. "The system is responsible."


Trust others

On a personal level, small business owners also need to be honest with themselves and accept that they will have to trust others to oversee operations without their direct supervision.


"If you like to micromanage, then you're probably going to be frustrated," says Randy Moon, president of RMoon Consulting in the Dallas-Fort Worth area. "Don't be afraid to hire someone smarter than you or better than you in other ways. Combined, you can be a powerful team."


When Moon consults with a business about expanding, he does an assessment on the industry itself to see if there are other cases of stores that operate multi-site locations in the same niche. He also recommends that small business owners take full advantage of technology to stay in touch, whether in a video chat on Skype, or by cell phone or email. That said, it is critical that owners still show up regularly at their various locations.


"You have to make your presence known periodically, especially in certain types of labor intensive businesses where there are a lot of employees," Moon says. "They expect to see the owner. When the owner shows up or has lunch with the employees, it makes people feel that they're not out there on an island."

QAWeinschenk_Body.jpgby Erin McDermott.


Want to get something done? Well, stand up straight when you’re talking. Keep your hands with open palms at a 90-degree angle from the body with your fingers together. And here’s a bonus: Remember that you don’t just like chocolate—you are a chocolate eater. Those are a few of the clever, sometimes-subliminal tricks described in How to Get People to Do Stuff: Master the Art and Science of Persuasion and Motivation, a new book by behavioral psychologist Susan M. Weinschenk. The Psychology Today blogger and business consultant known as “The Brain Lady” has mined academic and scientific journals for the subtle psychology that helps people better communicate their wants and needs, and the art of slyly getting others—like employees and customers—to do what you want them to do via physical and verbal cues.


Among her strategies:


  • People unconsciously interpret and react to body positions in conversations. Face your colleague directly (it shows confidence), don’t tilt your head (an angle can convey submission), and keep your weight balanced on both feet (slouching undermines your authority).


  • When you’re talking to a group, keeping your palms open and at a 90-degree angle from the body with fingers together shows you have confidence and expertise about what you’re saying, Weinschenk says. But touching your face, hair, or neck makes you look nervous or tentative, as do hands grasped together in front of you.


  • When asking people to do stuff, use nouns rather than verbs. When you invoke a sense of belonging to a group, people are much more likely to comply with your request. For example, research shows that if people say: “I am a chocolate eater” versus “I eat chocolate a lot,” it affects the strength of their preference for chocolate. “Eater” is a noun. “Eat” is a verb.


How to Get is a great read for anyone trying to lead people. Writer Erin McDermott recently chatted with Weinschenk about the strategies she describes, adopting a “persona” to get things done, and how all of these behaviors can translate online.


EM: Is there one physical gesture or stance that you think is paramount for leaders to consciously think about? And one they should also avoid?

SW: It’s so hard to pick just one.  I think eye contact is critical, as well as a hand gesture for when they are sure of what they are saying. Men should avoid putting their hands folded in front of their body. Women should avoid tilting their head.


QAWeinschenk_PQ.jpgEM: I had a doctor tell me about his ‘doctor authoritative persona’ that he adopts on the job. How can a small business owner find that “voice” and stick to a persona, particularly if they’re not so authoritative outside of the office?  

SW: Some professions have certain types of influence ‘built in,’ for example, the doctor you mentioned. Doctors can easily use authority. But other professions may need to try a different method. You should use what comes naturally to you. You want to amplify your own persona so that it comes across as natural and sincere.


I had a client whose natural persona was very high-energy, and kind of funny and clever. He thought that to be a successful consultant he had to be very serious, calm, and authoritative. I convinced him to try being more himself, and showed him how to use his naturally high-energy level, sense of humor, and cleverness to be effective. I had him practice by answering questions and presenting on camera and then we would watch the videos together, so he could see what he was doing and what impression he was making.


EM:  How can you deal with someone who resists being “shaped”?

SW: If you are doing shaping correctly, there isn’t resistance. The key is to pick reinforcements that match the person—that are what the person really wants.


Image-CTA-v2.1[1].gifLet’s say I’m trying to get one of my employees to speak up at group meetings. He seems reluctant to do that, so what I do to shape the behavior is to “reward” him—offer reinforcement—when he looks like he is engaged in the conversation. If he’s looking down at his notes, I don’t reinforce that behavior, but if he looks attentively at the people talking, then I do offer reinforcement. But what should the reinforcement be for the first step of this shaping behavior? If he doesn't like speaking in front of the group, if he doesn't like being singled out, then calling on him, or calling attention to him might not be reinforcing. So I don’t want to say, ‘Kevin, you look like you have an idea. What do you think about this?’ Instead, I might decide that what Kevin really wants is to feel like he fits in and that others like him. Therefore, I might try just a small fleeting smile in his direction when I notice that he is actively engaged with eye contact with others. It’s subtle, but it’s an important difference.


EM: How can a teacher/manager learn to control their instincts, which may be to correct what an employee is doing wrong at each step of an instructional process? And if the mistakes continue, what’s the best way to address them so that it stops?

SW: Being a good teacher means applying the science. It means working on it over and over until the “right” behavior on your part is the new instinct. You have to train yourself before you can teach others.


Let’s say that a manager is constantly correcting each small step and you want them to wait and only correct after the task is completed. First, draw their attention to the fact that they are interrupting with constant feedback. They may not realize they are doing this. Then model for them—for example, with role play—how and when you want them to interrupt with feedback. Now practice in a simulated situation where they are giving feedback. Every time they do it “wrong,” ignore them. Every time they do it “right,” reinforce by letting them know they’ve done a good job. Keep track of their progress—to invoke the desire for mastery—until they are only interrupting at the correct intervals.


EM: You’ve also done a lot of work with user interfaces and design in the digital world. So one natural question arises from your book—how do you get people to engage with a small business online, whether it’s social media or a blog?

SW: Everything in the book can be applied to the digital world. Think about which of the seven motivational drivers will speak to your particular customers, and then decide how to use that driver. It’s different for each small business. For some small businesses, their customers will be most motivated by belonging to a group, and for others it might be that the desire for mastery is the strongest motivation. Do your homework and understand which of the seven drivers are the most important for your audience.


This interview has been edited for length and clarity.

PetsAtWork_Body.jpgby Heather Chaet.


You’ve heard it over and over again: office life today is much different than a generation or two ago. Jeans? Once forbidden, they are now perfectly acceptable to wear to a board meeting. Working from home? No longer frowned upon, but openly encouraged. And now added to the list of newly accepted practices—bringing your dog or cat to the office. But how do you know if your company should institute a Fido-friendly policy or be a pet-free workplace? We’ve detailed the pros and the cons of having furry friends curled up in the cubicles.


Pets = Productivity? 

Many large and extremely successful companies allow pets at work–Google, Amazon, Ben & Jerry’s to name a few—and they have research to support their pro-pet choice. Studies have shown that if Molly the beagle or Cindy the calico accompany workers to the office, they are more productive, efficient, and happier. Trupanion, a pet insurance company based in Seattle, Washington, has been pet-friendly since its beginnings in 1999 and currently, with 250 employees, has a one-to-three pet to employee ratio, one of the highest in the country. “We recognize the benefits every day of allowing pets in the workplace,” says Trupanion’s founder and CEO Darryl Rawlings. “When we need to take a minute to process our thoughts, our furry friends are right by our side for petting,” he explains. “When we're meeting a new co-worker, our pets help break the ice. And if we need to work late, we don't have to worry about rushing home to a lonely pet.”


Granted, for a pet insurance company, having an open doggie-door policy may seem an obvious choice. However, other small businesses not tied to the pet industry also encourage their employees to bring pets to the office for similar reasons. “A simple touch, a look of contentment, a break for a little playtime...all work toward a more laid-back atmosphere where creativity can flourish,” says Dick Grove, CEO of INK inc., a public relations firm based in Kansas City, Missouri.


Not For Everyone

Just because you don’t allow pets in your office doesn’t mean you are anti-pooch. Many small business owners love their pets but have found four-legged friends and their workspace just didn’t mix. “Having your dog hang around you all day while you're unavailable to give him/her the attention they deserve isn't really fair,” notes Gregory Ciotti, marketing director at Help Scout, a Boston-based email support software company. “It’s also unfair to assume that all of your co-workers are comfortable having your pet around all day, let alone the distractions they might cause.”


Although many companies cite an uptick in creativity and productivity when pets are around, Shreyans Parekh, director of business development and marketing for Koyal Wholesale, the world's largest wedding and event-supplies company, discovered the opposite. “We ran an experiment allowing dogs at work to lower stress levels and increase productivity,” says Parekh. “After four months, we eliminated it. Productivity, quarterly numbers, and error rates did not improve with the pets being present—in fact, [they] dropped during some weeks.”


Often, health concerns take priority over pet-friendly policies, especially when space is an issue. Self-proclaimed dog lover Kim Laudati owns two luxury beauty clinics, both of which are located in prime real estate areas of Manhattan. “At both locations, the subject of pet allergies is of great concern,” says Laudati. “I really wish that I had the square footage to have a dog sitting space so owners could bring their pets, but square footage is a premium in any big city, and much more so here in New York City.”


PetsAtWork_PQ.jpgBones of Thought to Chew On

No matter what you decide, guidelines regarding your pets in the workplace policy should be in place on the first day you start your business. If you keep your company animal-free, one or two lines stating that in the company handbook is fairly simple. However, allowing furry friends in the office requires detailed policy guidance to create an environment that is healthy and happy for both the pets and employees. Dr. Mallary Tytel, president and founder of Healthy Workplaces, LLC, works with small businesses to develop and sustain positive, productive, and successful work cultures. She says welcoming pets in the workplace is not for every business, but those that do need rules to ensure comfort and safety of both the employees and pets. “Most of the rules will be common sense, but paying serious attention to proper office etiquette is critical,” says Tytel.


What to outline in that pet policy? Everything from detailing the criteria on how animals are deemed acceptable to bring to the office to requiring up-to-date files on vaccinations and certificates for every pet that comes through your doors. “Communicate and enforce standards of behavior,” says Tytel, “One example is three accidents and you're out. [Also, be sure to] uphold a zero tolerance policy for any aggressive pets.” Tytel also suggests designating areas where pets do not go. “Identify and implement pet-free zones. These can include meeting areas, conference rooms, employee break rooms, cafeterias, and rest rooms,” she says.


Trupanion’s Rawlings agrees that implementing a finely tuned office policy is vital to reap the benefits of having pets at work. “We developed and tweaked our office pet rules to create a safe and productive environment for both employees and pets,” he says. “We have a designated Pet Team of employees, including those with veterinary clinic and pet care facility experience, who provide guidance and review incidents. Employees at Trupanion have a clear understanding of our office pet rules which apply equally to everyone from interns to executives.”


Though not as vital as that health insurance plan, definitive guidelines about pets in the workplace are key to the success of your company. And, remember, if furry friends are a no-go, yet you yearn for a pet in the workplace, there’s always Plan B: Bubbles, the beta fish.

TeamofRivals_Body.jpgby Iris Dorbian.


America has always been imbued with the spirit of competition, especially in sports. Whether it’s a swimming race at a national heat or a championship tennis match, the drive to win is a powerful catalyst.


A similar mindset exists in the workplace, where very often employees vie for leads, coveted accounts, or simply power, with the same gusto they might display at an athletic contest. However, if not harnessed properly, competition can lead to a toxic, cutthroat culture resulting in high employee turnover and erosion of morale.


For small businesses with a skeletal workforce, this scenario can have particularly dire consequences to the bottom line. How then can internal competition at your workplace be leveraged positively and in a way that will strengthen your company’s bottom line? Below are a few tips:


Avoid positioning employees against each other

This is a surefire remedy for internal discord and disharmony. If you’re issuing a challenge to staffers, let them know what they will be judged on. Emphasize the effort.


Don Fornes, founder and CEO of Software Advice, an eight-year-old software consulting company based in Austin, Texas, often works with small business clients and agrees. “Don’t make it a zero-sum competition,” he stresses. “Rather make it where theoretically everyone can win.”


For example, Fornes says everyone at his company is eligible for the same rewards. “All employees receive a bonus if they hit their sales or performance goals,” he explains. “We don’t just offer a bonus to the one person who performs the best.”


TeamofRivals_PQ.jpgDon’t overstress the rewards

This takeaway might sound counterintuitive to anyone who has ever entered a contest or race but sometimes, it truly is the spirit of competition that drives and galvanizes people to do their best. Make the challenge light-hearted and fun. Employees shouldn’t feel that they’ve let down the entire organization because they couldn’t keep pace with a goal or win a challenge.


Kristy Sharrow, director of marketing for LevelEleven, a Detroit-based provider of software solutions that caters to small businesses, concurs. “The prize is less important than most people think,” she explains, adding that many of her company’s clients have run successful competitions that offered only “bragging rights” or “inexpensive incentives.”


One client, in particular, Sharrow notes, infused its competitions with playful humor. “They offered incentives like toy chatter teeth or a plaque that said, ‘Chatter It Up.’”


Her own company takes part in similar whimsy. “We run cold-calling competitions daily for a macho man figurine and everyone gets fired up to win it,” she says. “Another client just ran a contest with an incentive of milk and cookies. The employees loved it. Most of the time, it’s the competition itself that motivates employees—not what they’ll win.”


Emphasize improvement

To avoid turning your team of rivals into a team of backstabbing, Machiavellian power players, it’s important to place a premium on improvement rather than winning at all costs. Such a positive reinforcement may result in happier and more confident employees who may be induced to go the extra mile for you when times get tough.


Jim Grew, president of the Grew Company, a consultancy that frequently works with small businesses, subscribes to this best practice. Having mentored many small business leaders, Grew looks especially askance at the negative aspects of internal competition.


“Usually, it’s great at first, but then it erodes into competition for its own sake, with the wrong priorities emphasized,” he says.


Instead, says Grew, small business owners should reward improvement. “This requires carefully defined and specific targets, short timelines [to achieve goals] and encouragement by management,” he explains. “Try with two teams who may or may not compete directly. Ask the leaders what is one thing they could do to ramp up results in an amazing way? Guide them in picking the activity, and ensure that the measure is unambiguous. Tell them it’s a test.”


Grew tried this precise approach with a mid-size manufacturing client. “[We helped them structure] a small monthly bonus for all their employees if all orders were shipped on time with no errors or quality problems,” he says. “Earnings jumped $1 million in a year.”


Don’t make the competition interminable

To foster internal competition that will benefit your bottom line, make sure that the challenge you issue is for a specific length of time. You want to motivate your employees—not make them feel they’re running a marathon. With no end in sight, staffers might give up prematurely out of sheer fatigue, boredom, or frustration.


Sharrow echoes the sentiment. “If a [contest] drags on, it’s difficult to keep employees motivated to compete,” she says. “We suggest competitions run for anywhere between an hour and a few weeks. If it’s around something like a quarterly bonus, competitions can run longer. But that should be the exception.”


Keep employees in the loop

Lastly, to increase and maintain employee engagement, make sure each competition participant knows their individual standings as well as the deadline for the competition. Use in-person meetings, social media platforms, and e-mails to communicate updates. And be sure to stay consistent. If employees become confused about the details of the competition, the entire exercise loses its effectiveness.


Using competitions or challenges to motivate your staffers can be a great way to boost your bottom line while increasing employee engagement. But make sure they’re executed in a manner that encourages effort. Otherwise you may end up paying a costly price when it comes to both company morale and profitability.

Hiring-Interns_Body.jpgby Susan Caminiti.


Remember when you were in college and couldn’t wait to get some work experience out in the so-called “real world”? Well, there’s a current crop of college students who feel the same way, and when utilized correctly, they can be a big help to your small business.


Contrary to what you might think, college interns aren’t just for Fortune 500 companies. Whether for the summer or during the fall and spring semesters, hiring an intern enables you to influence the next generation of professionals that will soon be out in the workforce—and gives you valuable insights from young, enthusiastic men and women who are interested in your industry. In fact, in a survey of their members, the National Association of Colleges and Employers (NACE) reports that employers last year planned on hiring 8.5 percent more college students for internships than they did the prior year.


Before you rush out to your local college or trade school to find students to hire, however, there are some basics do's and don'ts of internships that are important to understand. Some are simple common sense, but others, if violated, could run afoul of the Fair Labor Standards Act.


Define the job

The first thing to understand is that these opportunities are more for the benefit of the college student than your small business. Think of internships as a smart way for you to take your experience and success and pay it forward. That's not to say, however, that there can't be an upside for your company.


That's why it's important to take the time to define what you really expect from any intern you bring in—the same as you would a full-time employee. Decide on the job functions, how he or she will benefit from the internship, and who will supervise the intern.


Crissy Koehler, vice president of sales and marketing for Parties That Cook, a San Francisco-based firm that stages hands-on cooking parties and corporate team-building events, says that her company hires interns for its marketing department and for its kitchen management functions. “The students we bring in for our marketing department need to be proficient in social media and communications,” she says. The students in the kitchen management program need food- and cooking-related skills.  “We make it very clear in our job descriptions what the candidate will need for a specific internship,” Koehler adds.


Hiring-Interns_PQ.jpgGet your staff involved

Tara Goodwin Frier, founder of the Goodwin Group, a public relations firm based in Walpole, Mass., has two to three unpaid interns working for her at any given time. She typically finds them by attending college fairs or through the connections she's developed as a guest lecturer at Boston University.


While she always makes sure to interview each candidate herself, she also has her younger employees interview the college student as well. These “peer interviews” as she calls them, often reveal more than what Frier will be able to glean. “It’s amazing what a college student will say—or reveal—to someone closer to their age,” she says, noting that some candidates have admitted during the interview process that they’re not even sure what they want to do with their lives. “As much as we value transparency in my company, I do tell these students that that’s something they probably don’t want to repeat in other job interviews,” Frier says.


Decide paid or unpaid

Given that most small businesses are not flush with money, many opt to offer unpaid internships. In most cases, the student will receive college credits for the hours worked in lieu of a paycheck. While hiring an unpaid intern is perfectly legal, there are some guidelines established by the Department of Labor that must be followed. Among them: The intern’s training should be centered on the skill they’re pursuing in college—writing, accounting, culinary trade—and not something unrelated to their studies. In other words, having an unpaid intern around as a source of cheap labor to pick up office supplies or fetch your dry cleaning would likely be frowned upon by the Labor Department.


Frier doesn’t pay her interns, but she does cover expenses related to any events she has them attend on behalf of the company and its clients, and does offer a stipend of several hundred dollars at their end of their internship. “They are getting college credit for the time they’re spending with the company, but I also think the stipend shows that we value their contribution,” she says.


Be ready to offer feedback—and patience

Though some interns will shine brighter than others, it’s important to keep in mind that they’re still college students and will likely need some gentle course correcting—or sometimes more—while they work at your company.


As a public relations firm with several high-profile clients, including the NFL’s New England Patriots, Frier often needs her interns to interact with reporters. “One of the things I noticed was that college students lack telephone etiquette,” she says. “They’re so used to simply texting or emailing.” To break them of that habit, Frier says she’s written out scripts for what they need to say on the phone when they reach a reporter to figure out if they’re interested in covering a particular event or client. “We work in a multi-generational world,” she says, “so it’s important that we stay aware of the skills that each generation brings with them—or doesn’t.”

HireaCEO_Body.jpgby Susan Caminiti.

It may sound counter-intuitive, but the skills needed to start a small business—perseverance, patience, and passion, to name a few—aren’t always the same ones necessary to take a company to the next level. Sure, as the founder you’re the person who came up with the brilliant idea for your product or service, and can zealously promote it to potential customers better than anyone. But if you can’t (or don’t want to) deal with the day-to-day functions of running a growing enterprise, it might be time to consider bringing in a chief executive officer.

Charley Polachi, a partner at Polachi & Co., an executive search firm in Framingham, Mass., works with many small companies as they’re entering their early growth stage. He says the first step he recommends for any founder looking to hire a senior manager is to define the pain they’re trying to address. “Usually it’s a matter of too much or too little,” he says. “The small business owner is either too busy and can’t keep up with all aspects of the business adequately, or the business has stalled and he or she needs someone who can come in and move it ahead.”

Know what you want

Regardless of which scenario is driving the decision, the experts we spoke with all agree on one thing: define the CEO job thoroughly before you start your search. It’s not enough to say you want someone with financial or organizational skills. As you draw up a detailed list of the attributes and qualities you’re looking for, go a step further, suggest Polachi. What functions will this person be responsible for every day? What are you able to pay? And of course, as the founder, what roles and duties are you willing to realistically delegate? “Very few small businesses need a clone of the owner,” explains Dan Bowser, president of Value Insights Inc., a business valuation and exit strategy consulting firm based in Summerville, Pennsylvania. “When you’re drawing up the specs for this new person, you want to hire someone with skills and abilities that you don’t have.”

Evaluate the person, not just the resume

Once the job has been defined, don’t rush through the interviews. “There should be no fewer than three interviews when you find a promising candidate,” says Polachi. Each time you bring them back, the conversation should delve deeper into determining if you’ve found a good fit. “Ask them if they’ve ever scaled-up a business and how they did it,” he adds. “When you’re bringing someone into a small business in a senior position, his or her management style is absolutely critical.”

That’s because the skills and style that worked wonderfully in a billion-dollar corporation with thousands of employees doesn’t always translate well into a million-dollar organization with dozens (or fewer) workers. “There is a huge difference in support and responsibilities between a big and small company,” observes Bowser. “Everything from having to make your own travel arrangements to the ego boost that comes from working for a big company—all those issues have to be considered before bringing someone into your small business. I’d have real concerns about an otherwise great candidate if all they have is big business experience.”

HireaCEO_PQ.jpgDon’t expect perfection

What if you do everything right to find a CEO for your company and the person still doesn’t work out? For starters, don’t panic. Experts say most small business owners aren’t terribly good at (or even like) the hiring process, so the chances of getting it wrong—even when looking for a senior person—are pretty high.

John Brown, president of the Business Enterprise Institute (BEI), agrees. He recently worked with a couple that was routinely clocking 50 hours to 60 hours a week at their small business and hadn’t taken a vacation in 15 years. They hired a senior manager to relieve some of the burden, but when he didn’t work out they moved him into sales and contacted Brown about selling the company. “They were so burned out and so sure they’d never find the right person that they just felt they had no choice other than to sell the business,” he says.

To avoid that sort of draconian response, set 60- and 90-day performance reviews once you’ve hired someone into a senior position. “You’ll probably know within the first 30 days if this person is going to work out, but after 90 days you should certainly have a feel for whether this was a smart hire,” says Brown. And if it’s not, Brown says he likes to remind his clients of management consulting guru Peter Drucker’s advice: Hire slow and fire fast.

Understand your new role

“Someone can be an ex-CEO of a company or an ex-president, but no one ever introduces themselves as the ‘ex-founder’ of a company,” says Polachi. “Once you’re the founder, you’re always the founder.” That doesn’t mean, however, you’re going to play the same role if you’ve decided to bring in a CEO.

Bowser advises clients to take the time to introduce the new manager to existing staff, outline his or her responsibilities within the organization, and then clearly state that this new person has your full support. Do not tolerate end-runs around your new hire by employees who say they’re more comfortable working with you. “That will only confuse people even more and undermine the person you’ve brought in,” Bowser says. “Calmly explain that the new person is now handling some of the duties you had been and ask them to work directly with him or her. Eventually employees will get the message.”

Telecommuting_Body.jpgby Robert Lerose.


When Marissa Mayer, the recently-installed CEO of Yahoo! rescinded the company's permissive telecommuting policy and required employees to work on-site, it sent ripples throughout the business world. Some critics of her decision say that it unfairly undermines the work-life balance of hard-working households. Supporters argue that regular face-to-face interaction fosters creativity.


The jury is still out, but one thing is clear: Mayer's decision sparked a conversation about the gains and losses of a telecommuting arrangement. We checked in with three small business owners to get their perspectives on this heated topic.


Clearly define expectations

To begin with, some people mistakenly conflate flextime and telecommuting. "The umbrella term is flexible work arrangements," says Pat Katepoo, founder of WorkOptions. These arrangements cover a variety of situations, including a compressed work-week, part-time schedules, job sharing—and telecommuting. The flexibility lets you "change when you work and how you work," she says. "Telecommuting is a change in where the work is done, [such as] at home, the coffee shop, or a library."


Katepoo says that telecommuting provides tangible benefits to both sides in the relationship. "For employers, the big gains are in productivity, retention, and reduced absenteeism, since [bad weather] or a sniffle won't stop [telecommuters] from doing work that day," she explains. "Employees save time and get more control over their work. Their perception of stress is less and they can actually do more work." Studies and surveys support Katepoo's findings.


And the drawbacks? Managers who are used to having workers in the office at their desks may have a hard time keeping tabs on their telecommuting staff. For the latter, being isolated from their fellow workers or lacking the self-discipline necessary to focus on work by themselves can seriously disrupt the new routine.


For a business that is trying telecommuting for the first time, there are some common issues that need to be addressed in advance to make the transition smoother, including setting a schedule, establishing work goals, and building a communication plan. For example, a telecommuter could work remotely on Tuesdays and Thursdays, accomplish an agreed-upon set of tasks, and report to their supervisor at the end of the day by email. Another communication option is Google Hangouts, which lets up to 10 people have an online video conversation.


Managing remote workers sometimes requires a special set of skills, so Katepoo recommends the tools and resources found at When Work Works and the Society For Human Resource Management. Establishing a telecommuting relationship takes patience and willingness. "I do suggest a minimum trial period of at least three months and up to six months," Katepoo says. "And the trial period should not be seeing if [telecommuting] works out. It should be working out the issues that surface [in order to make it a viable working arrangement]."


Telecommuting_PQ.jpgBe accountable

For companies that allow telecommuting, it's not uncommon for workers to split their time between the office and a remote location. However, some business owners have done away with a central office entirely and have every member of the team work on their own remotely.


Case in point: The Content Factory, a Pittsburgh-based public relations and social media marketing agency. Founded in 2010, it has a staff of about eight made up of contractors and full timers, as well as a fluctuating number of part-time service providers.


"We thought we were going to go the employee route, but when we outlined the job responsibilities and saw that it was very much project-based, we started changing the way we looked at how we were going to run our business," says Kari DePhillips, one of the co-owners. "We haven't really needed an office. You save so much time by working from home."


One of the early lessons DePhillips learned was to be very clear about the deliverables of each project and when they were due. For example, the agency is contractually obligated to produce a specific number of social media updates every day for their clients. Team members are held accountable for making sure the work gets done on time and that the quality of the copy is up to standards. "You can't have lazy people working from home," DePhillips says. "Some people can't handle the freedom. The big red flag is almost always [whether] deadlines are met."


DePhillips says that the majority of her core team is in Pittsburgh, but she has people working for her across the country. You might think that could lead to a breakdown in communication, but just the opposite appears to be true, she says. Her team stays in touch through Skype and e-chats and has regularly scheduled meetings—all managed virtually. "On the whole, I've been very impressed with the quality of the work that our team turns out remotely," DePhillips says.


Collaborate in person

As the owner of The Marks Group, a Pennsylvania-based company that sells software applications, Gene Marks closed down his physical offices eight years ago. Today, he and his 10 employees all work from home. Yet he also approves of Marissa Mayer's controversial decision to end the practice of telecommuting.


"There is something potentially significant to be gained from having your people around in the right work space and talking to each other, exchanging ideas, and discussing clients," Marks says. "All the collaboration technology we use—such as Basecamp and Dropbox—have great value, but sometimes I think we all take things too far."


By way of example, Marks explains that he has three people in his company each working on a Microsoft Dynamic project for three different clients—yet none of them are really talking to each other. "But if they were in an office working together, it's quite possible [they could suggest ideas] which might be more productive and create more revenue and more value."


That said, Marks has no plans to re-open a central office. Both he and his team members are almost always out on the road visiting clients or developing new business opportunities. "Telecommuting is not the answer for everybody," he says. "It worked for my company because [my team] was already used to doing it and being on the road. But I think requiring somebody to come into the office at least once or twice a week is a good thing overall."

NoNews_Body.jpgby Iris Dorbian.


When small business owner Hillary Kelbick co-founded MKP Communications, a financial services marketing-firm based in New York City, 18 years ago, one of her key goals was to treat her employees with dignity and respect. “That’s because previously [my partner and I] worked with someone who was like an abusive parent,” she recalls. “[There was] this notion that if someone was doing well then no one else was doing well. You were only made to feel good at the expense of someone feeling badly.”


Repelled by a work environment that resembled a toxic family, Kelbick seeks to run a business that subscribes to the Golden Rule: Treat others the way you would want to be treated. This means recognizing that employee feedback not only has immense value, but is also critical to the solution of a problem.


“Just because I’m the owner doesn’t mean I know the answers,” says Kelbick, who adds that she usually works with eight or nine salaried employees at a given time (not counting the myriad contractors and consultants hired on a periodic basis).


Case in point: In 2009, at the height of the recession, Kelbick’s business was experiencing, like many others in the country, severe financial straits. “We had a couple of years in which we lost more than we made,” she admits. “There were no secrets: people didn’t have enough to do.”


Seeking to keep her business alive, Kelbick held frank discussions with her staff, asking them for input. “I put forward the idea that everyone could take a temporary salary cut—or not,” she recounts. Her workers agreed and when business improved, their former salaries were reinstated, with bonuses added into the mix.


“I was also honest with letting them know I was getting a bonus, so I could pay them from that if there’s another economic shortfall,” continues Kelbick. By engaging her employees and making them feel they were part of the process, Kelbick not only avoided a business calamity—the closure of her business—she helped maintain positive employee morale and boost loyalty. To prove her point, Kelbick cites an uncommonly low attrition rate among her workers, most of whom she says have been with her company since its inception.


Certainly, being more “transparent” in ones’ employee communications is a solid best practice when it comes to increasing and ensuring company morale. However, some small business owners may be apprehensive about how to implement this “honesty is the best policy” due to bad experiences with past employers. What then are some takeaways that can help guide them in the right direction to secure employee buy-in?


NoNews_PQ.jpgDeliver bad news in person

Because many small business owners often have experience working in larger corporations where distant headquarters may not have regularly passed along important information about the company, some entrepreneurs may instinctively bring that same type of resistance to openness when interacting with staff. Aside from its basic disingenuousness, what makes this management style even more troublesome is that it can also blindside workers in a devastating manner.


Susan Baroncini-Moe, president of Business in Blue Jeans, an Indianapolis marketing consulting firm that frequently works with small businesses, recalls a near disastrous example involving a client’s financial hardships.


“Against my advice, the client kept the financial struggles of her company secret from employees,” recalls Baroncini-Moe “But you can't keep secrets very well in small businesses. Rumors about the company's troubles got started. Employees, assuming the worst, quickly started looking for new jobs and gave notice. Had I not come in and cleaned up the mess, my client might've lost her entire business, simply because she was too afraid to be transparent with her team.”


Keep staff in the loop when it comes to their performance

For many people, there’s nothing more disconcerting than to do a job and not get feedback except at the annual salary review. Avoid turning your business into a communications vacuum. Be proactive and fair when it comes to monitoring and assessing a staffer’s progress. It will not only help them but you as well.


Susan Johnson, owner of the Minneapolis-based Rue 48 Salon, a hair salon, is a passionate proponent of this management practice. Since launching her business three and a half years ago, Johnson likes to meet individually with her 12 stylists every 30 days for a one-on-one evaluation to discuss their performance and future goals. During these sessions, she will refer to reports that show each stylist how much product they sold the previous month as well as their customer retention rate. She says these confabs are highly beneficial to her workers who are paid on commission.


“It all kind of works together,” explains Johnson, a former social worker. “It’s teaching the stylists to take a hold of their own numbers and know what their paycheck will be next time. I explain to them when I set goals, it’s not to set goals for me to make money; it’s to make sure we survive. I don’t want anyone to lose their money.”


Acknowledge efforts of staff

This doesn’t mean you should gush over them nonstop if they’re doing well and forget you’re their supervisor. Rather, let a conscientious worker know that you appreciate his or her work ethic and the quality of their performance. But always be sincere in your language and demeanor and avoid glibness. Making workers feel that they’re important contributors to the fabric of your company and not just cogs in a machine will maintain employee morale even during challenging periods.


Don’t cloister yourself in an office

If you want to invest your transparency efforts with credibility, then you will need to show your workers you follow through on your promises.  An effective way of doing this is to work alongside your staff. Don’t barricade yourself behind closed doors in an office. Remove the silos and your workers will be more amenable to treating you with respect and opening up to you.


Salon owner Johnson agrees wholeheartedly.I will clean the toilets and mop the floors to make sure this place is up and running,” she says. “They see that and respect. It’s a lead-by-doing tactic. “


Semantics also helps. “Nobody has ever said anything about me being a boss,” she notes. “The way I refer to staff is that I never call them my employees. I say they’re my co-workers. They know I take the lead, but I do work alongside with them. I would shampoo one of their clients if need be.”


Whether your business is large or small, being upfront with employees can be an invaluable tactic to maintaining good morale. But it must be backed by sincerity and action. Otherwise no amount of transparency will help you win the loyalty and respect of your workers, no matter how seemingly well meaning you appear.

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