Recruiting and Retaining Staff In A Small Business

By Ron Beilin and Paul DelFino

Over the years, we have seen the frustration, anxiety, and compounded challenges that small business entrepreneurs experience in managing their workforce. Often, emerging businesses grow from startups that include the entrepreneur and just one or two others. The perception is that growth and success bring more employees and compounded problems. Entrepreneurs often say, “It would be easy if not for the people issues,” or, “Sometimes I wish I had fewer employees and made less money, because then I’d be happier.”

Why do entrepreneurs feel like they suffer a heavier load with employee management issues than managers in larger companies? Do they? Our experience is:

  • Small businesses have many disadvantages in the human resources open market
  • Small businesses do not always leverage the advantages they do have
  • Reinforcement and continual application of basic management disciplines can improve the circumstances for small businesses

It’s Not a Level Playing Field: Let’s face it, scale and size provide purchasing power and leverage. The rule applies in human resource recruitment and investment as well as purchasing. Larger enterprises often:

  • Offer unique benefit programs and benefits not available to small businesses in terms of medical, retirement, deferred compensation, and other sophisticated and costly programs.
  • Offer defined and disciplined compensation programs with market-driven mid points to salary ranges and ongoing programs for compensation adjustments.
  • Offer career path counseling, structured and funded development and training programs.
  • Offer defined policy and procedures embedded with flexibility for the ever-growing demand for free time (leave policies, flexible vacation scheduling, personal days, etc.)
  • Offer a broader arena for socialization, with people who do the same things and think the same way having the opportunity to meet and expand relationships in a social setting.
  • Offer access to the latest and greatest in technology, or state-of-the-art equipment related to an individual’s vocation.

Can You Compete? Not listed above is one other secret weapon that the larger enterprise brings to the table: a dedicated human resource professional that develops and packages the above into a disciplined marketing program to attract the best employees. Unfortunately, in small businesses, that role is too often relegated to less than one percent of the entrepreneur’s time. But can it be done? Examination suggests it can.

Benefit Programs: Many state or local chambers of commerce and economic development initiatives provide group benefit programs. Some have grown in scale and sophistication to match those of larger companies. Also, numerous benefit consultants have worked with larger insurance and investment carriers to create unique and competitive offerings. A few phone calls could get you and your people just about any program you might wish for.

Salary Administration: Sample compensation programs and job descriptions are available online. Local salary surveys are available from chambers of commerce and other industry groups for the price of membership and participation. An investment of one day by one person could result in a respectable program any small business would be proud of. However, the investment is wasted if a disciplined performance evaluation program is not maintained.

Careers and Training: Not every person wants to be CEO of General Electric. However, most people want to learn! Every day small business mailboxes are filled with advertisements for training programs. Often these are discarded. What if you established a policy to invest $500 and two days each year for each employee’s development? For a company with ten people that is approximately a $5,000 decision, plus 20 days of time away from the office. Before you say no, remember that conventional wisdom suggests that it costs $8,000 to recruit and train one support or service employee. The key here is joint discussion with each employee on the plan for the year and the real need or benefit that can be applied to productivity gain and job performance.

Policy Manuals: Less than ten percent of businesses we enter that are under $10 million in size have an up-to-date policy manual. Sample policy manuals are quickly available from industry associations. These example documents can then be edited, customized, and printed for your staff.

Socialization and State-of-the-Art Work: Most entrepreneurs belong to an industry group or association. But few assign their employees to represent them in similar programs as members and leaders. This process is in itself an employee development investment. Beyond that, your employees could be pushing you for change. They can be your recruiters. The strategy requires confidence since they themselves can be recruited – but, with the above steps in place, who can compete with you?

Can You Win? Much of the commonly accepted wisdom about big business is crumbling:

  • Job security has eroded with layoffs and collapse of confidence
  • Stories of conversions and terminations of traditional pension programs to lump sum employee-funded initiatives leave many wary of long term commitments
  • Many employees have accepted that the world has changed and that their employer, whom they have not personally met, is not committed to them as an individual

The result is that many people now more interested in quality of life issues – knowing who they are working for and what their employer stands for. This fact could and should be your largest recruiting weapon.

It Always Comes Down To Time and Money: By now, you may be thinking that this advice is impractical – that you can’t afford to take these measures. Our response is that considering how much your company spends in payroll, can you afford not to?

Ron Beilin and Paul DelFino are the principals of the consulting firm Opportunity Inc. For nearly 15 years, they have assisted entrepreneurs in growing their businesses, responding to economic downturns, and merger and acquisition activity. Visit to contact them or learn more about their services.

[From Connection MagazineJul/Aug 2003]