I’m Melinda Emerson (AKA “Small Biz Lady”). Each week as @SmallBizLady, I conduct interviews with small business experts on my weekly Twitter talk show #SmallBizChat. This is excerpted from my #SmallBizChat interview with Dr. Janice Presser (@Dr.Janice on Twitter) the Chief Executive Officer of The Gabriel Institute, and (with Dr. Jack Gerber) an originator of Role-Based Assessment (RBA). She is a recognized Thought Leader in talent development and measuring quality of hires in a business setting. Dr. Presser has served on SHRM’s Human Capital Assessment/Metrics Special Expertise Panel. Visit the website at: https://www.thegabrielinstitute.com/

Smallbizlady: What should I be looking for in my first employee?

Dr. Janice Presser: First, know yourself. What parts of your job do you love? What do you want to give over to someone else? Most important: what do you need to get someone else to do?

Approach the problem from the standpoint of your organization. Think of it as a living, breathing entity that has needs. You probably started with the vision of what your business will accomplish (your goals), so move on and consider things like ‘Which products or services will I be competing with, and how will I win?’ (your marketing strategy). Or, ‘If I am meeting all my expenses, what more will I need in order to expand?’ (your financial strategy)

While you are thinking at the level, you may realize there are things you really don’t like to do, but don’t think of them as weaknesses – think of them as clear indicators of what you need in an employee who strengthen your operation, and who can really shine.

Remember: you want to hire someone who will complement your skills, you don’t want to hire your ‘mini-me’!

Smallbizlady: When is it smarter to hire a consultant than an employee?

Dr. Janice Presser: Employees are expensive. It isn’t just the salary. You need a place for them to work, and you might need equipment too. Don’t forget that employee benefits you choose to offer, and required employer taxes, can add 30% or more to the cost of employing someone. Plus, as an employer, you take on some legal obligations (liabilities) that you might not have with a consultant. And last but certainly not least, you should be absolutely sure that you can keep an employee active and productive at all times.

The hourly rate of a consultant may seem to be high, but consultants give you flexibility that you do not usually have with an employee. For instance, you can negotiate with a consultant and ask for a flat fee for each task. You can bring them in as-needed and release them when the job is done. You can have a performance clause that pays them more when their results exceed expectations—or pays them less if expectations are not met. These days, many companies hire consultants with a ‘right to hire’ agreement, to ‘preview’ them as potential employees.

Some business owners hire people for full-time work, but pay them as “consultants.” Remember that the IRS has strict rules about this, and making the wrong choice can cost you dearly. Here’s the most important difference: a true consultant controls his or her own flow of work, and you are one of many customers. If you hire someone full time and you clearly control where, when, and how they work, the IRS may declare the person to be your employee and will charge you for back payroll taxes, plus penalties and interest.

Smallbizlady: What are the most important things to look for in a new employee?

Dr. Janice Presser: There are usually two key areas to consider: what they can do (knowledge, skill, experience), and who they are (respect, integrity, teamwork). Many employers put knowledge and skill first, but smart employers look for great team players who also have the right knowledge and skill (or the ability to learn quickly).

First think about job requirements. If you have absolute performance requirements, then experience and skill are also required. But in many businesses, some things take much longer to learn to do well than others, but most things are pretty easy to learn. So you may not need to hire people who have high levels of experience—and high salary requirements. If you have flexibility, pick the best team player who has the ability to ‘come up’ in the job.

Every job requires that people ‘team’ with others in some way. Make sure the person you hire will actually enjoy doing his or her job responsibilities, and has ‘teaming characteristics’ that match with the way you will need them to behave with others.

Smallbizlady: How will I know when a candidate is really the right person for the job?

Dr. Janice Presser: How do you know when you’re in a good relationship of any kind? It takes time, and even then, you may not be sure. Many employers use knowledge and skill tests, which can be helpful.  Others test for personality traits, but there is now a test called Role-Based Assessment that will predict the quality of a person’s behavior on a team. This gives you key information you need to make an informed decision, but remember that a relationship is a two-way street. You need to make sure YOU are ready to work with someone and YOU are the kind of team player you want to attract.

Smallbizlady: Should I hire someone I know?

Dr. Janice Presser: There’s a big difference between hiring someone you know because you’ve seen them in action and you’re confident they can accomplish what you need, and hiring someone like a friend or relative because they need a job and you’re being pressured to hire them.

Be careful about dual relationships. Best friendships and marriages may not survive the stresses of business and, as the song goes, ‘breaking up is hard to do’. You don’t want to add the pain of financial or legal problems to personal ones.

Smallbizlady:  How do I decide what to pay someone?

Dr. Janice Presser: What are the job requirements, and the level of expertise you require? And of course you need to consider your budget, and also the net benefits to your company (sales and profits) that is expected from a person in the job you are hiring for.

The person at a library reference desk can help you find reports and online reference sources showing the pay range for most common job categories. And there’s a similar useful tool at www.mysalary.com. It is intended for job-seekers, but the information is valid for employers, too….and it’s free. You enter the job name and zip code, and you get a graph with the range being paid in your location.

Pay isn’t everything, though. Consider non-monetary motivators that might compensate for offering lower pay.  Flexible hours. Easy access via public transportation.  Job-sharing. Opportunity to learn new skills, or to advance to a higher rank. Just remember, you need to treat employees equally if they do the same work, so get advice before you offer ‘creative’ options that might create liabilities or risks for your business.

Smallbizlady: What employee benefits should I provide?

Dr. Janice Presser: There are no laws (yet) that demand that you provide any benefits at all. But consider what is typical in your area and for your type of business. If your business is growing rapidly, you should consult a benefits specialist who can give you options. (The analysis may be free, if the benefits specialist also sells products such as health insurance or 401k plans.) Basic medical benefits for your employee sends the message that you believe that they are just as important to the success of your company as you are.

Before you hire, think through what you want your paid time-off policies to be. There are holidays to consider, as well as vacation and personal time. Many employers provide a fixed number of days per year for ‘paid time off’ rather than specify a number for vacation, sick time, etc. It’s easier to track and you eliminate people calling in sick when what they really want is a ‘mental health’ day off.  And while you are on this topic, you really should be developing or adopting an official Employee Handbook that spells out all of your company policies. You’ll find a free resource at www.business.gov. Enter ‘employee handbook’ in the search box.

Smallbizlady: How important is it to have a clear “job description”?

Dr. Janice Presser: If you want to be able to judge someone’s performance, you need to have a baseline of expectations that you both understand and agree upon. That, in a nutshell, is a job description. Some people go all-out and use special forms that include things like how many pounds you have to be able to lift and what the temperature is where you’ll be working, but for the typical small business, all you need to figure out is what the purpose of the job is, and what the employee has to actually do to fulfill that purpose.

For instance, let’s say you are hiring your first employee, an office assistant for your gift basket company. You currently do the sales, purchasing, collections, accounting, and marketing, in addition to designing, making, and delivering your products. So what is the purpose of the office assistant’s job? Probably to get the day-to-day work of the business running smoothly so you can concentrate on growing it. So you want someone who can understand what you are trying to achieve and help you get there.

Then you want to add the most important tasks, and finally, any requirements. Remember, a requirement is something you absolutely must have, and the more someone has higher-level skills, the more you will have to pay them!

A basic office assistant’s job description would probably contain a statement of purpose, a list of tasks, and a list of requirements. Here’s an example:

Purpose: Assist President with day-to-day operations of the company, including but not limited to telephone support, recordkeeping, and clerical functions.

Essential Tasks:

1) Answer customer and vendor calls and fulfill routine requests.

2) Maintain customer records in company database.

3) Assist with organization of materials, delivery, etc, etc, etc.

Requirements:

1) Ability to consistently interact with customers and vendors in a professional manner.

2) Basic computerized recordkeeping skills.

3) Ability to maintain order, etc (depending on specifics required for other tasks).

4) Special skills, abilities, licenses if required (for instance, current state driver’s license and clean driving record if you expect the person to need to drive while on the job.)

Smallbizlady: What do I do if it begins to appear that I made a hiring mistake?

Dr. Janice Presser: First get out the job description and figure out what your employee is doing – or not doing – that is raising red flags. Also have in mind exactly how you expect your employee to perform better. You are going to present your expectations in a matter-of-fact way, and ask your employee if they want to do this. Remember, your employee may also be thinking they made a mistake taking the job!

Set a time to review the job description when you both are calm and be specific.

For example, let’s say your office assistant is not answering the phone in a speedy manner and, when a caller asks for an item that is not in your catalog, the assistant says, “sorry we don’t have that” and just hangs up. This is clearly not good for business, but there may be different causes and solutions.

It may be that you just hired someone who doesn’t like speaking to people on the phone, which you are not likely to be able to change. In that case, let your employee know that business is growing and you expect the number of phone calls to triple in the next month. Then ask if they are prepared to deal with that. Give them your expectations in writing, and both of you sign off that you are in agreement.

But what if you have hired someone who really wants to perform well, but is afraid to ask you—or your customers—questions. In this case, do a little small business mentoring, and let your assistant know the reality that the customer comes first. Try a little role-play, and teach them when they should say, “let me see if I can get that for you” or “I’ll have to ask my manager about this”. It may be worth the investment of your time.

Smallbizlady: What should I do if I have to fire someone?

Dr. Janice Presser: First, think it through carefully. Are you firing them because they didn’t perform well, or because you have changed the job and they just can’t do it to your standards? Sadly, some good employees are let go simply because the work that they are good at has ceased to exist.

Second, whatever the reason for termination, you need to track performance, document any discussions, reprimands, or events that preceded the termination. These are necessary if you want to be able defend your position when they apply for unemployment benefits that may not be deserved.

Third, if it can be avoided, don’t fire anyone on a Friday or just before a holiday. Wait till a time when they can immediately start looking for another job. They’ll feel less helpless and they won’t have the ‘time off’ to stew and get angrier at you.

If you’ve given people warning and adequate feedback, firing for non-performance should come as no surprise.

Smallbizlady: How much background checking that I should do before hiring someone?

Dr. Janice Presser: Be careful here, and check out the current federal, state, and local labor laws. Checking credit history prior to hiring may be illegal in your state, and checking a person’s medical history definitely is.

Remember, while a background check might reveal some bad behavior, a clean background check doesn’t mean the person has never done anything – only that they haven’t been caught.

Many, many people have learned from their mistakes, and can be outstanding employees.  Many others may seem to be perfectly OK, but are actually trouble just waiting to happen. In a Role-Based Assessment, indications of positive teaming characteristics can clearly distinguish between the two.

Smallbizlady: How can I get my employees to work well together?

Dr. Janice Presser: You want great team players! Role-Based Assessment, or ‘RBA’, is a completely new way to predict how someone will work on your team. Since you are a friend of Melinda Emerson, aka SmallBizLady, you are going to get a special gift. When you are ready to hire your next person, whether that’s your first hire or not, you can use this link to use a ‘no-cost solution’ to receive RBA reports on up to five candidates – a $400 value, free!

If you found this interview helpful, join us on Wednesdays 8-9pm ET follow @SmallBizChat on Twitter.

Melinda F. Emerson, known to many as Small Biz Lady (or on Twitter as @SmallBizLady) is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure.  As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine recently named her one of the Top 20 women for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog www.succeedasyourownboss.com. Melinda is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media 2010)