Top 5 Personnel Mistakes by Small Businesses

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For all my talk previously about systems and processes, they are worthless if you don’t have the right people to run them.  Personnel is a tough area for small business owners due to a lack of experience in the personnel development process.  There are 5 mistakes that small business owners make with regards to personnel.

Mistake #1: Not defining roles for the partners in the business.

This applies even to the individual business owner.  It’s important to decide what roles that you will play in your organization both short term and long term.  It’s especially important with regards to partnerships.  I have personally seen the damage that is done in business when roles aren’t clearly defined for all of the players.  The Coaching Millions blog recently went over some solid guidelines for effective partnerships.  If you are in a partnership currently or are thinking about, define the roles of the partnerships as soon as possible.

Mistake #2:  Poor or nonexistent hiring practices.

When you are building systems and processes for your business don’t overlook the personnel aspect of the business.  Once you define what personnel you will need, it’s time to figure out how you will do it.  This includes having sound interviewing practices, doing background checks, reference checks, how to turn down candidates, where you go to find talent, job descriptions, offer letters etc.  A lot of small businesses try and wing this and look to hire people when a pressing need arises without little thought of the long term needs of the business.  Having the right practices will help to ensure that you get the right people and that you follow the correct labor practices when doing so.

Mistake #3:  Not knowing what you want or what you need.

As your business grows, you will need new people to keep your business  moving in the right direction.  One of the first mistakes that is made is not having a game plan for what position you want to hire for first once your business starts growing.  Beyond that, once the position is decided upon, chances are you haven’t really thought about what characteristics and attributes you want a successful hire to have in the position so you word your job description with generic and overused terminology that suggests that you aren’t sure what you want.

I’ll give you an example of this from Craig’s List:

I am a busy executive looking to hire, train and mentor an individual to learn my business. The person will be:
-Professional in appearance and demeanor
-A Highly motivated, teachable self-starter
-Be overly ambitious
-Possess the highest level of moral integrity
-Be looking for a long-term career,
-Have a highly flexible schedule
I am a demanding, aggressive senior executive who pushes people to their limits, but with that comes great
rewards. I will only personally train one person, so I am highly selective. I will teach you how to grow a successful
business with a high value residual income.

This above job description doesn’t even say what the job is. You can’t be this careless with your job description and expect to get the right people for your job in an efficient manner.  Someone whose worth hiring would look at the above job description and pass immediately.  It’s important to make sure that you figure out who you need first and what an ideal candidate will look like.

Mistake #4: Using faulty logic when hiring or promoting in your business.

In college I was involved in a fraternity. My favorite reasoning in the fraternity came when it was time to elect new officers to positions for the next year. For instance, we elected a guy for activities chair even though he never came to any activities. The logic? If we put him in charge of activities, he will come to them. The result? Not only did our activities suck but he never came to them either.

Another example is for our historian who takes pictures etc. We had a guy in our group who wanted the position and was an avid photographer. Who did we elect? A guy who didn’t even own a camera. The logic? We wanted to get him more involved. The result? That year may as well have never happened because there is no record of it anywhere.

I thought that my fraternity was uniquely stupid in this area until I got into the workforce and saw that places of business hired sometimes for terrible reasons as well. With small businesses it’s usually happens when they hire family members because of family pressure. The logic? Your brother just hasn’t done anything because he hasn’t been given the chance. The result? You find out right away why he hasn’t been given a chance because he is an idiot.

Sometimes we put good performers in other positions to make them more “well rounded” and then watch as we kill their career by putting them in a position that doesn’t match their skills. Kolbe has a C index that they use to match what you want from a position to what the skills of the candidate are. It’s a great tool to see how someone’s skills really match with what they are going to be required to do.   In your different roles you want to put them in a position to do what they do best and grow, you don’t want to stifle them by trying to help them be more well rounded.

Mistake #5:  No training program.

Small business owners seem to really learn this the hard way.  Initially a business owner is doing the majority if not all of the tasks in his business.  This is a great time to start putting best practices down on paper so that you can more easily train your replacement in this area.  Not giving an outline to an employee isn’t necessarily the key to them performing but it’s good to let employees know that you support them.  Having a training program is a good way to help them feel supported.  At the very least, it tells the employee you have thought through their development in the position.

Those are my top 5 personnel mistakes.  The great thing  is that these can all be easily fixed within your organization.  Some areas such as interviewing may take some time to get properly educated but shouldn’t be anything too extensive.  If the hiring process in your organization has holes, now is a great time to start patching them.

What personnel mistakes make your top 5?

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