To be successful as a small business owner, it’s crucial to find great staff members. Whether your business relies on full-time employees or part-time contractors (or, likely, a mix), you want to make sure you have the best possible people filling those roles. This is especially important if your business employs a small number of staff (let’s say fewer than 7 or 8), because each one of them is going to be carrying a significant portion of your business’ workload. And, if you’re working with a small group of people, personalities can also play a big role (after all, you don’t want to hire someone who’s going to mess up the group dynamic of your workplace).
So in the interest of helping you fill your positions with the best possible staff, I wanted to share 4 thoughts:
Thought #1. You get what you pay for
It’s possible to find great people who will work for a low salary—but it’s really difficult. And even if you’re able to hire a great worker at a low salary, you won’t be able to retain them (there are just too many job opportunities out there). Here’s a helpful way to think about this: if you need to hire someone, and you’re okay with that person being average or mediocre (or leaving you in 6 months,) then it might make sense to offer them a low wage. But if you need to hire someone with above-average competence and abilities, you need to pay them more.
Thought #2. Business is not a Zero-Sum Game
You might be under the impression that any time you pay staff members generously, this will reduce your profit—but in many cases this isn’t true. For example, let’s say you need to fill a position with someone who has a high level of competence, creativity, or autonomy. If your requirements for the position are this high, then it probably means that this position could help make your business more profitable—if you find the right person to fill it. And with higher profitability, you will be able to compensate yourself AND your staff generously.
Thought #3. Keep your eye on ROI
Before you hire someone, you need to calculate the return on investment (ROI) that you’d get from having a competent staff member in that role. (This applies equally whether you are hiring to replace someone in an existing role, or whether you are hiring someone for a new position that you have created.) If you think you’ll be able to increase your business revenue significantly by hiring a competent staff member, then it’s definitely worth paying that person generously.
And, after you make the hire, you need to keep returning to your ROI metric to make sure that your staff member is delivering and performing up to your expectations (and that you’re getting the return that you were expecting). You need to let them know that you have specific, high expectations from them—which is why they’re being compensated well.
Thought #4. Keep your expectations reasonable
Keep in mind that your expectations need to be reasonable—especially in today’s job market. Many Americans have gotten used to working less and demanding higher pay (and more benefits) for the work they do. This new landscape might require a mindset shift if you’ve been in business for a while; the salary you paid for a certain position in 2019 is probably not going to be enough today.
Also, it’s not helpful to use yourself as a benchmark for how hard your staff should work. As a business owner, you have a different level of commitment to your business than any of your staff members do. Additionally, the disruptions during the Pandemic gave rise to a different type of work ethic. Putting in long, hard hours is no longer in vogue—it’s been replaced by an emphasis on work-life balance, remote work, and mental health days.
Here is the key take-away
If you’re trying to fill a position in your business, and you need someone who is above-average in competence and abilities, it’s probably worth paying that person generously. Of course, you need to calculate the expected return on investment for that position to see exactly how generous the salary should be.
(In addition, I highly recommend using a probationary period with all new hires. It can save a lot of headaches.)
Over to You…
If you need help with staffing decisions, defining the roles within your business, or calculating ROI for different positions or staff members, VIP Business Coaching can help get on you on the right track.