The Balance Sheet
How to hire (and retain) people
Hiring and retaining talent in your business is probably one of the hardest things you'll have to manage as an owner, but there are things you can do to stack the odds in your favour.
When it comes to growing your business, beyond the supply chain, the associated base costs, the marketing and the sales, lies probably the biggest challenge of all - hiring - and then retaining people.
Hiring people - or more specifically, the right people - has always been hard. It might seem that post-pandemic things have become significantly tougher, and to some extent they have in terms of the market, but hiring was always tough. If we're brutally honest, finding that perfect fit, the person you trust deeply with your business, the level of talent that can compliment your own and grow with the business, who can embody and comfortably represent the business and brand you built - has always been very difficult.
What the pandemic really delivered was a form of additional market pressure, making hiring not significantly tougher - but significantly more competitive. A prospective employee now has more choice and more room for negotiation when they consider a role. They've likely had some enlightening employment experiences over the past few years. Maybe they've faced redundancy and the fear of financial loss and are hyper-focused on who can pay them the most tomorrow. Maybe they've seen their life impacted heavily by inflationary pressures and their financial position is unstable and quickly changing week to week. Maybe they've been able to work from home, and seen the positives that brought to their work-life balance. The fact is - the labour market has changed - and it has changed in favour of the employee.
In any competitive market, price usually becomes the biggest factor. That means that you have to pay the going rate at minimum to stay in the game. Paying above the going rate gives you more of an advantage. But as small business gets squeezed by rising costs on all sides, and as consumer spending lowers and there's less money moving around, deciding to significantly increase your labour costs might not be realistic.
So instead of looking at how we can increase the price of labour, let's instead look at increasing the value of labour. Value means, in this case, competitive elements which are not directly related to wage - but count towards the perceived total renumeration. As long as you're paying the going rate (and unless you increase that rate) perceived total renumeration is going to be your most competitive tool when it comes to landing talent for your business.
Flexibility
The days of 9-5 in-the-office are over. We don't know how to make this any clearer. It's gone. Dead. Past. We're now entering the future of work at 100kmph and the training wheels fell off a long time ago - and no matter how much you despise it, it's the new reality. By all means cling onto it if you must, but be aware that if you run a rigid office-based environment in your business with a non-negotiable 9AM-or-you're-fired start time, most future employees are going to be looking elsewhere for their next role. The most searched and applied for vacancies in the market currently are either 'remote' or 'hybrid' roles, and there's a reason for that.
People have come to realize that time-in-office (and the long commute to that office) is largely wasted time compared to the work they need to do. They've experienced working from home and adopted the technologies needed to communicate with others - and seen that they work and provide more personal effeciencies. More time with their children. More time with family. Time to exercise. Time to think. For those employees who experience disability or are neuro-diverse, this new remote-positive market is a huge win, allowing them to apply for the roles they want without the worry of physical and mental barriers. For those employees who cannot afford to, or choose not to live in larger metro areas, who cannot sustain a lifestyle there (for example due to family or health reasons), they can now apply for roles without geographical limitations that have persisted since the era of port cities. It's not the 1800's anymore. Unless you work in logistics, the chances are you don't need to be near the sea or airport.
If you're of the mindset that you don't trust people working remotely, or feel that your business is not set up to allow for this environment (or you don't know where to even start) then it's likely you are really the blocker in hiring and you should look at ways to address those issues.
Of course not every business has office-based roles. Perhaps your business relies on in-person shift work or site-specific operations. Flexibility doesn't have to mean 'sitting on Zoom at home'. It's about being generally empathetic towards those you hire, and at a basic level understanding that they have lives beyond work - childcare issues, health issues, family issues - and providing a framework in your business to address, recognize and coordinate around those issues. This framework could simply be presenting a less dictatorial way of people management, and the adoption of a more discussion-forward allocation of work and responsibilities.
The bottom line is people want flexibility, and those businesses that accommodate flexibility will be more competitive when attracting future employees and retaining existing ones. Consider what might provide flexibility in your business, talk to your employees, look at the market and find that balance.
Benefits
If your business offers employee benefits from day one, your hiring will be more competitive. With inflationary pressures and several years of health-centred uncertainty, combined with an ever increasing retirement age, employees are looking for stability and not wanting to stress about out-of-pocket medical costs, a lack of retirement plans and not enough time off.
Benefits can be expensive. They can increase your broader labour costs. You might balk at paying hundreds of dollars per month per employee to contribute to their retirement savings and reduce their dental and prescription costs. What benefits really are though is proof that you're investing in your employees and their future. They're a great way to retain current employees, and they're a great way to attract future employees. They're also a taxable benefit and can be deducted from your tax bill.
If you're still struggling with the concept, consider the cost of benefits in terms of hiring and churn. Your hiring cost is the cost of the job posting, your own time creating and managing the job posting, you and your employees time interviewing those that apply, and the cost of the initial training that future employee will need. At some companies, that cost can run to upwards of $10K, and if that new employee then leaves (or 'churns') then that cost is lost, and you have to begin again. Now look at the employees you currently have in terms of being a 'flight risk' - those who might leave, or are currently unhappy in their role. How much will they cost to replace? Are they critical to your business operations? Employees have a 'incumbent value' to your business and are not just 'costs'. When you consider benefits, consider them in terms of increasing employee value and how they might offset future churn.
Of course not all benefits have to cost money. There are a lot of benefits you can provide your employees (and advertise to future employees) which don't have a steep sticker price on them.
Think about paid time off. Paid time off is a very competitive space right now, and an increasing number of businesses are advertising above standard PTO or 'unlimited' PTO. Again, what this shows current and future employees is that you're invested in their future in your business and that you recognize that they have a life beyond working for your business. It also plays well with the concept of flexibility - that an employee can feel confident taking the time off they need, when they need it, without the fear of being seen as a 'lazy'. Since the pandemic, there has been an increase in the time people have taken off for change-related stress, and the increased daily pressures the pandemic and market shifts have put on every business which has resulted in 'burn out'. At the extreme end of PTO and flexible working, some businesses have begun to institute 4 day working schedules, which have scientifically shown increased productivity, employee satisfaction and overall decreased sick days and churn. There is no one-size-fits-all solution to PTO in a business, but typically those who have trialed and instituted competitive PTO schedules have done so through communicating well with their existing employees and working out a solution together that benefits everyone.
Beyond PTO there are numerous other benefits you could be deploying to your employees at low cost which can also be taxable benefits. A say in which computer they use. The option to choose the chair they sit in. Staff appreciation events. Bonuses. Food. A say in what uniform they wear. Stipends to cover out-of-pocket expenses. Find out what your current employees would appreciate and use that to your competitive advantage in terms of retaining them and attracting others in the future.
Culture
Many people looking for employment talk about looking for the right work culture, or cultural-fit. The culture in a business is usually set by the owner. They're the first to start the business, and their personality is usually the thing that defines it and goes on to shape it. Before we come out and say 'you're the problem' consider your current company culture. If that's just you, think about what your ideal company culture would look like. If you have employees already, look at who you've hired, and how they've shaped that culture. Now look at how your competitors present their culture. If you're in an industry which has a standardized culture, then you have an opportunity to consider shifting your culture to present a more positive and supportive environment that will give you a more competitive edge.
Shifting your culture is not easy - it takes buy-in from not only those you employ, but also yourself. As the owner the culture is rooted in how you act, and you have to be consistent in how you apply it. It's often said that a culture is 'lived' and that means that the cultural values you define have to be absorbed into all elements of your day-to-day. You can't take a day off from culture, or it will quickly be revealed as a scam. A culture of 'accessibility, transparency and fairness' for example is something that will open your business to a more diverse hiring pool, which is a great positive. But if as the owner you make arbitrary decisions without consulting your employees, fail to build a sense of team-level accessibility, allow some employees to override those cultural foundations, or undermine those who act on those cultural foundations, then your culture will fail and those who supported it will feel disenchanted.
Culture is at its core a trust issue. You need to lead your business and trust others to act in its best interests, and from that a culture can be formed, defined and progressed.
Ownership
In the technology industry, ownership is a huge part of attracting talent and retaining it. Beyond the technology industry, ownership is becoming more mainstream, and those that deploy it tend to gain a competitive advantage in both hiring new talent and retaining existing talent. Ownership is a broad definition, but it usually breaks down into two areas - ownership of a role and ownership of the business.
Ownership of a role is really a trust issue. With this form of ownership the employee is given a defined role in the business, with a clear sense of what they own and what they don't. They are then entirely responsible in their role to execute on the things they own. This has two benefits - the first is that as an owner you know who is responsible for what, and you know that - success or failure - the buck stops with that person and there is nowhere to hide or 'coast'. The second benefit is for the employee - there is no micro-management, no daily meddling. It is their sole responsibility to deliver. Employees for the most part tend to seek out responsibility, and nearly all despise micro-management - and those who consider themselves to have ownership over their role tend to be happier in their role.
Ownership of the business is increasingly being used as a 'value-addition' to wage. The incorporated company creates an 'employee pool' where typically non-voting shares are created and rewarded to employees on a schedule over the course of their employment. Typically used as a tool to reduce churn and reward good performance, businesses who offer employee pools and shareholding tend to offer a set amount of shares over a period of around 5 years (known as the vesting schedule), with the shares being awarded quarterly or annually. In the case that the business is sold or acquired, those who hold shares receive a pay-out relative to their shareholding. This means that those who hold shares in the business are 'investors' in the business, and as such are incentivized in helping the business succeed long term. It also gives the employee a sense of personal ownership - that they are invested, that their role in the business is more than just a job, that their efforts in their role are contributing to something bigger.
Creating an employee pool isn't for every business, but it's not prohibitively expensive, and typically it's a quick process for most lawyers to create the share certificates and corporate structure required. There are also many good resources online that can help business owners work out how to move towards creating an employee pool for their employees and what benefits it can bring.
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Rob Boynes is the Co-Founder of huumans
What is huumans?
A smart, cost-effective bookkeeping service designed specifically for small business owners, huumans provides same or next business day support, guaranteed weekly reconciliation and fixed, transparent monthly pricing. Your business numbers, directly calculated from your constantly reconciled accounts, are presented in a free, easy-to-understand, on-demand, shareable dashboard - and like your billing, it can be managed online whenever you find it convenient. Offering the most cost effective small business managed payroll services in Canada, we also provide specialized discounts for startups and new businesses, along with dedicated solutions for franchises.