How to mitigate new hire failure

My wife Seema recently got an offer to work from a leading wedding decor company as a business development manager. The company has been family run for years and this would be their first hire. The negotiations and discussion on roles and responsibility went through several revisions over a few weeks.

I thought to myself, what is it thats making this process take such a long time. Small businesses are extremely busy, usually a very small group wearing multiple hats. So they really should be completing this process faster so they could get more help.

I spent some time with them earlier in the year briefly and then again yesterday. I identified the following issues:

1. Trust – They didn’t want to bring someone in who wasn’t family and might steal their trade secrets.

2. Pay – They didn’t have a clue how to evaluate someone’s skills and make a correct offer that only brings him/her in but also retains them.

3. Business process – They didn’t have any computer software that would allow a new hire who had not been with the business for a while to make sense of anything worked. It was all in the owners heads and on pieces of paper.

What was clear was that they wanted to grow exponentially, get on the web and automate their business process.

As I worked through with them, I realized that this is not specific only to them, but to almost all small businesses including ChaiONE. Here are my recommendations to them on how to go about resolving each issue:

1. Contract to hire – I asked Seema to work for them for a month in exchange for them to do our wedding decor at no charge. This would help them see her style of work, her communication skills, work habits, organizations skills and more which would help them get to know her. This would also help them feel comfortable with her and learn to trust her.

Its a good idea to try out someone before you bring them onboard full time. We do that with our hires here in the US and are trying to do the same with our hires in India. Sometimes the timing might not work for someone to work after their regular job, but if they really want to work for you, they will put in the time. 37 signals talks about this in their book Getting Real.

2. Commission based pay – The company had offered her a mix of salary and commission initially which she promptly turned down. It was going to be a 50% cut in pay from her previous job. Their next offer was a % only based off of net profit. We then asked them for their numbers from the previous year and countered with a % that seemed fair to both parties, which after some thought, they accepted.

If you are a growing company that needs to hire for sales but wants to reduce the risk of a full time employee, consider commission. Put them on a commission that rewards them for the work and makes them feel like a partner. Instead of using forecasted numbers, use the prior year numbers to come up with a rate that would work for both parties.

3. Simplify process – If you are still using paper and files/folders to run your business and don’t want to spend a ton on software, consider free tools on the web. Google docs is a simple and easy way to do proposals, track earnings, inventory and spending. I advised the company to make a concerted effort to put down the intellectual capital that was stored in their heads online. Seema could then get to it from work or from home.

Its tough to take time away from daily business activities to learn complex new software. But start simple, start with free online tools that can capture the data so if you are not at work one day, your new hires know where to go to find the information. If they can’t get the information to do their job, they will fail! Once this stage is complete, then look into better solutions that can provide business efficiences and accelerate your business!

Seema took the job and is starting today. They dropped the title of business development manager and instead will refer to her as a partner. What a great way to increase employee engagement from the get go!

Thanks
Gaurav