What do I have to Manage? # 5 – Hiring & Keeping good employees – Part 1

Monday, May 17th, 2010

Personnel management is not usually very good in the small business environment. Without a doubt, this is one area that small business owners do not pay enough attention to.  

At the same time, I must emphasise that it is usually not by intent – it is usually by oversight, or even ignorance of the basics!


There are three main areas of contention.

Firstly, many small-business owners in South Africa today, are very nervous about hiring anyone! 

 The Labour Relations Act in South Africa has to be one of the most liberal pieces of legislation around, and while it is certainly comprehensive, there is no doubt that it tends to favour the employee.  Now, I know that there are unscrupulous employers out there who manage to get away with ‘murder’ almost, when it comes to the way they treat their employees; but I also know that it is extremely difficult for employers – especially when they are small business-owners, with small budgets and even less time – to get rid of a troublesome employee. 

Almost without exception, any employee that has been dismissed – even for all the right reasons – still has the right to go to the CCMA (Commission for Conciliation, Mediation and Arbitration) and be heard – and will usually go there anyway.  This means that every employer will have to appear at the ‘hearing’ as well, all at great cost to them in terms of time and money.  The two words that made America great – “you’re fired!” – will never wash here!

Secondly, when it comes to hiring staff, small business owners tend either to employ people on trust and gut-feel, and not based on some sound selection criteria, or they tend to employ people based on what those people are prepared to be paid for the job.

Thirdly, small business owners tend to be guilty of not engaging their employees in the warp and woof of the business.  This has the effect of alienating employees – it makes them feel they’re not trusted and that they’re not appreciated.


“The best time to fire people is before you hire them.” (Dave Anderson)

So, how should you go about employing people if you run a small business?

Personnel consultancies are expensive, charging as much as 20% of the annual salary of the employee, as a finder’s fee.  Even in the case where someone is being employed in a clerical post, the fee can seem enormous. (Placing a monthly salary-earner at a cost of R5,000 per month will attract a fee of anything between R7,000 and R12,000.)

 Most small businesses see that as far too much to pay and so they employ relatives, rely on referrals from friends of friends, gut-feel, etc.  At the end of the day, the cost to them can be far greater in terms of poor workmanship, poor productivity, poor attitude and ruined relationships.

 On the other hand, there are a number of Personnel Consultants out there who do not have the necessary expertise in every field of employment to fit the right person to every job.  They base their recommendations on the research they do, and a rather narrow band of selection criteria. 

If a person has built up a good referral base, consultants will be happy to recommend them – even if they may not ‘fit the bill’.  I have had occasion to use consultants a few times, and it has always irritated me when I receive a written report from them containing their opinion that “the applicant is ideally suited to the job”.

And this same opinion will be relevant to all four applicants they sent me, and which I now have to interview.  Well, which one really is ideally suited to the job? 

I have also been approached by Consultants for references on certain people who I have either worked for, or who have worked for me in the past.  I am appalled when the person asking me the questions is clearly just reading them off some standard questionnaire.  I wonder how they are able to get a true idea of what the prospective employee is really like, and in the right context?  I have had to comment on the work habits of some highly qualified people in fairly senior posts at times, and I’ve been conscious that the ‘interviewer’ representing the Personnel consulting firm, probably only has about five years work experience, and I doubt would be able to provide an objective opinion on the ability of the applicant.

We have managed to assist clients in quite successfully in the past, but only in the area of our own expertise – which is accounting and administration.  We follow a simple research process, and then rely on our own experience working in similar environments:

  • We design the JOB DESCRIPTION (profile) in accordance with the client needs.
  • We preview the applicants’ CV’s ourselves and create a short list.
  • We get the client to do the same, and then we compare short lists.
  • We get the short-listed applicants to complete a StrengthsFinder Profile test on the internet.  This can be accessed at http://www.strengthsfinder.com/113647/Homepage.aspx
  • We match the Job profile with the applicant’s strength profile to get the best fit.
  • We interview the applicants who match the profile the best, along with the client.

 Personnel consultants may be horrified at this – we may even be stepping on their turf – but so far it has worked pretty well. And, we don’t get involved in employing people outside our own field of expertise!

 Small business owners don’t have time to mess around trying people out only to find they don’t fit.  They also need to know that the new employee has the initiative and can innovate if need be.

I would suggest you adopt the following basic principle: – get a specialist in a certain field to hire someone for you to perform a special job in that field. The specialist should have a sound knowledge of how small businesses work, and the environment they work in, as well as knowledge of what will be required to get the job done.


John Maxwell, in a teaching series on Excellence in the workplace, recommends that entrepreneurs should make an attempt to employ the very best people they can in every position in the business.  In fact, he goes one step further – he recommends that we should employ top people, even if we do not have a job for them immediately. 

The best people, – the top people, – are net value creators.  In other words, they have the ability to create value greater than their cost to an organisation, – value that was not necessarily there in the first place. It won’t be long before they’re actually generating income which will not only cover their cost but increase the profits in the business as well.

 Dave Anderson, in his book, “Up Your Business” says

 People are not your greatest asset; the right people are.  The wrong people are your greatest catastrophe. Mediocre people are your greatest drain on resources.”

In the next newsletter, I’ll cover the issue of how to retain those good employees.