Insights

For entrepreneurs looking to grow their business to the next level, there’s usually only one way to achieve this goal – by starting to scale their organisation with the addition of more people. Some companies, especially where professional services are involved, will decide to do that using freelance workers who are operating as ‘associates’. In this case, although the costs of accessing this type of resource may be greater per hour, they retain more flexibility to ‘buy’ only the time they need, and typically have no legal or employment responsibilities. It will also not be necessary to finance equipment such as laptops and phones, or pay into pensions. It can be a short-term collaboration; if the individual doesn’t perform, you simply do not use them again. Using freelance workers is however rarely a long-term solution and many business owners will prefer to recruit permanent staff - often more junior employees - to join their team and train them to develop with the organisation.

Regardless of whether you opt for the freelance or permanent employee route to attract the people you need to scale your business, it’s not as straightforward as getting in someone who can ‘do the job’. Apart from the obvious legal compliance issues, there are some other important initial points to consider.

The first of these is to have a clear understanding of where your business is heading in the medium term and focus on this when you secure your resources. You might be busy and think you need an assistant, but actually you may need a sales person instead. Be clear about what you require. Secondly, what exactly do you need that person to do and how are you going to identify whether they are suitable? What will their job description be? What type of leader are you going to be? How will you manage these people? Will they live up to your expectations, and will you live up to theirs? How will you measure their performance?

Being good at evaluating and hiring the right people is critical because there’s nothing worse than having the wrong people in your organisation, especially in a small business, where a bad decision can completely alter the culture you want to foster. As the business owner, you will have very high standards because it’s your business, and an employee or contractor may never fully share your enthusiasm for success. Why would they unless they too get to enjoy a share in the financial performance of the business? To counter this, you may want to consider giving them shares as part of a tax advantaged employee share scheme after a set period, or alternatively, some form of performance related pay as a minimum.

Usually you can tell if an employee is of the right calibre quite quickly after they start working for you, by setting them some assignments and reviewing their approach to the work, and the standard of work they produce. You can also consider doing this at interview stage. What can be harder to judge is whether they will fit in with your company’s culture; whilst this can be tested at interview stage with targeted, open questions, you need to have a clear understanding of your company’s culture and values in order to analyse the answers you get. This is important in order to identify potential conflicts.

Before starting a round of recruitment, take some time out to consider what’s absolutely important to success. Creativity, innovation, service, value adding, technical excellence, resilience and perseverance, quality? Establish the 4 or 5 attributes that are most critical to enabling you to achieve your organisational goals, and set out to find people who display evidence of those attributes as employees and/or associates.

Some companies do this by using specialist psychometric tests which can be conducted online as part of the recruitment process. Whilst there is a cost to these tests, when recruiting key individuals for your business it can be a very worthwhile investment. These tests can evaluate a person’s cognitive preferences, how they prefer to make decisions, process information, their optimum working environment, whether they can think strategically or prefer an operational role and how much potential they offer in the long term. When considering whether to offer a key employee a share scheme, having information on a person’s capabilities and long-term potential will be a very important deciding factor. Some tests will also measure a person’s intrinsic motivators and their own value system, to spot compatibility and potential conflicts early. Although psychometric testing tends to be favoured by larger businesses, some might argue that it’s even more important for SMEs, to help them arrive at the correct hiring decisions, because the impact of one ‘bad egg’ can have an immediate effect and can have very damaging consequences.

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