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BA 346
Working as an Entrepreneur
Bob Zahrowski
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1919Human Resource Management:Human Resource Management:
Small Business ConsiderationsSmall Business Considerations
McGraw-Hill/Irwin ©2007 by the McGraw-Hill Companies, Inc. All rights reserved.
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ObjectivesObjectives• Explore the decision to hire full-time or part-time help• Understand how to recruit good employees on your
budget• Know how to match the right person to the job• Learn about employee training methods and
resources• Gain insight in meeting employees’ needs and
expectations• Learn how to develop a fair compensation and
benefit plan• Understand the complexities of managing family in
your business
Chapter 19Chapter 19
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• Focus on Small Business: Chris Perkett and Chris Perkett and
PerkettPR, Inc.PerkettPR, Inc.
• Virtual public relations agency in 1998
• Initially appreciated the temporal nature as well as flexibility of having independent contractors
• Needed more commitment from his staff
Chapter 19Chapter 19
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• Chris PerkettChris Perkett: cont.– Needed to show the client base that he had a staff
that was as committed to serving them as he was
– Decided to switch to an employee-based staff
– Hired many of her former consultants as full-time employees
– Increase in the level of excitement
Chapter 19Chapter 19
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Hiring EmployeesHiring Employees
• No decision is as important or complex as the decision to hire an employeehire an employee
• Of the 23 million23 million business in the United States in 2002, 17 million17 million had no employees
• Adding employees increaseincrease amount of work that can be done – serving more customers, staying open longer
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• Owner and business become responsibleresponsible for safety and well-being of the employee– Legal requirementsLegal requirements as an employer
• What kind of workwork needs to be done?– You can hire either part-timepart-time or full-timefull-time
employees
– Many additional expensesexpenses
• Carefully balance the ledger
Chapter 19Chapter 19
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Attracting EmployeesAttracting Employees
• Tends to be expensiveexpensive, so consider less expensive alternativesalternatives– Networking
– Internet recruiting
– Employee referral
– Company websites
– Career service offices
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• SourcesSources: cont.– Professional groups
– Outsourcing
– Non-traditional methodsNon-traditional methods:
• Local churches and pastors
• Visit local high school for entry-level jobs
• State unemployment offices
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Matching the Work to the WorkerMatching the Work to the Worker
• Writing a job descriptionWriting a job description: define and discuss all the essential knowledge, skills, and abilities– Craft a job analysisCraft a job analysis:
• Reason the job exists
• Mental or physical tasks involved
• How the job will be done
• The qualifications needed
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• Crafting a Job DescriptionCrafting a Job Description:– Start with a title
– Give a job overview (or a summary of the job)
– Define the duties and responsibilities
– Knowledge, skills, and abilities
– Credentials and experience
– Special requirements
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• Evaluating job prospectsEvaluating job prospects: is an individual the right match for the position and your small business– Create same specific questions you will ask of all
candidates
– Ask that person to demonstrate that skill
– Consider involving one or two other interviewers
– Never hire a moderately qualified just because you need someone now
Chapter 19Chapter 19
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Training Your EmployeesTraining Your Employees
• Assess your firm’s training needstraining needs– WhereWhere is training needed? What key areas need
the most attention?
– WhatWhat specifically must an employee learn in order to be more productive?
– WhoWho needs to be trained?
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• Two broad types of trainingTwo broad types of training:– On the jobOn the job:
• Delivered to employees while they perform their regular jobs
• Orientations, job instruction training, apprenticeships, internships and assistantships, job rotation, and coaching
– Off the jobOff the job
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Rewarding EmployeesRewarding Employees
• 5 factors5 factors are most valuable to employees:1.1. TeamworkTeamwork: allows people to interact
2.2. RecognitionRecognition: showing appreciation, giving credit, incorporate a reward system
3.3. TrainingTraining: providing learning opportunities
4.4. EmpowermentEmpowerment: allow employees to use their judgment
5.5. ContributionContribution: they make a difference
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Chapter 19Chapter 19
Table 19.123 Rewards Offered Employeesof Small Businesses
Factors Psychological Contract Items
Autonomy and Growth Meaningful workChallenging and interesting workParticipation in decision makingFreedom to be creativeOpportunity to develop new skillsIncreasing responsibilitiesA job that provides autonomy and controlRecognition of my accomplishmentsCareer guidance and mentoring
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Chapter 19Chapter 19
Table 19.123 Rewards Offered Employeesof Small Businesses
Factors Psychological Contract Items
Benefits
Rewards and opportunities
Health care benefitsVacation benefitsRetirement benefitsTuition reimbursement
Opportunities for promotion and advancementOpportunities for personal growthPay and bonuses tied to performanceJob trainingContinual professional training
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Chapter 19Chapter 19
Table 19.123 Rewards Offered Employeesof Small Businesses
Factors Psychological Contract Items
Job security and work responsibility
Work facilitation
Well-defined job responsibilitiesA reasonable workloadJob security
Adequate equipment to perform jobEnough resources to do the job
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• Reviewing employees’ performanceReviewing employees’ performance– Performance reviewPerformance review: once a year to monitor your
employee’s job satisfaction, overall performance, and set career objectives
• Recognize performance, set goals, and set direction
– Pay reviewPay review: reward your employees if they have performed all duties and met general requirements
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Compensation and BenefitsCompensation and Benefits
• Determine the organization’s salary salary
philosophyphilosophy:– Find comparison factors for salary
– Research salary range
– Determine whether you are competitive
– Salary.com: or on http://hotjobs.yahoo.com
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• Bonuses and long-term incentivesBonuses and long-term incentives: single lump at end of year– Profit-sharing plans, stock options, or stock grants
• Health insuranceHealth insurance: not always affordable– Sends the message that you care about their
health
– Consider having employees pick up part of the tab
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• Retirement plansRetirement plans: 401(k) plans have become popular because they are relatively easy to administer
• Other incentivesOther incentives:– Time off
– Flexible schedules
– Sick days / personal days
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When the Sparks FlyWhen the Sparks Fly
• Owner’s problemOwner’s problem is to keep the bickering from interfering with the real work
• Cannot afford to let the company become divided into warring campswarring camps– Convince non-family employees that their interests
are best served by a profitable organization rather than by allegiance to particular members of the family
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• Is the small business owner really in control?Is the small business owner really in control?– President is not necessarily in charge
– Day-to-day management is in the hands of members of the family
– Someone may be the manager because of age or the amount of capital invested in the business without regard to qualifications
– Management control is weakened if special allowances are made for family employees
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• How is the pie divided?How is the pie divided?– Dividing profitsDividing profits among family members can also
be a difficult affair
– RecapitalizingRecapitalizing the company, stockholders can take
preferred stock with dividendspreferred stock with dividends
– Salaries are best handled by being competitivecompetitive with those in the area
– Tie pay to the type of worktype of work that the individual does
Chapter 19Chapter 19
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• Fair personnel policiesFair personnel policies: a few guidelines to consider– Hiring standardsHiring standards: hire the best possible candidates
for the position
– Boundaries for each roleBoundaries for each role: family members must be prepared to behave in their role exactly as they would in a traditional office setting
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• Personnel policiesPersonnel policies: cont.– Clearly defined job descriptionClearly defined job description: what the job
entails, what the pay will be, what he or she will be responsible for
– Performance expectationsPerformance expectations: establish clearly what you expect of any employee family member
• Explain performance expectations, employee responsibility, and cultural norms
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• Personnel policiesPersonnel policies: cont.– Personnel policies apply to everyonePersonnel policies apply to everyone: benefits
afforded family members should be applicable to non-family employees as well
– Procedure to express objectionsProcedure to express objections: communicating through the company’s preferred channel of communication, holding everyone accountable
– Procedure to let a family member goProcedure to let a family member go: almost impossible to “effectively” fire a family member; ask what good business practice dictates
Chapter 19Chapter 19
