Small businesses and startups operate on a fine line between becoming profitable or sinking into insurmountable debt. At Hudson Weir, we have extensive experience dealing with insolvency, debt management, and finding the right debt solution for each client. As such, we have first-hand knowledge about the various issues plaguing small organizations and how to deal with them.
While the majority of startups are, indeed, preoccupied with dealing with the financial side of their business operations, that is not the only area that could give rise to severe problems. Neglecting the hiring, onboarding, and retainment of employees could lead to disastrous results, even more so in the current complex situation where many employees are demanding viable remote work options.
Home and remote work is likely to stay relevant even after the COVID-19 pandemic is over and the social distancing restrictions have been lifted. Our findings that we have integrated into the Hudson Weir’s Working From Home Happiness Index support this conclusion. The index shows that most people across different UK regions and industry sectors view remote work as highly favourable.
Small businesses and startups will need to adjust to the new employment realities of the market or risk incurring significant losses. We want to emphasize five important red flags that startups should keep in mind during their recruitment process.
The main goal of any small business or startup should be to avoid any significant turnover rates. While more prominent companies can absorb the impact of frequently losing qualified employees, this is not the case for smaller organizations that could face multifaceted consequences.
First, studies have shown that turnover can cost around 30% of the employee’s annual salary. The sum consists of several direct costs – fees for recruiters or hiring agencies, interview expenses, signing bonuses, onboarding and training costs, etc.
Then, you have to factor in the indirect costs. New hires need time to get accustomed and comfortable in their role. During that period, your other employees, usually the most qualified ones, will have to take on additional tasks or find time to help the new employee, potentially reducing the quality of their work and increasing their work-related stress levels.
2. Misalignment In Values
One of the best ways to eliminate turnover is to hire people that are less likely to run during the first challenging period encountered by your business. To foster loyalty, high motivation, and personal engagement, you should look for potential candidates that share the same values and believe in your startup’s mission. Doing so in a remote work environment could be challenging.
For starters, communicate clearly what your company stands for, its goals, and values. Make sure that sufficient materials on this topic are available on your website, but do not stop there. Emphasize them during the recruitment process and continue to reinforce your corporate culture during your normal business operations every time a suitable opportunity arises.
3. Lack of Internal Referral Programme
Another way to boost employee retention is to implement an internal employee referral program. People are less likely to leave if they have a familiar face in their new workplace. Having such a program in place may allow you to find qualified candidates faster, especially when you need to finish a crucial project with an approaching deadline.
With the employee already knowing the skills and aptitudes of the person they are recommending, the business as a whole can reduce hiring costs and the time necessary for onboarding. Indeed, employee referral has become a common practice among companies of varying sizes as it has proven its benefits.
4. Ambiguous Job Descriptions
Many startups skip on making sure that they provide clear and accurate job descriptions for their available positions. In our experience, this could lead to the new hires feeling overwhelmed and confused when they actually start working. After all, employees at startups are frequently required to perform tasks typically associated with different job roles.
If the stress continues to pile up, they may feel like the offer was deceptive and could decide to leave, leading to a restart of the whole hiring process. Take the necessary time to go over your job descriptions and add all of the relevant responsibilities so that the candidates know exactly what is expected from them and what they will receive for their efforts.
5. No Proactive Recruitment
Startups are rarely a magnet for job seekers, especially if they operate in a hotly contested industry such as IT. That is why sitting around and waiting for people to discover your job listings may lead to prolonged recruitment and getting candidates that are less qualified. To mitigate the chances of making a wrong hire, startups can implement active recruitment measures.
Identify the behaviour of your ideal candidates and find the places that they converge – be it an online group, a professional forum, association, etc. Establish a presence there and keep an eye on prospective candidates. When a suitable job opening becomes available, you can message them directly.