Be decisive in hiring.
Every company has a personality — a culture. If new hires fit into that culture, they’ll adapt to what’s required and learn to do the job. If they don’t fit into that culture, they’ll never learn and will be a continual problem to you and your employees.
Under expanding employee-rights law, you have like 90 days to make that determination. If they’re not fitting in — or even if you have reservations about their fitting in — let them go! Once they’ve passed that initial trial period, you have an obligation — moral if not legal — to help that person become the best employee that he or she can be.
If you do let them go, make it clear that the problem is in the fit. They may well be a great employee for another company. Give them the chance to find out! Every person can eventually find a “fit”. When they do, both they and the company will be happy. You’ll not be doing either them or your company any favors by letting mis-fits stay.
Treat employees as adults — not children.
Whatever the rules, they should be clear, precise — and minimum. They must be uniformly administered — applied as equally to your star engineer as to the new-hire on the assembly line. They should be documented in an “employee handbook” (which need be no more than a few sheets stapled together) which should be given to each employee and all new hires. And each rule should include not only the rule but the “why”. Keep in mind that the primary purpose of these rules is to protect the safety and comfort of your employees — only secondarily to protect your company. Before freezing the handbook, talk over the rules with your employees. If they have trouble with some of the “whys”, either convince them or let them convince you.
Almost every beginning entrepreneur falls into the paternalism trap. Your company’s growing. You’re starting to build up some extra cash — and you want to share your success with your employees. That’s cool. They’ve contributed to that success and they should share in it. What’s not cool is then starting to believe that since you shared with them, they “owe you”.
All an employee owes you is a good day’s work for a good day’s pay. Nothing more. Nothing less. You can’t “buy” warm-fuzzies like loyalty and devotion — even at 20 times the going wage!
If you want to share the company’s success with your employees, do so with random bonuses when you have extra cash. And be certain that that extra cash cannot better be spent in “growing” your business. You’ll be doing your employees a much greater favor by expanding your business — creating more challenges and opportunities for them — than by simply doling out cash — if the business can be reasonably and safely expanded.
Avoid incentive pay.
Incentive pay can be used to influence employee behavior. However, it is certain that any benefits gained in the short-term will be more than lost in the long-term. It is people’s nature to look at what you are doing for them today. What you did for them in the past is quickly forgotten. That may not be the way it should be — but that’s the way it really is.
You can use incentives to trigger a short-term burst of output. But be assured that the next time such a burst is required, the reward will no longer be looked at as an “incentive” — but as an “expected”. Worse, if such a burst becomes not required in the normal course of events, your employees will — wholly unconsciously — see that such a burst does become required.
Pay to get out extra product at the end of an accounting period, and you’ll get out extra at the end of every accounting period. That’s what you’re telling them you want. Of course, if you look at the numbers, you’ll find that you’re shipping a bit less during the accounting period!
Avoid long-term employees.
Conventional wisdom admires companies who have retained employees for many years. That wisdom is wrong! A good employee is a good employee only so long as he is stimulated, challenged — and learning.
Trying to retain employees after they’ve stopped learning is bad for the employee and bad for the company. Bad for the employee because they’ve stopped “growing” — stopped improving their unique value in the job market. Bad for the company because it stifles the flow of new ideas, new insights, new views of the changing business environment.
Why is it done? Because it’s easier on the manager — do I want to hold onto this guy or go through the hassle of trying to hire and train someone new? And it’s easier on the employee — there’s equal hassle in looking for and starting a new job. Both parties are inherently oriented toward choosing the “easy” way — to the very real detriment of both.
Your star employee, once a dynamo, once willing, able and eager to tackle any task, no longer shows that drive. The problem may be outside personal problems — whereupon you have the obligation to help him through that period. However, it’s more likely that he’s simply no longer learning at the rate he was. He’s no longer stimulated and challenged — he’s bored.
People enjoy best doing what they do best. A born salesman will not be happy doing account audits — despite the fact he may have spent many years getting an accounting education. Everyone is good at some things — and lousy at others. But most people don’t get the chance to find out what it is they’re good at. Give them that chance!
Say you hire someone in to do assembly. In time, they’re doing that job competently — maybe very well — but they’ve stopped learning. They may or may not become a problem — but they’re certainly not stimulated, motivated. You can raise their pay and benefits, but as we’ve said before, that’s a short-term fix — with long-term consequences.