Adam recently posted about hiring from oDesk, one of the bigger virtual assistant/freelancer portals, giving many great ideas on how to avoid pitfalls, and find solid, reliable help.
Freelancers on sites like oDesk can be much cheaper than automating with software, and valuable in a pinch if you want to staff up for a short term project. It’s long term projects, building your business, and getting persistent relief from the stresses of entrepreneurship, that oDesk probably won’t be your best solution.
Stress Quality Over Quantity
Business is about margin. In its simplest form, buy low, sell high. Profit is the margin between the two.
One of the mistakes I see newer entrepreneurs make is that they try to control costs rather than scale revenues and the first place they try to cut costs is by getting cheap labor. When this happens, the employees that end up getting hired typically don’t know their worth, and perhaps aren’t worth very much. They certainly won’t have experience that informs their wage demands.
These affordable employees can be bricks in your business, but they will not be the mortar which holds the whole thing together. It takes time and experience to hone instincts and develop habits. Even modest experience can yield exponential returns over someone who is working on a project for the very first time.
There are also costs to you, the person hiring these very average employees. You have to train them. You have to replace them frequently. As a leader and entrepreneur your focus is priceless and spent wisely, essential. Any energy spent bringing someone in casual employment up to speed, is energy not spent on the tasks you need to be working to get your business to the next level, whatever level that may be.
There is never enough time to do all of the things you could do to make your business great. That’s the nature of life, but very much a condition of business.
So what is the alternative to hiring cheap?
I’d say it’s looking for less-skilled employees with drive and hunger who can be developed while constantly keeping an ear to the ground and an eye out for successful employees at other firms (because really good employees are rarely unemployed for long) looking to make a move or becoming available.
Your Job as the Boss
A good leader organizes people, supports them, and puts them in a position to succeed. It’s an open secret of effective leadership that leading is a support role rather than some high office accumulating glory and kudos for every smart move the company makes.
To put your employees in a position to succeed, you have to give them a sense of ownership over their work and their job. Ironically, empowering others often means remove yourself as an obstacle to their autonomy. Sure, you need to be there when they get stuck, and to challenge them to figure out as many problems on their own as they can. It’s not totally hands free. The goal however, is to put your employees in a position to lead themselves, freeing you up to organize the next challenges for your business.
As your employees learn from their mistakes, they are going to develop valuable insight essential to the position they are filling. That is exactly what you’re aiming for.
Can you be patient while your employees develop? You’ll have to be if you want to grow your business.
How to Develop Key Employees
When it comes to labor investment, you can invest in training employees internally (probably at the cost of your time if you’re a lean operation), or send them outside the company to learn new skills if you’ve got the capital to invest.
If you’re in the SEO market, getting your employees a membership at SEOBook or a subscription to the tools at SEOmoz can be real difference makers, exposing them to new ideas very quickly. Mixergy also has many courses covering many of the day to day operations of running an online business including social marketing, copywriting, creating ad campaigns or handling customer service.
You can also get your employees better equipment and better software, which can make them more productive, if not more intelligent about how they do their work. Don’t expect miracles from software though as it’s been my experience that tools cannot make an apprentice a craftsman. Only practice can do that.
You Can Hire Too
New entrepreneurs typically take the approach of hiring cheaper labor because they are risk averse, and don’t want to commit any big mistakes.
Going out and landing a full-time or expensive employee can a big leap for someone new to doing business. However, a responsible business owner has to make decisions which allow him to delegate work of increasing difficulty. That’s essential because the owner or CEO can’t get bogged down in management. His job is to be thinking about ways to grow the firm and expand its scope of business.
If he is stuck working the front lines each day, the company will stagnate and stall.
This is where a key hire, someone who already has experience and understands your industry culture, can go a long way. By bringing in an employee who already understands the business, even if his habits or approach is different than yours, gives you the opportunity to release more of the decision making and management burden.
You’ll also be mixing more industry DNA into the melting pot of your business’ culture and practices, which can lead to a stronger firm going forward.
If possible, come out swinging and hire the smartest, most motivated, focused, accomplished person possible, even if they are better than you at anything or everything. As long as you are the smartest, hardest working person in your business, you will be trapped always leading, always making decisions, always working long hours and always being frustrated.
Many small business entrepreneurs fear valuable employees developing a high level of competency/insight, and then leaving and maybe even competing against their former boss.
This fear is valid because it is possible however the reward of adding competent employees and their knowledge to your business, far outweighs the risk of them leaving and undermining your business in the future.
It is very hard to get ahead if you do not take chances. Make sure the chances you take are smart by doing your diligence.
And when you have the right person, build loyalty with them in the form of honesty, respect and good pay.
Check the Attitude
My experience has been that someone with a bad personality, who is low energy or who doesn’t care about what they do will never be a great employee even if they have 20 years in your industry. Yes, people who suck can still find a way to be a lifer by simply outlasting the businesses they sabotage.
Whether you start on oDesk, develop your own employees or hire in veteran talent, getting attitude right is essential. Many businesses have collapsed where the culture isn’t maintained or improved with each hire.
One bad apple can truly ruin the bunch.
Be on the lookout for people who are chronic underachievers, or lifers with low ambition. You can always do better than these folks.
Stay on the Right Foot
Whenever you add a new hire, lay out clear expectations. What’s required, what’s expected.
Be explicit and precise, if you leave anything unsaid assume it will not be done.
When it comes to pay, this is make it or break it territory. Always pay on time, every time. Nothing undermines trust and loyalty like missing payday. If money is tight, you’ve got to find a way to make payroll. If for some reason you absolutely cannot pay on time, inform your employee as soon as possible and try to work out an arrangement. Nearly every company has cash-flow issues when they start out, how you handle those issues will determine how long your firm will last, if it will last.
Remember to push employees to evaluate problems and to design their own solutions. Do not baby them. If you start off micro-managing employees, they won’t take responsibility later, and you handicap their capacity to add value to your business.
One technique I like is to require that employees report to you when a task or project has ended. Reports can be a phone call, a text file, an instant message conversation, or an email. By reporting the work done, it’s a chance to discuss how it went, what was learned, and if there were any issues that need to still be taken care of.
Where employees are paid casual-hourly, tell them you will pay them to provide detailed accounting of hours worked. This information is dual purpose, helping you understand the cost of doing different projects (useful for estimating future work), and it also helps keep employees honest because they account for their own time.
A great employee with opportunity and responsibility is going to be many times more helpful and productive than someone who is hired for a week’s work only, or someone who is only capable at best of doing a mediocre job.
If you keep expectations of quality high and reward people for great work, your business has a chance to grow into something special. Give yourself the chance to achieve big things. Be smart when hiring, and always hire smart people.