How Small Businesses Hire Employees

By Sarah E. Needleman

As more small firms look to grow their work forces (see “Hiring Starts to Pick Up Pace“), business owners say they don’t need to invest as much in job boards to attract applicants as they had prior to the recession. These days, they get plenty of unsolicited resumes.

But rather than rely just on applications that naturally flow in, business owners say they’re tapping their employee and online networks to identify top talent.

Watchfire Signs by Time-O-Matic Inc., a maker of electronic billboards and signs, has a bonus-referral program that brings in about a third of recruits who stay for at least one year, says Steve Harriott, president and CEO. The program awards employees $500 when someone they recommend gets hired, and another $500 if the recruit is still with the Danville, Ill., company after six months.

“People take great pride in the folks they refer,” says Harriott, adding that Watchfire Signs has hired about a dozen employees since January and plans to recruit about a dozen more throughout the year. “We have low turnover for this reason.”

About one-third of recruits to small firms come via referrals from employees, online networks and other sources, according to data from, a provider of recruiting technology in San Francisco. The findings include data from more than 500 companies with fewer than 250 employees.

Rob Waldron, president and CEO of Curriculum Associates LLC, says he often searches LinkedIn for prospective hires. He’ll then contact ones he thinks might be a strong fit for his business and offer to visit them to discuss career opportunities at his firm.

“I’ve met personally with more than 800 people in the last two years because this is the best time to hire talent,” says Waldron, whose firm publishes print and online educational products. “I will find a job for outstanding talent even if I don’t have an opening. I try to hire people, not positions.”

Curriculum Associates, located in North Billerica, Mass., currently has 162 employees and 15 openings in areas such as sales, product development, finance, marketing, regional management, warehousing and customer service. Last year, the small business hired 59 people, and in 2009, it hired 10 more, starting mid-way into the year. By contrast, the company retracted in 2008, letting go 30 employees, including 10 who took retirement packages.

“(Sales) were down 5% in last quarter of 2008 and we were basically flat through July 2009,” says Waldron. “Things had completely frozen and people stopped making decisions.”

Beyond recruiting, some small businesses are taking extra – and perhaps exhaustive – steps to make sure they hire the best possible fits.

Family Financial Inc., a 200-employee pawn-shop chain that does business as La Familia Pawn & Jewelry, requires applicants for jobs at all levels to complete two lengthy tests and three rounds of interviews. “If you don’t score like we want you to, you’re not going to go forward,” says John Thedford, co-founder and CEO.

The first test includes 100 questions on workplace behavior. For example, it asks: What have you done above and beyond what was asked of you and how did it turn out? The second is on psychological temperament with 125 questions like: Do you drive fast, yes or no? Would you ever lead a conversation in a group, yes or no?

The two exams must be completed on site and take about two hours to finish. Applicants who pass are then required to participate in three 30-minute interviews, each with someone who would train them or work alongside them if they were to get hired.

La Familia Pawn & Jewelry plans to double in size this year by adding new management and sales staff for its 20 locations in Florida and Puerto Rico. “We would’ve hired 200 people last year but we only hired 100, reason being we didn’t secure the investor funding we needed,” Thedford says. “Now we have it.” A private-equity firm invested several million dollars into the business in December and a second round of private-equity funding is currently in the works.

“Who you hire is the most important decision you make in business,” says Thedford. “It makes a big difference when you have a rigorous approach from top to bottom in the organization. You can’t have weaklings in any position when you’re in a formidable stage of growth.”

Readers, what’s your strategy for identifying and interviewing job candidates?

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