How Hiring Works


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­handshake over paperwork
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If you are a new business owner, hiring yo­ur first employee is big step. Not only do you have to be doubly certain you actually need an employee (and not just better organization), you also have to make sure you hire the right person. If you're working in a larger established business and have taken on the role of Human Resources Manager, or simply need to hire an employee for your department because there is no HR department, then you too have to make sure you don't make a hiring mistake. Recruiting, interviewing, and hiring employees is a science in itself. It has grown over the years to be one of the most critical aspects of business success. The right people make the company. Remember the old saying that your employees are your most important asset. It's true.

On the Job

­In this edition of HowStuffWorks, we'll investigate what it really takes to hire the right person for the job. We'll take you through the steps and explain the importance of some of the decisions you'll have t­o make along the way. In the end, you'll have an understanding of why most companies have an HR department that does all of the hiring. Hiring is a science, and no one ever said science was simple!

 

 

 

Your hiring needs

Let's assume you are a new business owner with no employees, but are tired of never having any free time. (After all, isn't that one of the reasons why you went into business for yourself?) So what do you do first? Are you sure you really need someone? Are you sure you are performing the duties you would like to hire someone else to do as efficiently as you could be? Perhaps all you need is some computer training to help automate some things that will cut some of your hours. Take some time to fully assess your needs. Here is a list of things to consider before placing that first Help Wanted ad.

  • Make a list of every duty that you feel someone else could do.
  • Estimate the time spent doing those duties. Could you hire a part-time employee?
  • Analyze all of the costs. Can you afford to pay someone? Remember you'll not only have the salary to pay, you'll also have benefits and tax issues to deal with.
  • Do you need a permanent employee or could you hire temporary help?
  • Do you have working space for an employee?
  • Could the type of work be desirable for a student internship? Contact local community colleges or universities and ask about their internship programs.
  • Can you hire an independent contractor to do the work on project basis or for set number of hours? This frees you from payroll taxes, but still gives you the flexibility of an on-site worker. Be careful that you don't misclassify a worker as an independent contractor. This can be costly. Check the IRS guidelines to help in determining the employee vs. independent contractor designation.
  • Finally, don't forget to account for your time spent recruiting, interviewing, training, and supervising an employee. Make sure you really will have some spare time left over!

Writing the job description

A job description is a definition, or "snapshot," of the job. Before you can write a good job description you have to be very familiar with the duties required for that job. If you haven't had anyone in the position before then do a job analysis by talking with other businesses, friends, or associates who have had similar types of positions within their businesses or work departments. Or, better yet, interview or observe someone who holds the type of position you are hiring for. They can offer the best overview of what that type of work entails. Get as many details about their duties as you can. That will help you identify the skills necessary to do the job well. Here are some examples of questions you should be able to answer about the position.

  • What are the specific duties?
  • What are the specific skills needed to complete the job?
  • What formal training or educational background is needed?
  • What interpersonal skills are needed?
  • What tools are used? (To find equipment skills needed.)
  • How is the position supervised? (What is the reporting structure?)

The description should at least include the essential functions of the job, reporting relationships or organizational placement, supervisory duties, and qualifications necessary to perform the work.

Job functions
Use your notes from the previous conversations and interviews to make a complete list of the job functions. Include as much detail as you can about how those duties should be carried out, as well as what is done a daily basis, weekly basis, etc. For example, if you know one of the duties is to maintain a list of customers that includes their past purchase information, contact information, and complaints they've registered, then you probably want to elaborate a little more and explain how often this must be updated, the software program that is used, and any other pertinent information. This will be of help during the hiring process, as well as after you have an employee in place because it provides an initial guide for how the employee should structure their time.

Job skills required
Each of the functions you've listed will probably require a specific skill to go along with it. For instance, if one of the job functions is to sell your services then the employee should have some solid sales skills. If the job requires a lot of customer contact then they must have skills in dealing with disgruntled clients (you know they're out there), and probably good negotiation skills.

Identify all of the skills the job will need and prioritize those. Remember, there are some things that can be taught if you've otherwise found the perfect candidate. Don't discount an applicant for not having one of the lesser important skills, particularly if that skill is one that can be learned fairly easily.

The job description is useful for more things than just hiring. You'll use it in:

  • training new employees and setting the expectations for their performance
  • annual performance evaluations
  • determining the position's pay scale and other compensation
  • differentiating the position as either exempt or non-exempt

There are probably many other organizational values to having good job descriptions. Make sure yours are detailed and kept up-to-date. Another thing to keep in mind is how much experience you think the person should have in order to be able to do the job well. Will you be available to provide a lot of supervision, or will they need to be able to hit the ground running.? You may find a person who has the right skillset, but may not have the track record to go with it. That track record is sometimes just as important.

Advertising the position

­ There are many avenues in which you can advertise jobs. The Internet now offers a great opportunity to reach an otherwise inaccessible labor pool. The type of job will once again have some impact on where you place your ad.

Local newspapers are usually the first place to start, but don't forget about regional papers, and even statewide publications. Talk with your local Employment Security Commission. They often can provide a list of potential job candidates, as well as good advice on local publications for job listings.

If the position is of a professional nature then you also have the option of advertising in trade journals. These very targeted publications go directly to the audience you need for the position, and are very good if you need someone with industry-specific experience.

As we mentioned above, the Internet can be a gold mine for hiring for certain types of positions. Job sites like Monster.com, Careerbuilder.com, and your local newspapers' online counterparts offer searchable databases for employers and job seekers. Jobs can be posted on Careerbuilder for as little as $100 per month.

Another place to check is your local community college or university career placement services. Call their offices to find out how to list positions for which their students and alumni can apply.

Don't forget about local and industry job fairs or trade shows. You can often gather great leads on candidates at these types of events.

Writing the ad
Always title the job ad with a descriptive title that will catch attention. You have to put the position in a good light, while at the same time remaining very honest about the company, the working environment, benefits, perks, etc. Focus the beginning of your ad on the highlights of the job that will be most attractive to candidates. In How Hiring and Training Your Sales Team Works, we discussed focusing on what gets the attention of the type of employee you are trying to hire. Read that article for ideas on targeting a specific type of position.

When writing the ad, use active, exciting words that are relative to the job. Make sure you don't exaggerate! If there are any specific skills that are mandatory, list those clearly. To help "sell" the position, as well as the company, include information about the quality of the company, the work ethics, reward programs, opportunities for growth, challenge, fun, etc. Make it an ad for a job you would want to apply for yourself.

Broad descriptions versus detailed descriptions
This really depends on the type of position you are filling. Using broad descriptions may give you a greater selection and even help pull in some hidden pearls, but it will also be more time consuming to sort through the higher number of responses.

If you are hiring a technical person for a technical position then you'll probably need to write a more detailed description. More specific skills such as software program skills should be bulleted or otherwise highlighted. Productivity can be greatly hampered by someone who doesn't know how to use your established software programs. Depending on the program, the learning curve may be pretty steep.

If you are hiring a managerial person to oversee those technical positions then you'll probably need to write a more general description that includes the types of problem-solving needed, the creativity involved, and the necessary people skills. In either case you need to focus the description on the functions the position includes.

Head hunters and other professional services
If you really need to hire a top notch executive to help run part of your business then you may want to enlist the help of a professional headhunter. Corporate headhunters do all of the legwork and only bring the top candidates to you for interviews. Rather than waiting for candidates to come to them, they actively pursue the people they think would best suit their clients' needs. These may be from competing companies, or completely different industries. It's the active pursuit that makes headhunters so effective, but also expensive. Look for a firm that specializes in the type of position you need or industry you are in.

Employment agencies also can help you find good employees. While the majority of these agencies focus on clerical and support staff, there are some more specialized agencies that deal with technical positions, and management positions. Their fees are usually paid either by the employee, the hiring company, or both. The benefit of using this type of agency is the screening of employees before they are sent to you. You save time by interviewing only those applicants who are pre-qualified for the job.

Temporary agencies should not be confused with employment agencies. They work in a similar manner, but they pay the employee rather than your company paying the employee. Since temporary agencies are usually used for positions that are, well, temporary, it is often a smart step to take. You are relieved of the need to pay employee taxes and offer benefits. You simply pay an invoice sent by the temporary agency.

Often missed worker pools
You may also want to investigate worker pools such as senior citizens, women re-entering the market after raising a family, freelancers, retired workers, and disabled workers. For information to help you reach these groups visit the Links page of this article.

Let's move on to what you do once you've gotten response to your ad.

Screening applicants

Once you've advertised the position and have started getting some response, are you going to be reviewing resumes or asking applicants to fill out an application? You can do either, or both, just remember that the resume you are presented with includes only the information the applicant wants you to have. An application you ask them to fill out includes the information you want to have.

How do you really evaluate someone based on their resume or an application? Often, hirers find themselves comparing educational backgrounds and where the applicant grew up with their own experiences. Finding someone who went to the same high school or university you went to doesn't mean you should give them greater consideration than someone who didn't. Train yourself to be impartial to these types of things and you'll be much more successful at hiring the right person for the job.

Reviewing resumes
So what information should you pay particular attention to? One of the first things to notice is the overall appearance of the resume. Does it have a professional appearance? Is it neatly done? Are there spelling or grammatical errors?

Reviewing educational backgrounds and experience
While an applicant's educational background is important, it may not be the best barometer for their actual skills. Take, for example, someone with a degree in English. Does that tell you anything about their skills? Probably not. Other degrees can also be misleading. Perhaps the applicant got a Bachelor's Degree in Industrial Relations, but then went into real estate sales? If you're hiring a sales rep then that next step, which probably shows up in the work experience section, is what you really should be interested in.

Typically, a quick glance at the education to ensure they have any required formal education is all you need to do. Again, the depth of your review into their education depends a lot on the type of position you're hiring for. Your focus in most cases should be on the work experience of the applicant.

When reviewing the applicant's past work experience, look for information that will answer questions about:

  • Their actual responsibilities, as opposed to what is implied by their title. (Does it fit that they were the Manager of Sales, but had no sales responsibilities themselves?)

  • Their duties, as opposed to what they state they were responsible for. (Do these jive with each other? Perhaps they supervised the person who performed the function, but haven't had the experience of doing it themselves. For example, someone may manage a print shop without having ever run a printing press before.)

  • Specific accomplishments such as goals met or exceeded, awards won, or special projects spearheaded.

  • The length of time they held positions or titles. (Were they in a position long enough to have the experience under their belt that you need? Why did they leave that position?)

  • The progression of their work experience. (Does their experience show increasing levels of skill and/or responsibility? Is there significant backtracking? Or, is there no real change in the level of the responsibility or job duties? This may indicate a lack of ambition or desire to achieve.)

  • Unexplained gaps in the work history.

­There are, of course, other questions you may be specifically trying to answer when you review resumes and applications, but these will get you started and lead you to those more specific questions and answers. Remember to make notes about any questions you have particularly about job changes, lack of advancement, etc.

The cover letter is also a good barometer from which to gauge the person who wrote it. Does it address aspects about the position you are filling, as well as your organization? Or, does it appear to be a standard letter template they used to drop in company names and job titles, of which yours is simply one of 75? This lack of customization may show a lack of true interest in the position you are filling. If the applicant doesn't even take the time to research your company, they may not take the time to cover details in the job at hand. Look for statements that show sincere interest, signs of research and knowledge about your organization and the position, as well as good grammar and communication skills.

Interviewing techniques

You've finally plowed through the pile of applications and/or resumes you received as a result of your advertisement. What do you do now? The interview process can be based on several different strategies. There are several interviewing techniques that can help you get the most useful information from the applicant. Some techniques will, of course, be more useful for certain types of jobs.

Regardless of the technique you use, preparation is key to a successful interview (for both you and the candidate!) Winging it with a simple conversational interview where you and the candidate chat and exchange war stories won't give you the real information you need. Preparation means having a set of questions you follow with each candidate, a rating method of some sort to compare candidates (very important if you conduct more than one interview per day), and the learned ability to form unbiased opinions. This last one is especially difficult for some interviewers. You may really hit it off with a candidate and like them personally. This makes it difficult to truly evaluate their skills for the position.

Telephone interviews
The first step you may want to take is a telephone interview. This can save quite a bit of time by helping you weed out some less qualified candidates. They are typically shorter because you don't have the formalities involved that you would have to go through in a face-to-face interview. You don't have to spend as much time scheduling or reserving space, they're less formal (i.e., less stressful), and you don't form any initial impressions based on appearance or other physical attributes.

Make sure you have a good connection, schedule the phone interview at a time that is convenient for the candidate. For example, they may not want to be interviewed from their current workplace, so an evening interview may be necessary. Try to accommodate their schedules if you can. Distractions at home (i.e., kids, pets, other noise) are also factors.

It is just as important to have a prepared list of questions for phone interviews as any other type of interview. This keeps you on track and keeps the interview moving along at a good pace. You should keep the questions more general, however, in order to keep the interview short. Save the details for the face-to-face interview. Just make sure you get the facts you'll need to make the decision about who to screen out. This may also be the best time to bring up the salary offered for the position and screen out applicants that require higher levels of pay.

Let's go over some of more recent trends in interviewing techniques, then we'll talk more about preparing your questions and what you can and cannot ask!

Behavior-based interviewing
This type of interviewing is explained in depth in Dr. Del J. Still's book "High Impact Hiring." It involves asking questions that require the candidate to replay specific actions they took to solve a problem, complete a project, or otherwise do their jobs. It goes to a deeper level than most interview techniques by forcing the candidate to give details. Rather than saying that they were part of a group project that developed a software program to solve a company's inventory problems, they would specifically detail what their role was. Using the word "I" rather than "we" is important in this type of interview.

As the interviewer, it is your job to teach the candidate how to answer your questions appropriately. It will be an automatic response for them to give a less detailed answer. You have to tell them the depth of information you need. For example, Dr. Still spells it out like this. First have the candidate describe a work situation, then have them describe what specific actions they took, then explain the final result of their actions.

As the interviewer, you have to take this information and apply it to the position for which they are interviewing. Use their actions from previous situations to predict how they might perform in the job at hand, or react to the situations that arise as a part of that job.

Situational interviewing
Situational interviewing is similar to behavioral interviewing in that it seeks specific information about actions taken to solve a problem or complete a project. It is based, however, on a hypothetical situation you create rather than a specific past experience of the candidate. You create situations based on the job's functions. The candidate will still pull from past experience in most cases so you are getting virtually the same information, but the candidate does more of the work making the connection between the two. They may even illustrate their answer to your hypothetical situation with an example of how they handled a similar situation in their past work experience.

Both behavior-based and situational interviewing take some skill and practice for the interviewer, but can definitely unearth good information about the behavior, work ethic, and work style of the candidate.

Other techniques
There are several more techniques that use behavioral type information. Competency-based interviews are one. These focus on the essential competencies of the job and ask that the candidate apply their skills to those areas.

Other more traditional (although probably less effective) types of interview techniques draw more from personality traits and the candidates' own claims to their work ethics and skill levels. For example, a candidate can claim to thrive on challenge, be creative, assertive, etc. and probably truly believe these things about themselves. Unless you have specific examples of how they demonstrated these traits in their past work environments then you don't have much more than their word for it.

There are also much more complicated and expensive techniques for interviewing candidates. These often involve testing, assessment centers, and even psychological interviews. For more information on these techniques go to the Links section of this article. Also, visit How Hiring and Training Your Sales Team Works for more ideas.

A final note about interviewing
If you are not the interviewer, make sure the first interviewer is someone who knows the job. If it's a tight labor market, your company is being interviewed as well as the job applicant. Don't let the candidate's first exposure to your company be through someone unqualified to answer the technical questions they may have. This first exposure needs to go to the manager of the position.

Now, let's move on to questions you can't ask in an interview.

Illegal interview questions

There are several laws that dictate rules about hiring. For example, the Americans with Disabilities Act was created to protect those with disabilities from discrimination because of their disability. This act makes it illegal to ask job candidates certain questions about their disabilities.

Here is a list of the most common interview questions you can't ask job candidates.

  • DON'T ask how many days the applicant was sick last year (But you CAN ask how many days were "missed").
  • DON'T ask broad questions about a disability, such as "do you have any disabilities?" (But you CAN ask if they can perform the necessary duties of the job.)
  • DON'T ask about any past workers' compensation claims or job injury history.
  • DON'T ask about lawful drug use (unless it is as part of a screening for unlawful drug use).
  • DON'T ask age, gender, marital status, race, ethnic origin, religion, or anything else that could be discrimination-based. (This includes seemingly innocent questions like: "Where did you grow up?" "When did you graduate from high school?" or even "Are you married?" or "Where is your spouse from?")
  • DON'T ask about child care availability.
  • DON'T ask about employment status of family members.
  • DON'T ask about their sexual preference.
  • DON'T ask about criminal arrest records. (But you can in some instances ask about convictions.)

The main thing to keep in mind with the questions you ask a job candidate is to stay away from anything that could be construed as discriminatory. Don't even make notes about physical appearance, ethnicity, disabilities or other attributes about the candidate. If they offer such information do not make note of it or respond to it.

Comparing candidates

With your head spinning from the parade of job candidates you've interviewed, you may be very confused about who said what and who you thought was the best person for the job. That opinion may have changed as each candidate came and went. This is precisely why it is so beneficial to take notes. And we don't mean scribbles in the margins of their resume, but actual notes on the pages of prepared questions you used during the interview. You are using prepared questions aren't you?

Rating each candidate
Remember when we said preparation also means having a rating method to compare candidates? As you ask each question and take notes about the candidate's answer, you should also assign a rating for their response to that question. It may seem like a pain at the time, but will definitely be beneficial when you approach decision-making time.

The rating system you use can simply be a 1-5 scale, or something more elaborate. Design a system that works best for the types of information and answers you expect to get.

Checking references
You can ask for business, personal, and even education references from your candidates. Getting the opinion of someone a job candidate has worked for in the past can be extremely helpful or of very little help. Often past employers are hesitant to say anything about a past employee for fear of being sued. If you do get any input from a former employer or other reference (or even if they refuse comment), make sure you document everything about the conversation and take notes about what they said. If you can't get in touch with the reference after several tries, make a note of that as well. This can help you protect yourself from any negligent hiring suits. Background checks, criminal records checks, and other references can be very important for certain types of jobs.

Keep records of notes and resumes, and other correspondence with candidates who applied for the job for one year.

Making the offer

You've made your choice and now you have to let the lucky candidate know. You can do so either by mail, phone, or other communication means. At the end of the interview, you should tell the candidate how and approximately when you expect to contact them. This helps alleviate some of the stress for the candidate, as well as helps you cut down on phone calls you'll get asking if "you've made a decision yet?"

The most common method is to extend a verbal offer by phone and follow it up with a letter spelling out the details of the offer including such things as the negotiated salary, hours, etc. Include in the letter any contingencies such as physical exams, drug tests, etc. Then ask that the employee either sign and return the letter as a record of their acceptance of the position, or call you. Give them a deadline in which to respond too, so you know when to start thinking about your second choice.

While it is important that the letter spell out some detail, make sure you don't include too much. Most states have an Employment At Will doctrine that means it is assumed that the position is for an indefinite amount of time, and that either the employer or employee can terminate the relationship for any reason. One thing that can put a kink in that is if your Offer Letter is written more as an employment contract. Here are some things to watch out for in your Offer Letter.

  • Watch out for phrases within the letter that imply the permanence of the position. No one is really a permanent employee.
  • State the salary as a monthly figure. It is not unknown for a court to award a year's salary to an employee who was discharged within 6 months based on the salary figure in the Offer Letter. Or, that the employee had to be kept on for one year because of the way it was stated in the Offer Letter.
  • Don't state the intervals for evaluations. Courts have also held that new hires had to be kept on at least until the evaluation because it was stated that they would be "evaluated in 3 months" in the Offer Letter. Use general terms for these statements.
  • Make sure the letter somewhere states that it is not an employment contract and does not spell out specific terms of employment.

Employment contracts
Sometimes hiring the right employee does require a written employment contract either for your protection or for theirs. These contracts can spell out any number of specifications pertaining to the job, including:

  • salary and other compensation
  • term of employment
  • pay increase schedules
  • review schedules
  • specifications for terminating (such as just or good cause -- not just for any reason)
  • ownership and rights as they relate to created works by the employee
  • rights of the employee for performing similar work outside of the company
  • employee dispute resolution

Almost anything can be written into an employment contract. One thing, however, that can't be included is a waiver of the rights guaranteed by the government such as overtime pay for nonexempt employees, discrimination and harassment laws, family and medical leave act, etc. The contract is a two-way street too. Both the employee and the employer are required to hold up their end of it.

For those who didn't make the cut...
Once you have the acceptance of the candidate of your choice, contact the others candidates you interviewed either by phone or letter. This is important not only as a courtesy, but because you never know when you might call those candidates back. It is certainly possible that your chosen one will change his or her mind and you'll end up calling your second choice right away. If not, you may have another position open a later date that one of those candidates could fill. Don't ruin your chances of getting them back by failing to let them know about the decision for the current position.

Orientation
There's nothing worse as a new employee than arriving at work for your first day on the job and having no one know who you are or why you are there. Make sure there is someone (if not yourself) available to show the new employee around, answer questions, introduce them to staff, and get them started on the right foot.

While formal orientation programs are great, even an informal one is better than nothing!

Glossary

Americans with Disabilities Act
As it relates to hiring, the ADA requires that employers not discriminate against job applicants based on their disabilities. It states that employers may not refuse to hire an otherwise qualified applicant who has a disability, as long as the individual can perform the "essential functions" of the job "with or without reasonable accommodation." This law applies to businesses that employ at least 15 people. For additional information, about the ADA, see our Links section.

Employment At Will
Every state except Montana has an Employment-at-Will doctrine that means an employer can fire an employee for any reason at any time. It also mean the employee can quit for any reason at any time. The exceptions to this are when there is a public policy that prevents it, or when there is a whistleblower statute that protects employees who report unsafe or illegal activities by their employers. If the termination by the employer is based on any discriminatory fact then it is not protected under the at-will doctrine.

Exempt
Employees classified as "exempt" are typically salaried employees (but don't have to be), and fall into specific types of jobs such as executives, administrative professionals, or outside salespersons. These employees are not eligible for overtime pay, but do have to be paid at least the minimum wage (figured on an average weekly basis.) There are also exempt classifications for jobs that are seasonal such as employees of amusement parks, the fishing and agriculture industries, casual employees such as babysitters and other caregivers, and others. The law varies with each group, so check with state and federal requirements when classifying employees as exempt and non-exempt.

Negligent Hiring
The legal liability a company has for failure to sufficiently screen an applicant's background. This applies primarily for positions that have exposure to, and interaction with, the public that can result in public injury, etc.

Non-Exempt
An employee classified as "non-exempt" typically works for hourly pay and is entitled to at least the minimum wage (figured on an average weekly basis), overtime pay at one and one half times their normal hourly rate for any hours over 40 hours per week, and other protections under the Fair Labor Standards Act (FLSA) including child labor laws and equal pay protection. The law varies with each group, so check with state and federal requirements when classifying employees as exempt and non-exempt.

Hiring practices

Legal Links

Federal Employment Law

Hiring Services

Recruiting Special Populations