What will the elements of your customer service policy be? Because customers expect to be able to contact a company with questions, special requests or problems related to ordering, online businesses should offer an e-mail address or phone number for customer service inquiries.

Not only is customer service a great way to build loyalty, but it’s also a valuable feedback mechanism–customers are all too ready to sing your praises or call out improvements that need to be made to your product, service or image.

An important aspect of customer service is deciding how quickly the business will respond to customer inquiries and complaints (phone or e-mail). This response time should be realistic and consistent. If the policy says all phone calls will be answered within two minutes or returned the same day, that time line becomes a pledge to the customer.

Nothing frustrates an online shopper more than sending an e-mail to an address listed on a shopping site and waiting hours, days or interminably for a response. To keep customers on the site, businesses must keep them in the loop.

Be honest and follow through with your customers – your competitors are only a click away!

When you only have a few employees and a few customers, it’s easy to stay on top of things. As you add more customers and and employees, it gets quite a bit harder. You actually create the potential for growth at the same time you’re creating the potential for disaster.

Creating a customer service policy and sticking to it can make it easier on you.

Take these steps to help you ensure that your clients receive excellent service every step of the way.

1. Put your customer service policy in writing. These principles should come from you, but every employee should know what the rules are and be ready to live up to them. This doesn’t have to be elaborate. In fact, keep it as simple as you possibly can.>
2. Establish support systems that give employees clear instructions for gaining and maintaining service superiority. These systems will help you outservice any competitor by giving more to customers and anticipating problems before they arise.
3. Develop a measurement of superb customer service. Don’t forget to reward employees who practice it consistently.
4. Be certain that your passion for customer service runs rampant throughout your company. Employees should see how good service relates to your profits and to their futures with the company.
5. Be genuinely committed to providing more customer service excellence than anyone else in your industry. This commitment must be so powerful that every one of your customers can sense it.
6. Share information with people on the front lines. Meet with your employees regularly to talk about improving service. Solicit ideas from employees-they are the ones who are dealing with customers most often.
7. Act on the knowledge that what customers value most are attention, dependability, promptness and competence. They love being treated as individuals and being referred to by name.

Phrases That’ll Make Your Customers Happy

Principles of customer service are all very well, but you need to put those principles into action with everything you do and say. There are certain “magic words” customers want to hear from you and your staff. Make sure all your employees understand the importance of these key phrases:

• “How can I help?” Customers want the opportunity to explain in detail what they want and need. Too often, business owners feel the desire or the obligation to guess what customers need rather than carefully listening first. By asking how you can help, you begin the dialogue on a positive note (you are “helping,” not “selling”). And by using an open-ended question, you invite discussion.
• “I can solve that problem.” Most customers, especially business-to-business customers, are looking to buy solutions. They appreciate direct answers in a language they can understand.
• “I don’t know, but I’ll find out.” When confronted with a truly difficult question that requires research on your part, admit that you don’t know the answer. Few things ruin your credibility faster than trying to answer a question when you are unsure of all the facts. Savvy buyers may test you with a question they know you can’t answer and then just sit quietly while you struggle to fake an intelligent reply. An honest answer enhances your integrity.
• “I will take responsibility.” Tell your customer you realize it’s your responsibility to ensure a satisfactory outcome to the transaction. Assure the customer you know what he or she expects and will deliver the product or service at the agreed-upon price. There will be no unexpected changes or expenses required to solve the problem.
• “I will keep you updated.” Even if your business is a cash-and-carry operation, it probably requires scheduling and coordinating numerous events. Assure your customers they will be advised of the status of these events. The longer your lead time, the more important this is. The vendors customers trust the most are those that keep them apprised of the situation, whether the news is good or bad.
• “I will deliver on time.” A due date that has been agreed upon is a promise that must be kept. “Close” doesn’t count.
• “Monday means Monday.” The first week in July means the first week in July, even though it contains a national holiday. Your clients are waiting to hear you say “I deliver on time.” The supplier who consistently does so is a rarity and will be remembered.
• “It’ll be just what you ordered.” It will not be “similar to,” and it will not be “better than” what was ordered. It will be exactly what was ordered. Even if you believe a substitute would be in the client’s best interests, that’s a topic for discussion, not something you decide on your own. Your customer may not know (or be at liberty to explain) all the ramifications of the purchase.
• “The job will be complete.” Assure the customer there will be no waiting for a final piece or a last document. Never say you are finished “except for….”
• “I appreciate your business.” This means more than a simple “Thanks for the order.” Genuine appreciation involves follow-up calls, offering to answer questions, making sure everything is performing satisfactorily, and ascertaining that the original problem has been solved.

Neglecting any of these steps conveys the impression that you were interested in the person only until the sale was made. This leaves the buyer feeling deceived and used, and creates ill will and negative advertising for your company. Sincerely proving you care about your customers leads to recommendations and repeat sales.

Never Let Your Customers Forget You

One important tool for generating repeat business is following up. Effective follow-up begins immediately after the sale when you call the customer to say “thank you” and find out if he or she is pleased with your product or service. Beyond this, there are several effective ways to follow up that ensure your business is always in the customer’s mind.

• Let customers know what you are doing for them. This can be in the form of a newsletter mailed to existing customers, or it can be more informal, such as a phone call. Whatever method you use, the key is to dramatically point out to customers the excellent service you are giving them. If you never mention all the things you are doing for them, customers may not notice.
• Write old customers personal, handwritten notes frequently. “I was just sitting at my desk and your name popped into my head. Are you still having a great time flying all over the country? Let me know if you need another set of luggage. I can stop by with our latest models any time.” Or if you run into an old customer at an event, follow up with a note: “It was great seeing you at the CDC Christmas party. I’ll call you early in the New Year to schedule a lunch.”
• Keep it personal. Voice mail and e-mail make it easy to communicate, but the personal touch is often lost. If you’re having trouble getting through to someone whose problem requires that personal touch, leave a voice-mail message that you want to talk to the person directly or will stop by his or her office at a designated time.
• Remember special occasions. Send regular customers birthday cards, anniversary cards, holiday cards…you name it. Gifts are excellent follow-up tools, too. You don’t have to spend a fortune to show you care; use your creativity to come up with interesting gift ideas that tie into your business, the customer’s business or his or her recent purchase.
• Pass on information. If you read an article, see a new book, or hear about an organization a customer might be interested in, drop a note or make a quick call to let them know.
• Consider follow-up calls as business development calls. When you talk to or visit old clients or customers, you’ll often find they have referrals to give you, which can lead to new business.

With all your existing customers can do for you, there’s simply no reason not to stay in regular contact with them. Use your imagination, and you’ll think of plenty of other ideas that can help you develop a lasting relationship.

Dealing With Unsatisfied Customers

Studies show that the vast majority of unsatisfied customers will never come right out and tell you they’re unsatisfied. They simply leave quietly, later telling everyone they know not to do business with you.

So when a customer complains, don’t think of it as a nuisance-think of it as a golden opportunity to change that customer’s mind and retain his or her business.

Even the best product or service receives complaints now and then. Here’s how to handle them for positive results:

• Let customers vent their feelings. Encourage them to get their frustrations out in the open.
• Never argue with a customer.
• Never tell a customer “You do not have a problem.” Those are fighting words.
• Share your point of view as politely as you can.
• Take responsibility for the problem. Don’t make excuses. If an employee was sick or a supplier let you down, that’s not the customer’s concern.
• Immediately take action to remedy the situation. Promising a solution and then delaying it only makes matters worse.
• Empower your front-line employees to be flexible in resolving complaints. Give employees some leeway in deciding when to bend the rules. If you don’t feel comfortable doing this, make sure they have you or another manager handle the situation.

It doesn’t make good business sense to spend large amounts of capital to store and maintain hard copy information. As with all aspects of a company’s business, using technologies that will increase productivity and reduce costs is vital to your profitability and success.

Because of the cost-savings available, many companies are changing their attitudes toward data storage and are looking at innovative ways to handle the flow of data. Today, there are several inventive and cost-effective technologies available that can streamline the processing and storing of hard-copy data, which, in turn, will save you money. Money that you can use to improve systems and invest in the future of your business. Let’s take a look at one of these new systems.

Defining the Solution

Digital archiving, also known as scan-to-file, is one of the best methods around for processing and storing documents. Simply put, digital archiving is the process of converting paper information to a digital representation of the original document.

These highly cost-effective conversions allow information to be stored and accessed easily, enabling companies to save time, storage space, money and resources, and increase their productivity and security.

Over time, digitally storing information will reduce the costs of document storage. It will reduce employee workload associated with filing, retrieving and re-filing paper documents. Additionally, it provides easy access to search, retrieve, read, print and e-mail imaged files.

Digital archiving also allows for expedient file transmission over the internet or an internal network. And it creates a flexible, electronic database of corporate documents, such as financial statements, required regulatory documentation, client and patient files, tax and legal documents–all of which can be password-protected to restrict printing and content extraction.

And there’s more good news: The process is simple. Information is scanned and stored on one of a number of forms of media, most often on CD-ROMs, but also on hard disks or other file formats. You then store the digital data in a secure location, either onsite or away from your business.

The digitally stored information can easily be retrieved by simply loading a CD-ROM or disk onto any computer. The document appears just as it did in its original hard copy form and can be saved to the computer, e-mailed or printed.

Digital archiving enables companies to put unlimited amounts of information onto CDs. Imagine taking 35,000 pages of paper and converting it to three CDs.

If you think digital archiving may be right for your company, here are a few questions to ask your visual communications partner:

1. How is information scanned? Who does it and how long does it take? Information can either be hand-scanned or fed into a scanner based on the type of data being scanned. Scanning should be done by a team of professionally trained and certified digital specialists, who know how to scan and archive your important documents. Scanning times will vary based on the amount of information being converted. For example, 1,200 pages can take up to four hours to complete.
2. Is the information secure while it’s being scanned for digital archiving? Most likely it is, but you need to ensure that the vendor has a dedicated and secure digital archiving imaging area designed with your sensitive documents in mind. Additionally, you need to verify that the information won’t be shared with any outside source, and your vendor should return all documents upon completion. In some cases, you and the vendor may determine that the scanning should be done at your location.
3. Where is the information stored? Typically, your vendor should store the information on CDs that will be returned to you for storage.
4. What format will the digitized documents be in? At a minimum, documents should be converted to PDF because that’s the widely accepted format for digitized information. Additionally, PDF formatting is approved and in use by a host of local, state and federal agencies. However, based on your needs, files can also be created in Word and other industry-specific software.

Money management is tricky business. In addition to customers, cash flow and managing your accounts properly is what keeps your business humming along. Consequently, getting paid in full and on time, as well as understanding money management, has to become a priority, even if you elect to hire an accountant or bookkeeper to manage the books.

You will still need to familiarize yourself with basic bookkeeping and money management principles and activities such as understanding credit, reading bank statements and tax forms, and making sense of accounts receivable and payable. You also have to give careful consideration to the purchase payment options you offer customers, including cash, checks, debit cards, credit cards and online payment options, as well as establishing payment terms and debt collection in the event of nonpayment.

Opening a Bank Account

Once you’ve chosen a name and registered your business, you will need to open a commercial bank account. Setting up a business bank account is easy. Start by selecting the bank you want to work with–think small-business-friendly–and call to arrange an appointment to open an account. There’s not much more required than that.

However, when you go, make sure you take personal identification as well as your business name registration papers and business license, because these are usually required to open a commercial bank account. The next step will be to deposit funds into your new account (even $100 is okay). If your credit is sound, also ask the bank to attach a line of credit to your account, which can prove very useful when making purchases for the business or during slow sales periods to cover overhead until business increases. Also be sure to ask about a credit card merchant account, debit account, and other small business services.

Bookkeeping

When it comes time to set up your financial books, you have two options–do it yourself or hire an accountant or bookkeeper. You might want to do both by keeping your own books and hiring an accountant to prepare year-end financial statements and tax forms.

If you opt to keep your own books, make sure you invest in accounting software such as Quickbooksor Quickenbecause they’re easy to use and makes bookkeeping almost enjoyable. Most accounting software programs allow you to create invoices, track bank account balances and merchant account information, and keep track of accounts payable and receivable.

If you’re unsure about your bookkeeping abilities even with the aid of accounting software, you may wish to hire a bookkeeper to do your books on a monthly basis and a chartered accountant to audit the books quarterly and prepare year-end business statements and tax returns.

To find an accountant or bookkeeper in your area, you can contact the U.S. Association of Chartered Accountantsor the American Institute of Professional Bookkeepers. In Canada, you can contact the Chartered Accountants of Canadaor the Canadian Bookkeepers Association.

If you’re only washing windows on weekends to earn a few extra bucks, there’s little need for accounting software or accountant services. Simply invest in a basic ledger and record all business costs and sales. Since you are doing it on your own, be sure to use a commonsense approach when calculating how much to invest in your business vs. expected revenues and profits.

Also remember to keep all business and tax records in a dry and secure place for up to seven years. This is the maximum amount of time the IRS and Revenue Canada can request past business revenue and expense information.

In today’s super-competitive business environment, you must provide customers with many ways to pay, including cash, debit card, credit card and electronic cash. There is a cost to provide these payment options–account fees, transaction fees, equipment rental and merchant fees based on a percentage of the total sales value. But these expenses must be viewed as a cost of doing business in the 21st century.

You can, however, reduce fees by shopping for the best service with the best prices. Not all banks, merchant accounts and payment processing services are the same, and fees vary widely. You can also check with small business associations such as the chamber of commerce to see if they offer member discounts; it’s not uncommon to save as much as 2 percent on credit card merchant fees. Just remember, consumers expect choices when it comes time to pay for their purchases, and if you elect not to provide these choices, expect fewer sales.

Cash is the first way to get paid, which is great because it’s liquid and there’s no processing time required. As fast as the cash comes in, you can use it to pay bills and invest in business-building activities to increase revenues and profits. The major downside is that cash is risky because you could get robbed or lose it.

In cases like that, collecting from your insurance company could prove difficult if there’s no paper transaction as proof. Even if you prefer not to receive cash, there are people who will pay in cash, so get in the habit of making daily bank deposits during daylight hours. Also invest in a good-quality safe for cash storage for times when you cannot get to the bank.

If you’re running a service business, one the most popular way people still pay for services is with a check. You have to take a few precautions to ensure you don’t get left holding a rubber check, especially when dealing with new clients. Ask to see a photo ID and write the customer’s driver’s license number on the check.

If the amount of the check exceeds a few hundred dollars, ask the buyer to get the check certified or pay with a bank draft instead, especially if the client is new to your business. Also get in the habit of checking dates and dollar amounts to make sure they are right. I have been caught a few times with wrong dates and dollar amounts and it can be time-consuming to have to get a new check because of a simple error.

Debit cards are another option, but to accept them, you will need to buy or rent a debit card terminal. Most banks and credit unions offer business clients debit card equipment and services. The processing equipment will set you back about $40 per month for a terminal connected to a conventional telephone line and about $100 per month for a cellular terminal, plus the cost of the telephone line or cellular service.

There is also a transaction fee charged by the bank and payable by you every time there is a debit card transaction, which ranges from 10 cents to 50 cents per transaction, based on variables such as dollar value and frequency of use.

Opening a Credit Card Merchant Account

Many consumers have replaced paper money altogether in favor of plastic for buying goods and services. In fact, giving your customers the option to pay for purchases with a credit card is often crucial to success. This is especially true if you plan to do business on the web because credit cards and electronic cash are used to complete almost all web sales and financial transactions.

To offer customers credit card payment options, you will need to open a credit card merchant account. Get started by visiting your bank or credit union or by contacting a merchant account broker such as 1st American Card Service, Cardservice International or Merchant Account Express to inquire about opening an account.

Providing your credit is sound, you will run into few obstacles. If your credit is poor, you may have difficulties opening a merchant account or have to provide a substantial security deposit. If you are still unsuccessful, the next best option is to open an account with an online payment service provider, which is discussed in the next section.

The advantages of opening a credit card merchant account enabling you to accept credit card payments are numerous. In fact, studies have proven that merchants who accept credit cards can increase sales by up to 50 percent. Not to mention that you can accept credit card payments online, over the telephone, by mail and in person, as well as sell services on an installment basis by obtaining permission to charge your customer’s credit card monthly or per agreement.

Of course, all these benefits come at a cost, especially when you consider that you’ll have to pay an application fee, setup fee, purchase or rent processing equipment and software, pay administration and statement fees, and pay processing and transaction fees ranging from 2 to 8 percent on total sales volume. Once again, these fees must be viewed as the cost of doing business.

Online Payment Services

Online payment services allow people and businesses to exchange currency electronically over the internet. These services are very popular with consumers and merchants. PayPalis one of the more popular online payment services with more than 40 million members in 45 countries, offering personal and business account services. Both types of accounts allow funds to be transferred electronically among members, but only the business account enables merchants to accept credit card payments for goods and services.

The advantages of online payment services are that they’re quick, easy and cheap to open, regardless of your credit rating or anticipated sales volumes, and you can receive payment from any customer with an e-mail account. You can have the funds deposited directly into your account, have a check issued and mailed, or leave funds in your account to draw on using your debit card. The only real disadvantage is that most services redirect your customers to their website to complete the transaction. This can confuse people who in some cases will abandon the purchase.

Every small-business owner also needs to establish a payment-terms policy. Although you certainly want to standardize the way you get paid, at the same time you will also have to be flexible enough to meet clients’ needs on an individual basis. Setting payment terms covers deposits, progress payments and extending credit.

It’s important to establish clear, written payment terms with clients prior to providing services or delivering product. Your payment terms should be printed on your estimate forms, included in formal contracts and work orders, and printed on your final invoices and monthly account statements.

Securing Deposits

If you’re run a service business, you have to get in the habit of asking clients for a deposit prior to providing services, especially if the work also involves product sales that have to be paid for by you in advance. In this case, the deposit should be for at least the value of the materials. If you’re supplying labor only, try to secure a deposit of at least one-third to one-half of the total value of the contract in advance of providing any services.

Your order form or contract should have the deposit information clearly stated. Information on canceled orders or contracts and your refund policy should also be on your forms. Securing a deposit is your best way of ensuring that, at minimum, basic out-of-pocket costs are covered should the customer cancel the job or contract.

Progress Payments

Progress payments are also a way to ensure that you do not leave yourself open to financial risk. The key to successfully securing progress payments is to prearrange your contract and payment terms. Agree on the amount that will be due at various stages of the project. You can use percentages to calculate the progress payments, such as 25 percent deposit, 25 percent upon delivery of any materials, 25 percent upon substantial completion, and the balance at completion or within 30 days of substantial completion.

Or you may arrange for more concrete progress payments based on indicators that are relevant to the specific scope of work, the job or the services provided. Regardless of the system you use, progress payments on larger jobs can dramatically lessen your exposure to financial risk.

Extending Credit

In most cases there’s no need to extend credit to consumers unless you deliver a service such as pest control that’s billed monthly or a major contract that is completed in stages. As a general rule, when a transaction is complete you should be paid in full. However, in the case of business-to-business sales, commercial clients will generally want some type of credit on a revolving-account basis, such as 30, 60, 90 or sometimes 120 days after delivery of the product or completion of the service.

Ideally, you want to be paid as quickly as possible, so you might want to offer a 2-percent discount if invoices are paid within one week. And if you do extend credit, make sure to conduct a credit check first, especially when large sums of money are at stake. There are three major credit-reporting agencies serving the United States and Canada: Trans Union, Equifaxand Experian. All three credit bureaus compile and maintain credit files on just about every person, business and organization that has ever applied for credit.

Debt Collection

No matter how careful you are when it comes to extending credit privileges to customers, once in a while you will not be paid on time or at all. What can you do to get paid? The first rule of getting paid is to keep the lines of communication open with your delinquent client, and keep the pressure on to get paid through the use of nonthreatening telephone calls, letters and personal visits.

You cannot legally intimidate clients into paying you, but you can explain why it is in their best interest to pay you–namely, to keep your business relationship intact, that nonpayment can hurt their credit rating or that you may sue them if they do not pay.

Another option is to hire a collection agency to collect the outstanding debt. Collection agencies generally charge a percentage of the total amount owed as their fee, which can range up to as much as 50 percent. The Association of Credit and Collection Professionals is a good starting point for finding a collection agency to work with.

Your final option is to take the delinquent account to small-claims court, but remember that small-claims courts have limits as to how much you can sue for in your state or province, ranging from $1,500 to $25,000. Filing fees vary by state and province as well, and these must be paid upfront. But if you win, the fees are added to your award.

As a rule of thumb, small-business owners that take people to court for nonpayment generally represent themselves, as the amount of the potential award is usually small and doesn’t justify lawyers’ fees and expenses. Even if you win, you will not necessarily be paid the amount you’re awarded. You may win a judgment, but still have to chase the defendant through garnishment of income or seizure of assets to get paid. You can learn more about the small-claims court process and filing fees by contacting your local courthouse.

How many times have you tried so hard to match the skills of a candidate to the demands of the open position that the most important characteristics of a person have been relegated to lesser importance or forgotten entirely?

Finding the “Right Stuff”

The key to a person’s worth (the “right stuff”) is integrity, honesty, intelligence, the ability to communicate, and the ability and willingness to learn. Technical skills are important, but without the key ingredients, the technical skills of the applicant may be irrelevant.

Finding the candidate with the “right stuff” is not an easy task, but then my grandmother, after several years of urging, finally convinced me that anything that is worthwhile is difficult and requires considerable effort.

There are several roads to successful hiring:

Personal knowledge of a candidate.The best candidates are usually not hunting for a job. They may be people employed by one of your customers, people in competing companies, people in the same industry but not in the same line of business, or people in other industries who have exhibited the talents necessary for the job. More important, do you or one of your key associates personally know the candidates? If so, you may begin to pursue them, but with a few admonitions.

If the selected candidate works for a customer, it’s a good plan to contact the customer and let him know that his employee is a candidate for your position. I once hired one of my best customer’s top men, believing that I would lose the customer. I decided it was worth the risk. I did lose the customer, but not forever. The man I hired is now successfully running the business from which I retired. It was well worth it!

People with the “right stuff” are absolutely essential to the future success of your business! A compromise in this area has come back to hurt many businesses: it typically involves terminating the “compromise” and repeating the hiring process. What’s worse is that these “compromises” do poor work, cause internal problems, and end up costing the company in many ways.

Depending upon your relationship with a competitor who has a potential candidate, you may wish to treat that competitor much the same as recommended for your customer. The same may be said for candidates working for one of your suppliers.

A valued friend knows the candidate personally.

This is the next best thing to knowing the candidate yourself. A referral from a friend, a business associate or a present employee whose judgment you respect is a valid basis for pursuing a candidate. Note that your friend must be more than a golfing buddy; you must respect his judgment as you would a trusted associate.

Pay the price.

If the first two approaches don’t provide a candidate, the next best avenue to the “right stuff” is a toll road. A search firm or a highly reputed employment agency is a good but expensive route (often in the area of 30 percent of the employee’s starting annual compensation). Keep in mind, however, the value of an outstanding employee. It far surpasses the fee you may have to pay.

Your agreement with the search firm or agency should include the right to reimbursement if the hired candidate doesn’t work out within a reasonable time period, perhaps six months and sometimes longer. This may be negotiable with each individual firm. This avenue is most often appropriate for higher-level positions and not entry-level jobs.

The search firm or agency should do all preliminary screening, which often includes intelligence, personality, aptitude and skills testing, the cost of which should be included in their fee. (Note: These efforts do not test judgment; you must do this yourself.) In addition, you should expect the firm to provide you with at least three good, qualified candidates who meet the requirements you specify when you contract with the firm.

Hire a temporary employee from an agency.

It’s quite common to contract for a temporary employee only to find that the temp is the right person for the job on a permanent basis and may be available. In this case, you should be prepared to pay a fee to the temp agency. This is a reasonably good way to hire clerical and lower-level technical personnel and it keeps your business moving while you’re continuing your search.

Advertise in the right places.

Although we have not found many “right places to advertise,” they may include trade or industry magazines that you’re reasonably sure are read by the candidates you’re seeking. Sometimes the local newspaper can be a good source for candidates, but be prepared to kiss a lot of toads to find the prince. Likewise, some have reported success with national publications such as The Wall Street Journal and the National Employment Weekly, and others report good results by advertising on the internet. Choose the outlets best for you. Remember: If you hire an out-of-town candidate, you will be expected to pay for moving expenses!

The hiring of a candidate assumes that you have carefully and thoroughly considered your own employees as a source. You must not overlook current employee candidates! Study the background and work history of those who might qualify. You may not be aware or have forgotten that one of them has all of the qualities that you are hunting for in the new position.

Many businesses post job openings on the employee bulletin boards. I believe this is a good practice.

The interview process and application forms, in today’s arena, are landmines waiting to be stepped on! There are more employment laws today than ever before and questions you used to be able to ask are now grounds for discrimination lawsuits. If you aren’t familiar with these laws, you must become so–and the sooner the better.

Contact your legal counsel. Most law firms either have an expert on employee relations or can refer you to a source where appropriate literature can be found. One good document is the SBA’s An Equal Opportunity Guide for Small Business Employers.

There are questions you cannot ask during the interview process. Topics to steer clear of include age, disabilities, pregnancy, marital status, religion, sexual preference, race, ancestry, children and prior arrests. Everyone in your organization who may be in a position to conduct an interview must be aware of these and other limitations. We recommend that you develop a list of questions that are acceptable and provide the interviewers with some guidance that is meaningful.

A typical list of questions that can be asked is presented below. Obviously, if you have found a candidate because of your personal knowledge (or the knowledge of a business associate), you will already know the answers to many of the “illegal” questions. Even so, don’t document such knowledge, even if the candidate is for the number-two position in the company. Have as many key people as possible interview the prospect. More opinions will make for a better hiring decision and the other interviewers may uncover something vital that you overlooked.

Interview Questionnaire
1. What do you like most about your present job?
2. What do you like least about your present job?
3. Describe your responsibilities in detail.
4. Describe your relationship with your supervisor.
5. What do you like most about your supervisor?
6. Why are you considering a different job?
7. Why did you leave the job prior to this one?
8. Do you like most of your fellow employees?
9. Are you aware of the responsibilities of the job for which you are a candidate?
10. Do you have any physical limitations that would prevent you from fulfilling those responsibilities?
11. What do you consider your greatest strength as a candidate for this position?
12. What do you consider your greatest challenge as a candidate for this position?
13. What is your present compensation and benefits package?
14. What was your beginning compensation in your job?
15. What specific training have you had that might increase your ability to perform our job?
16. In which school subjects were you most successful?
17. Which subjects in school did you find the most difficult?
18. Can you provide some references for your technical abilities? What are their positions?
19. What do you know about our company that you find appealing?
20. Are working overtime and travel acceptable to you?
21. Are you willing to receive additional training to improve your ability to perform our job?
22. What is the most important factor to consider about becoming an employee of our company? For example: compensation, benefits, working hours, opportunity to progress.
23. What are the least important factors in your consideration?

Employment Preferences

Another aid in hiring is a listing of employment preferences. The answers can be quite enlightening when studied with the responses to interview questions and a review of an application form. The answers to these questions are important regardless of the level of the position that you are seeking to fill.

Here is a sample employment preferences questionnaire:

Rank the factors listed below, on a scale of 1 through 10, with 10 being the most important and 1 being the least important to you in considering a position with our company.
___ 401(k) plan
___ Health and dental insurance
___ Incentive bonus plan
___ Initial base compensation
___ Job security
___ Opportunity for advancement
___ Retirement plan
___ Vacation time
___ Working conditions
___ Working hours

The Employment Application

Once you have identified legitimate candidates for the position, you must have them complete an employment application. Failure to do so may result in your inability to defend your decision to hire or not hire an individual. There are a number of sources available for securing a sample form that complies with all government regulations and laws. Or, you can develop one of your own and have your legal counsel review and revise it to ensure that it is acceptable in the eyes of the law.

How you approach hiring the right person for a job depends upon the level and type of job. It goes without saying that hiring an entry-level person is substantially different than securing the services of a high-level technical person or a number two or three in the chain of command. In every case, however, reference checking is mandatory.

Despite your prior knowledge (assumed) of a key manager-level applicant, you may be surprised at what you find when checking references and credit. Remember: Some of the biggest names in industry (and in our federal government) have been embezzlers, bankrupts, accused of sexual misconduct and harassment, felons, and convicted of lesser crimes. Check out their education, call prior supervisors, check for felony convictions and verify prior employment. In short, do your homework!

Assuming you’ve identified a good candidate and completed all of the homework with positive results, how do you convince him or her to become a part of your company? There are several employment selling points that you should emphasize.

1. Stress the positive factors that have influenced the candidate to favorably consider the position. They may include your company’s reputation, a positive environment in which to work, an equity opportunity, the possibility of advancement, the prospect of securing improved monetary rewards for outstanding performance, or simply a “great challenge.” Remember that compensation is not the key incentive for people with the “right stuff.”
2. Do not “buy” their services. Any person who is primarily motivated by an immediate increase in base pay is not looking for the strong, long-term relationship that will contribute to the company’s success. Why wouldn’t he leave your company six months from now for another immediate increase in base pay? This is quite different from a candidate’s desire to be properly rewarded for an outstanding contribution to the company’s objectives. Although you shouldn’t “buy” the candidate, you should be willing to “pay for what you get.” Good people cost more! More about incentive compensation later.
3. Assure the candidate that his contribution to the company’s objective is meaningful. What is more discouraging than being pursued by a company and, once employed, becoming an unnoticed number on the employee roster?
4. Consider involving more than one key manager in the hiring process to reinforce the positive factors. It’s fine to discuss prospective employment with the key manager who is involved; however, if other managers are present, it will give the candidate a stronger feeling of being wanted. If you are hiring your number-two man or prospective successor, the group approach is not appropriate, unless that group involves other owners or directors of the company.
5. Consider an employment contract or offer letter. There may be occasions when a candidate for a high-level management position will be more comfortable seeing all of the conditions of employment in writing. The written document is a permanent record of the covenants between the candidate and the company and lessens the possibility for misunderstanding between the parties.

Getting Acquainted

One of the most common mistakes made by small businesses in the human resources area is believing that a new hire will perform exactly as expected. At the very least, there is an indoctrination phase that should be provided to every new employee. In addition to learning his way around the facility, the new employee must be provided information that will improve his chances of contributing immediately to the company’s performance. This indoctrination phase should consist of the following, at a minimum.

• Presenting the company’s personnel policies. Although the new employee will have learned a good bit about the company’s personnel policies during the hiring process, he should now be provided a personnel handbook (assuming one is available) that explains the more important policies. These policies should include the hiring process just completed, a definition of salaried and hourly personnel (and their differences), salary administration, incentive bonus plan, profit sharing, retirement plan (if any), pay grade structure, time reporting, working hours, overtime pay, shift premium, pay for attending funerals and jury duty, and performance appraisals. Employee benefits should be explained, including vacation time, health and dental insurance, disability compensation and other benefits, such as awards and company automobiles.
• Teaching the company’s safety programs. The Occupational Safety and Health Administration (OSHA) has issued standards and regulations designed to protect employees from safety and health hazards. These standards and regulations involve the communication of information about hazardous or toxic materials, infectious materials, respiratory hazards and safety procedures for the operation of equipment.
• Understanding the company’s business. This may be the most important part of the indoctrination program. The new employee needs to learn about the company’s operations, its objectives and, in broad terms, the plan for achieving the objectives. The new employee should understand product information, competitive position, marketing strategy, manufacturing or service process, and personnel organization.

In some cases, you may have hired a person who has all of the character attributes that you desire but may not be well-versed in some technical area of his responsibility. He may be a good machine operator but not have adequate training in computer numerical controlled (CNC) equipment.

He may be a great salesperson but not understand the required data entry functions required of sales personnel, e.g., use of a point-of-sale device, cash register and so forth. Many times a person with responsibilities in operations may have no background at all in accounting and financial controls. In all of these cases, a training program may be appropriate. There are several ways to provide the needed training.

1. Vocational technical school. Vo-tech schools are quite good in training people in industrial arts, such as machine tool operation, engineering design, computer-assisted design (CAD), computer-assisted manufacturing (CAM), and similar skills. You or the person who is responsible for human resources matters should be well acquainted with any vo-tech schools in your company’s area and the types of skills for which they offer training.
2. Business schools, colleges and universities. These institutions offer excellent training and education in traditional areas of marketing, sales, accounting, computer operation, clerical skills and others. If the school is of sufficient size, it will offer these subjects at night, interfering less with the normal workday.
3. Industry schools and seminars. Depending upon the background of the instructor and his or her teaching skill, industry-sponsored seminars or workshops can be an excellent way to provide “brush-up” training to new employees. The sessions are usually not lengthy and the value of meeting their peers from other companies may be even more valuable than the training itself.
4. In-house training. Many small companies don’t have the facilities or time to offer formal in-house training. However, one-on-one or on-the-job training, focusing on the critical needs of the new employee, is an excellent way to make sure the needed information is learned. Keep in mind that such training may detract from the efficiency of the trainer but the new hire will learn “our preferred methods,” enabling him to contribute more rapidly to the company’s performance.

Motivation and Involvement

Do you really know what motivates your people? Have you thought about what motivates you? We believe the answer can be expressed in this way:

Something or someone you respect has told you, in some way, “You have done well!”

The “some way” may be a silent nod, a communication from someone you respect, or your own knowledge (based on parameters you know and honor) that you have “done well.” The more clearly this acknowledgment is perceived, the more effective the motivation.

The premise that “nothing succeeds like success” is illustrated by a research study involving ten adults who were given a puzzle to solve. The puzzle was the same for all ten participants. After they were completed, five of the adults were told that they did quite well, getting seven or more correct out of 10 possibilities (which wasn’t true). The other five (who may have done well) were told that they had done poorly, seven out of 10 wrong (which wasn’t true either).

Then all 10 were given another puzzle, the same for each person. The five who’d been told they had done well on the first puzzle really did do well on the second puzzle. The five who’d been told they had done poorly on the first puzzle did poorly on the second puzzle.

Having coached little league baseball (ages 9 to 18) for 16 years, I can absolutely corroborate the results of the puzzle experiment. We created good teams out of players who were average in technical skills by reinforcing the good things that each player accomplished. We pointed out that poor performances were the result of some technical miscue of which the players simply weren’t aware and we were sure that they would do better now that they were aware. This confidence that we expressed in the players was rewarded!

In my own business, we often hired young people who had just graduated from high school and were known to some of our proven employees. Our on-the-job training program was essential to the success of these new recruits; however, positive recognition of their successful accomplishments played an immense role in their becoming valued and competent employees. We dealt with their mistakes as a learning process as long as their attitude remained good and they did not often repeat the same mistakes. Positive reinforcement is a powerful motivator!

Obviously, motivation is not as simple as a pat on the back or a person knowing that they’ve done well. You must understand the normal desires of people relative to their employment, regardless of the level of their responsibility. Most people desire the following:

• Recognition for their good work
• Meaningful participation in the company’s efforts
• A feeling of belonging in a successful organization
• Opportunities for growth and advancement in their competence and responsibility
• Security in their job if they perform to expectation
• Monetary reward for an expected level of performance
• Benefits that protect them and their families from significant monetary loss

Even top-level management personnel, who are typically self-motivated, desire the same things as those in positions of lesser responsibility. A mutual recognition by their peers for a job well done or a project successfully completed may be sufficient. A brief recognition of their success by the top executive goes even further as a motivator!

Keep Your Employees Happy

There have been many such surveys published, but none that I have found have ever identified what I believe is the most important factor in successful employment:

Enjoying the job . . . enjoying going to work!

How many people do you know that sincerely like to go to work in the morning? How many people do you know who would say they honestly like their job? We all know people who have worked all their lives at jobs that they have not enjoyed. Considering that many men and women spend 35 percent to 50 percent of their waking moments at work, not enjoying that time would be very depressing.

So, how do you make an employee’s work something that he or she enjoys? It is called involvement! Keep your people involved. Consider the following:

1. Communicate with them. Make them aware of company business that might affect them, either directly or indirectly. Make sure they know about new products or services, give them copies of new company brochures, and tell them about negotiations for new health insurance. They have a need to know.
2. Reinforce their contributions to the company’s objective. Informal discussions are needed to bring the employees up to date on their role in the business. Annual performance appraisals offer an excellent chance to involve the employees in company affairs in addition to letting them know how effectively they have been working.
3. Solicit suggestions for positive changes, whether in customer service, new products, manufacturing processes or administration. Often, the employees who are closest to a problem will come up with the best solution. Involve them in problem solving and operational improvements. A lot of good ideas have come from a suggestion box and those ideas should be rewarded with recognition and monetary rewards.
4. Encourage a sense of belonging, a sense of being a part of a successful effort. This is much like being a part of a winning sports team, an experience that is never forgotten.