Finding and hiring your company's first employee
By Jenny C. McCune • Bankrate.com

Congratulations! It's a new employee.

In every small company's life, there comes a time to hire the first employee. Generally, as a business owner, you'll sense when the time is right. "It's when you can't sleep at night. You're working 23 1/2 hours a day. It's when you feel if you only had two more hands, you could grow your business better," says Dian Griesel, chairman and chief executive of the Investor Relations Group Inc., a New York City firm that handles investor relations for companies.

In the case of Griesel's company, that moment came sooner rather than later. The day after she set up shop, Griesel knew she needed a helper to answer the phones and to file paperwork. She also knew that she only needed part-time help. So Griesel called a local high school's placement office and recruited a high school senior to act as her gofer.

That was five years ago. Since then, her firm has grown to about 13 full-time workers with an additional eight to 10 part-timers. The company bills more than $1 million a year and its revenue growth wouldn't have been possible without a little help from its employees. Well, actually, a LOT of help.

Here's a step-by-step plan that your company can follow to hire wisely.

Step One: Figure out what you need
Before you start pounding the pavement in search of employees, figure out what you need. What are the skills required? Does the position require a full-time or part-time person? Does it make sense to hire someone? Or would it be better to outsource or hire someone on a contract basis -- that is, for a set project and period, rather than as a permanent worker.

"The mistake that most small and medium-sized businesses make is upfront. They don't figure out what they need BEFORE looking for employees," says Joan Brannick, co-author of Finding and Keeping Great Employees (Amacom, 1999).

Along those lines, it's a good idea to write a job description before you start trying to fill a position, advises, John R. Gaffin, president of HR Associates, a Miami human resources consulting firm. That upfront work will pay later by helping you find the right person that fits the job and your needs, Gaffin says.

Step Two: Finding workers who fit the bill
Once you've figured out what you need, you need to find job candidates. If the position is part-time and entry-level, a good place to start is with the placement offices of local academic institutions -- both on the high school and college level. Eric Vinje, owner of Planet Natural, a Bozeman, Mont.-based mail-order catalog of natural products for the home, lawn and garden, often needs extra workers in the spring. He goes to the local college, Montana State University, to find them.

Another free source of job candidates is your state's local unemployment office, specifically its placement services. "The old misconception is that these people are unemployed because they lack initiative or skills," Gaffin says. "It's not true. Many are unemployed because of organizational changes."

Asking fellow business owners for help also can't hurt, Gaffin says. Try to ask people in related, not competing, fields. In addition, ask friends, family and other acquaintances for help. Particularly during today's labor crunch, a small business owner can leave no source untapped in the quest for qualified workers.

That includes turning to the old standby -- a classified advertisement. The trick to making such an ad work is to really craft the copy. "Be as specific as you can," Gaffin says. Specificity is necessary to ensure the best match of job candidates and job. "For example, you'll probably want to mention salary," the human resources consultant says. "If the position pays $10 an hour, you don't want someone that's already getting $15 applying for the position."

It also pays to be creative. If you come across someone who impresses you -- whether it's the waitress who served you superbly or a store clerk who handled a grumpy customer with grace -- give them your card and tell them to look you up when they're looking for a new job.

If you already have employees, use them to find new hires, says Brannick.

Retirees can be another great source of workers. Many have outstanding work ethics and would prefer some part-time work to total retirement. Find them through your local chapter of AARP or, if your Small Business Administration local chapter has a Service Corps of Retired Executives program, that can be another good networking arena.

Finally, there's the Internet. For the Web to work, you need to fill a job that's high enough up on the ranks to make it feasible to spend money on listing it online and/or to relocate the person. After all, the Internet is international, and if you post a job on a job site such as Monster.com, you can expect to get responses from outside your immediate area. That said, if you have a Web site, it can't hurt to post job openings there.

Step Three: Evaluate job candidates
Probably the trickiest part of the employee hunt is screening applicants. You need to find someone who's both qualified and a good fit with your organization. Here are tips from the experts on how to evaluate job candidates:

• Have candidates fill out an application. Your company can buy a "canned" form, but if your needs are specialized, draw up your own. Applications level the hiring playing field by ensuring that every applicant answers the same questions and provides a work history.
• Ask for -- and check -- references. Many companies fall down on the checking part, but talking to former employers weeds out liars and misfits. Given today's litigious times, ex-employers may not be able to be frank, but if you read between the lines, you'll be able to tell a lot. For example, if an employer won't answer the question, "Would you hire Jane again?" there may have been a problem -- particularly if you get that same response from all previous employers.
• Test a person for the skills that the job requires. For example, if Dian Griesel knows she's hiring someone who will work the phones, she'll conduct the first interview on the phone to get a sense of candidates' phone manners and presence. If the worker will be writing a lot, she'll scrutinize resumes for typos and grammatical errors and give applicants a writing assignment.
• Interview more than once. It's hard to get a sense of a person from one brief encounter.
• Let the interviewee do the talking. "The mistake that many business owners make is to do all the talking," says Gaffin, of HR Associates. "To get a sense of the person, you have to let them talk."
• Invite current employees to help conduct interviews. It can help to get other people's opinion of candidates and find the best fit with your company.

Keep in mind your company's "personality," too. In the case of Eric Vinje's mail-order business, he has little time to help new hires get up to speed. So he needs people who are self-motivated and independent. At the same time, his Planet Natural is a casual work environment. "I don't care if somebody's got long hair or how they dress," Vinje says. "It doesn't make a difference as long as they do the work and have the right attitude."

Jenny C. McCune is a freelance writer based in Montana.