Hiring, Firing and Everything in Between

How to get a personnel plan in place to assist you with hiring, firing and more.

One of the biggest challenges faced by an equipment rental business owner is personnel. Having good people in your shop has a positive impact on every facet of your operation. With properly qualified employees, your job quality, efficiency and customer service will all be strengthened. On the other hand, even one or two weak links in your personnel chain can have a detrimental effect on your entire business.

Of course, the process of maintaining an employment base of skilled, well-adjusted, dedicated employees begins with the hiring process. But you also must maintain an effective overall personnel plan to hire and keep good employees. Additionally, you need an effective system to weed out the people who don't fit in due to deficiencies in job skills, commitment or interpersonal interaction.

Hiring the right people for business

As your business grows, so does your employment base. As this occurs, it becomes increasingly important to hire good people into your operation. Of course, this is easier said than done. While you aren't likely to succeed 100 percent of the time in finding the right employees for your equipment rental business, you will increase your chances by following a well thought out and deliberate approach to each hiring situation. There are several steps you should follow to maximize your chances of finding a good employee each time a job opening arises.

Analyze the job requirements. Before you set out to fill a certain position, make sure you know exactly what the job will entail.

One good way to do this is to write out a detailed job description for the position. If you need a new office manager, write out a description of the key duties (i.e. paying supplier bills, sending out invoices, supervising office staff, etc.); the educational background and skills necessary (i.e. 80 words per minute typing, experience with word processing and spreadsheets on a PC, high school degree, etc.); and the anticipated salary range (i.e. $20,000–$30,000). If you don't specify these job requirements, then you might just wind up with the right person for the wrong job.

Promote from within versus hiring outside. Depending upon the job opening you have, you might want to consider promoting from within rather than going to the outside job market. Promoting from within, or "growing your own" employees, has a couple of key advantages. First, someone who is in tune to your way of doing business won't have to be oriented to your operating practices. Second, it's good for overall employee morale to promote from within, because it sends a message to all of your employees that if they work hard and do a good job, they will be given the opportunity to advance in their careers.

There are also a couple of key advantages to hiring outside of your business. First, hiring from the job market allows you to fill a position with an employee who has direct experience in that particular position. If you take an existing employee from your shop and promote him to a management position, you might have to invest significant training time and dollars to bring him/her up to speed. Hiring someone from outside with experience might be more desirable for that reason. Second, someone from another small equipment rental business brings fresh ideas, one or two of which might be worth adopting to improve your operation.

Where do you get candidates? There are three basic methods that can be used to recruit potential applicants for a new job — newspaper ads, employment agencies and word-of-mouth. Some business owners use newspaper ads primarily while others prefer employment agencies. Newspaper ads can be very effective and are far less costly than an employment agency; however, you might be missing good potential applicants who haven't read the paper.

Employment agencies offer the advantage of a third party screening on your behalf, as well as a more specified recruiting effort. An employment agency also can place new employees on a "no strings attached" basis for 60 to 90 days. At any time during that period, the employee or the employer can terminate the contract for any reason. So, while employment agencies are somewhat expensive, there are certainly benefits to the services they provide.

Word-of-mouth recruiting is often the most effective method of finding new employees. In addition to spreading the word that you are looking for someone, you also might consider calling prospects from other small equipment rental businesses directly if you are familiar with their background and qualifications.

Take time to interview. Many small business owners rush through the actual interview process because they feel pressed for time to meet the demands of that particular day. That's a big mistake. The one-on-one interview is the best opportunity to assess whether or not the candidate is a good fit for the job. Your hiring criteria should include experience, education and training, intelligence, appearance and attitude.

Don't underestimate the importance of attitude. If you detect an attitude or personality traits that will likely clash with your existing employees, the interview is the time to explore these potential conflicts. You can ask questions like, "How do you like working with other people?" and "How do you get along with your current boss?" to try and draw out any attitude problems.

The interviewing process can be cumbersome, particularly for higher skilled positions, but you must persevere. Take the time to ask well thought out questions (see sidebar, page 90). And let others in your shop participate in the interview process, particularly if it is a second or third interview.

And never settle for the "least worst" candidate!

Check references. Many business owners never bother to ask for references or don't check them when they are provided. And while references often do not reveal very much about a prospect, you should always obtain and check references from a job applicant.

In obtaining references, make sure you are given a reference person from all previous jobs. If the applicant has left off a reference, he might be trying to hide problems. Also, be careful in checking the reference from the candidate's existing employer. If he is still working there, you could jeopardize his current employment situation. Ask before calling.

Finally, have a plan when you call a reference. Most employers will give out factual information only when called for a reference. Start out your call with a few factual questions (How long did he work there? What was his position? What was his salary when he left?). Then, tactfully move to questions that might extract a subjective response (Did he leave on good terms? Did he get along well with other employees? Was he punctual?).

Drug testing. Many employers now include drug testing as part of their hiring procedures. It's a good idea as long as you specify this practice on the job application and are consistent with the policy. So, if you decide to hire someone, make sure he has already completed and signed a job application. Then, make sure all new hires are tested. If you use an employment agency, you can ask them to handle drug testing for you.

Avoiding discrimination. This has become a key issue as the Equal Employment Opportunity Commission (EEOC) has expanded its power base. As an employer, you need to familiarize yourself with current EEOC rules and regulations.

In the hiring process, there are two basic credos that should be followed to avoid discrimination:

  • Hiring standards must be job related, not "people" related.
  • Standards you set for any job must not adversely affect the hiring chances of any one group of people on the basis of their race, religion, national origin, age, sex, marital status or physical handicaps.

There are a couple of other points here. First, make sure your application form is in compliance with EEOC laws. Many outside employment specialists can provide applications that guarantee compliance with applicable laws. Secondly, you are required by law to save all job applications (regardless of whether or not you hire the applicant) for at least two years.

Personnel policies and procedures

Most large corporations have sets of manuals with many volumes and entire departments devoted to nothing but human resources and personnel. But since you aren't General Motors, you need a much more "user friendly" personnel program. You should start with a concise handbook that spells out the policies and procedures you use for hiring, performance standards, setting objectives, annual job reviews, salary and wage considerations and problem situations. You will also want to include in this handbook information on your benefits package.

If you are one of those small business owners who has never quite gotten around to writing a personnel handbook, start out by writing out job descriptions for each of the jobs in your business. Include the duties of the job, skill and education requirements and salary information. Not only will this help you establish some uniformity, but it also will enable you to evaluate how well your existing employees fit into their current jobs. I also recommend inviting the employees to participate in the creation of the job descriptions.

Once you have job descriptions written out, you need to set specific goals for your employees. These can range from sales goals to more intangible but equally important goals like providing friendly customer service or working well with co-workers. All goals need to be measurable and should be agreed upon by the employee. These goals should be used to evaluate the employee's performance each year when it comes time for a job and/or salary review.

One of the benefits you will reap from setting specific goals for your employees is that they will generally feel empowered to take more ownership in their job function in your business. It will also let them know exactly what you expect out of them on an ongoing basis.

On an at least annual basis, you should conduct a formal performance appraisal on each employee. In addition to assessing the employee's success in meeting his/her goals, the performance review offers the opportunity to evaluate the employee in several key areas:

  • Job knowledge
  • Initiative
  • Judgment Interpersonal skills — both in dealing with customers and co-workers
  • Creativity
  • Teamwork
  • Efficiency
  • Dependability
  • Attendance and punctuality

The annual performance review also offers the opportunity to document any problems that you are experiencing with the employee. However, you really shouldn't wait for an annual review to cover either the positives or the negatives. An integral part of any effective personnel program is the informal feedback that occurs on an ongoing basis. If an employee deserves a pat on the back for a job well done, give it to him. Likewise, if you aren't pleased with a certain aspect of an employee's performance, let him know that, too.

Your good employees want to know where they stand in their job performance on an ongoing basis. You should keep the job performance lines of communication open throughout the year so that there are never any surprises in the formal job review.

How to fire an employee

Firing an employee is one of the toughest situations you face as an equipment rental business owner. Regardless of the reason, it is never easy. Before you carry out the task of firing an employee, you should first explore the alternatives. If the problems have recently surfaced, the employee might be going through a tough time personally that he just needs to work through; or he might be unsure of exactly what is expected of him.

An alternative to firing the employee in this case would be to meet with him and discuss your concerns from a job performance standpoint and ask him for an explanation. Then, put the employee on a 60- or 90-day probation with some specific goals agreed upon by both of you to fix the problem. Proper documentation of unacceptable performance will help you avoid time consuming lawsuits, and ensure consistency and fairness in your human resources policies.

Another alternative to termination is a job change. Burnout can sometimes cause employee performance to suffer. In these cases, a change in responsibilities can often get the employee back on track.

Of course, there are some cases in which you have already tried a form of probation and termination is the correct action to take to alleviate an employee problem. Let's consider some suggested procedures to follow in dealing with the difficult situation of firing an employee.

Why do you fire employees? If you have been in the equipment rental business for any length of time, you likely have already come across many reasons to fire an employee. Generally, the reasons to fire an employee fall into one of five categories:

  • Elimination of the position
  • Unsatisfactory job performance
  • Habitual tardiness or absenteeism
  • Complaints from customers and/or other employees
  • Evidence of impropriety (i.e. embezzlement)

Of course, layoff situations sometimes can't be avoided if you lose a big account or are forced to scale back for other reasons. But in those cases in which the firing is due to the employee's poor performance, there are several other key components of a firing.

When should you fire an employee? Many small business owners wait until a Friday afternoon to carry out a firing, but that is the absolute worst time to do it. It is best to meet with an employee to fire him in the morning on any day but Friday. Sending him home for the weekend without a job will only add to his anxiety over becoming unemployed.

Where should you fire an employee? The best place to meet with an employee to fire him is in your office. Depending on the circumstances, you might also want to have someone else sit in on the meeting to verify the conversation. If you anticipate possible negative backlash or, worse, legal action from the fired employee, you should have someone else sit in on the meeting.

How should you fire an employee? Keep the meeting as brief as possible and let the employee know that the termination action is irrevocable. Once you have decided to fire someone, you need to carry your decision out. The employee may try and talk you out of it, but if you have determined that they are incapable of bringing their job performance up to standards, you won't be doing him or yourself any favors by agreeing to give him "one more chance."

Additionally, you will need to decide before the meeting how much you will pay the employee in remaining vacation time, severance, etc. If the firing occurs under adversarial circumstances (blatant misconduct on the job, embezzlement, etc.), then you might not offer any severance. But if you are eliminating a position, or you feel some obligation to "soften the blow" of unemployment, then some severance may be warranted.

Along the same lines, you might want to offer the employee the option of resigning.

He may prefer to resign to save face; however, he should know that a resignation will impair his ability to collect unemployment if that becomes necessary.

What should you say when you fire an employee? First, you should focus on performance, not personality when you explain the reason to the employee for his termination (see sidebar on page 94). If you have done a good job in setting goals and objectives as specified above, you should be able to sight specific performance issues as the reason for the firing. Second, the firing of an employee should never be a surprise to him. You should have already addressed (more than once) the performance problems in the past, both informally and formally. These problems should be well documented in his personnel file.

Third, you should treat the employee with dignity. Losing a job is a difficult time for anybody, and the termination meeting is not a time for arguments or personal attacks. Even if the employee becomes belligerent, keep your cool and focus the discussion on performance.

If you are firing the employee due to an elimination of the position, you might want to offer to help him find another job. And regardless of the reason for the termination, you will probably receive job reference inquiries once he starts seeking other employment. You need to be careful in giving references. It is best to provide factual information only, particularly if the firing occurred due to performance issues.

Finding good employees for your equipment rental business will continue to be a big challenge. Having a personnel plan in place to assist you in the human resources process will help you meet this challenge.

J. Tol Broome, Jr. is a freelance business writer from Greensboro, NC with credits in Nations Business, Entrepreneur and Journal of Commercial Lending. He also is a banker with over 21 years of lending experience.