Identify Job Requirements

A small business owner should not proceed with hiring anyone until he or she has a clear idea of what the new hire will do and how that new hire will help attain the objectives of the business. Workforce planningThe process of placing the right number of people with the right skills, experiences, and competencies in the right jobs at the right time., the “process of placing the right number of people with the right skills, experiences, and competencies in the right jobs at the right time,”“Workforce Planning,” accessed February 3, 2012, www.orgchart.net/wiki/Main_Page. is a way to do that. The scope of this planning will be very limited when a business is very small, but as a business grows, it will take on much greater importance. Doing things right with the first new hire will establish a strong foundation for hiring in the future. Forecasting needs for new people, both current and future, is part of workforce planning. No forecast is perfect, but it will provide a basis on which to make hiring decisions.

As an employer, every small business should prepare a job descriptionThe major areas of an employee’s job or position. before initiating the recruitment process. A good job description describes the major areas of an employee’s job or position: the duties to be performed, who the employee will report to, the working conditions, responsibilities, and the tools and equipment that must be used on the job.William M. Pride, Robert J. Hughes, and Jack R. Kapoor, Business (Boston: Houghton Mifflin, 2008), 159. It is important not to create an inflexible job description because it will prevent the small business owner and the employees from trying anything new and learning how to perform their jobs more productively.“Job Descriptions,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/job-descriptions.html.

Choose Sources of Candidates

Because hiring a new employee is an expensive process, it is important to choose sources that have the greatest potential for reaching the people who will most likely be interested in what a small business has to offer. Unfortunately, it is not always possible to know what those sources are, so selecting a mix of sources makes good sense.

• Internet. The Internet offers a wealth of places to advertise a job opportunity. Monster.com, CareerBuilder.com, and LinkedIn.com are among the largest and most well-known sites, but there may be local or regional job sites that might work better, particularly if a business is very small. A business will not have the resources to bring people in from great distances. If a business has a Facebook or a Twitter presence, this is another great place to let people know about job openings. There may also be websites that specialize in particular occupations.
• Schools and colleges. Depending on the nature of the job, local schools and colleges are great sources for job candidates, particularly if the job is part time. Full-time opportunities may be perfect for the new high school or college graduate. It would be worth checking out college alumni offices as well because they often offer job services.
• Employee referrals. Referrals are always worth consideration, if only on a preliminary basis. The employee making the referral knows the business and the person being referred. Going this route can significantly shorten the search process…if there is a fit.
• Promotion from within. Promoting from within is a time-honored practice. The owner sends a positive signal to employees that there is room for advancement and management cares about its employees. It is significantly less costly and quicker than recruiting outside, candidates are easier to assess because more information is available, and it improves morale and organization loyalty.“When Is It Better to Promote from Within Your Company?,” AllBusiness, accessed February 3, 2012, www.allbusiness.com/human-resources/workforce -management-hiring-recruitment/1502-1.html. On the downside, there may be problems between the person who is promoted and former coworkers, and the organization will not benefit from the fresh ideas of someone hired from the outside.
• Want ads. Want ads can be very effective for a small business, especially if a business is looking locally or regionally. The more dynamic the want ad, the more likely it will attract good candidates. Newspapers and local-reach magazines might be a business’s first thoughts but also consider advertising in the newsletters of relevant professional organizations and at the career services offices of local colleges, universities, and technical colleges.

Review Applications and Résumés

When looking for the best qualified candidates, be very clear about the objectives of the business and the associated reason(s) for hiring someone new. It is also critical to know the law. Some examples are provided here. This would be a good time to consult with a lawyer to make sure that everything is done properly.

1. Employee registration requirement. All US employers must complete and retain Form I-9 for each individual, whether a citizen or a noncitizen, hired for employment in the United States. The employer must verify employment eligibility and identity documents presented by the employee.“Hiring Issues,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/hiring-issues.html.
2. The Civil Rights Act of 1964, the Civil Rights Act of 1991, and the Equal Employment Opportunity Act of 1972. Attempt to provide equal opportunities for employment with regard to race, religion, age, creed, gender, national origin, or disability.John M. Ivancevich and Thomas N. Duening, Business: Principles, Guidelines, and Practices (Mason, OH: Atomic Dog Publishing, 2007), 299. The closest Equal Employment Opportunity Commission (EEOC) district office should be contacted for specific information.
3. Immigration Reform and Control Act of 1986. This law places a major responsibility on employers for stopping illegal immigration.

Interview Candidates

Just as knowing the law is important when reviewing applications and résumés, it is also important when interviewing candidates. Several interview questions are illegal to ask—for example, “Do you have dependable child care in place?” and “Do you rent or own your own home?”John M. Ivancevich and Thomas N. Duening, Business: Principles, Guidelines, and Practices (Mason, OH: Atomic Dog Publishing, 2007), 303. In general, the off-limit topics in most employment interviews include religion, national origin, race, marital status, parental status, age, disability, gender, political affiliation, criminal records, and other personal information such as financial and credit history.“Interviewing Guidelines,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/interviewing-guidelines .html. In short, keep the interview focused on the job, its requirements, and the qualifications of the candidate. Interviewing guidelines can be found at www.smallbusinessnotes.com/managing-your-business/interviewing-guidelines.html or http://www.smallbusinessnotes.com/managing-your-business/general-interview-guidelines.html.

Conduct Employment Tests and Check References

Selection tests have been used to screen applicants for more than one hundred years.“Employment Testing and Selection,” Chron.com, accessed February 3, 2012, smallbusiness.chron.com/employment-testing-selection-4794.html. An effective testing program can improve accuracy in selecting employees; provide an objective means for comparing candidates; and provide information about training, development, or counseling needs. These advantages must be carefully weighed against the disadvantages: the fallibility of tests, the fact that tests can never measure everything, and many tests discriminate against minorities.John M. Ivancevich and Thomas N. Duening, Business: Principles, Guidelines, and Practices (Mason, OH: Atomic Dog Publishing, 2007), 304–305. Each small business owner must decide whether employment tests make sense for his or her business. However, Daniel Kehrer of Work.com claims that employee testing is essential to reducing employee turnover for small businesses because preemployment screens are four times greater at predicting employee success than interviews. He notes further that high turnover rates are much more expensive for small businesses than large companies.“Employment Testing and Selection,” Chron.com, accessed February 3, 2012, smallbusiness.chron.com/employment-testing-selection-4794.html. Just be sure that all employment tests can be linked to a business necessity.“Employment Testing and Selection,” Chron.com, accessed February 3, 2012, smallbusiness.chron.com/employment-testing-selection-4794.html.

Checking references is a much more difficult proposition. It is a good idea to check references after the interview to objectively evaluate the candidate’s qualifications, experience, and other information presented during the interview. Not checking references can result in poor hiring choices.“How to Request References,” University of Texas at Austin Human Resource Services, accessed February 3, 2012, www.utexas.edu/hr/manager/hiring/references.html.

Unfortunately, many former employers are reluctant to reveal anything other than an employee’s date of hire and departure and job title,“Hiring Issues,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/hiring-issues.html. but others may be willing to discuss an employee’s job performance, work ethic, attendance, attitude, and other things that may be important to the prospective employer.Alison Doyle, “Reference Check Questions,” About.com, accessed February 3, 2012, jobsearch.about.com/od/referencesrecommendations/a/refercheck.htm.

As important as it is to check references, it is a process that is fraught with legal risk, so check with an attorney before moving forward.

Select a Candidate and Negotiate an Offer

After any desired follow-up interviews are conducted, it is time to select a candidate and negotiate an offer. There are three main issues to consider: compensation, job performance and expectations, and accommodations for disabilities.

CompensationWages, salaries, and benefits. includes wages, salaries, and benefits. Although wages and salaries are often used interchangeably, they are different. WagesPayments based on an hourly pay rate or the amount of output. are payments based on an hourly pay rate or the amount of output. Production employees, maintenance workers, retail salespeople (sometimes), and part-time workers are examples of employees who are paid wages.David L. Kurtz, Contemporary Business, 13th Edition Update (Hoboken, NJ: John Wiley & Sons, 2011), 294–95.SalariesCalculated weekly, biweekly, or monthly and usually paid to office personnel, executives, and professional employees. are typically calculated weekly, biweekly, or monthly. They are usually paid to office personnel, executives, and professional employees.David L. Kurtz, Contemporary Business, 13th Edition Update (Hoboken, NJ: John Wiley & Sons, 2011), 295. Every small business should do its best to offer competitive wages and salaries, but a small business will generally not be able to offer wages and salaries that are comparable to those offered by large corporations and government. Employee benefitsHealth and disability insurance, sick leave, vacation time, child and elder care, retirement plans and other perks paid entirely or in part by a company that represent a large component of each employee’s compensation., such as health and disability insurance, sick leave, vacation time, child and elder care, and retirement plans, are paid entirely or in part by the company; they represent a large component of each employee’s compensation.David L. Kurtz, Contemporary Business, 13th Edition Update (Hoboken, NJ: John Wiley & Sons, 2011), 296. Most employees have come to expect a good benefits program, even in a small business, so “the absence of a program or an inadequate program can seriously hinder a company’s ability to attract and keep good personnel.”“Employee Benefits,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/employee-benefits.html. Not surprisingly, small businesses are also not in a position to offer the same level of benefits that can be offered by large corporations and the government. However, small businesses can still offer a good benefits program if it includes some or all the following elements: health insurance, disability insurance, life insurance, a retirement plan, flexible compensation, leave, and perks.“Employee Benefits,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/employee-benefits.html. In addition, small businesses can offer benefits that only a small business can offer—for example, the flexibility to dress casually, half days on Friday, and bringing one’s pet to work. Other ideas include gym memberships or lunch programs. These things have proven to increase employee loyalty, and they will fit the budget of even the smallest business.“Improve Your Employee Retention Rate,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/improve-your -employee-retention-rate.html.

Set Performance Expectations

It is in the best interests of a business for prospective new employees to know and understand their performance expectations. This means that a business must determine what these expectations are. New employees should understand the goals of the organization and, as applicable, the department in which they will be working. It should also be made clear how the employee’s work can positively impact the achievement of these goals.“Setting Clearer Performance Expectations,” SmallBusinessLand.com, accessed February 3, 2012, www.smallbusinessland.com/article/setting-clearer -performance-expectations.html.

Make Accommodations for Disabilities

If a business is hiring someone with a disability and has fifteen or more employees, it is required by the ADA (enacted in 1990) to make reasonable workplace accommodations for employees with disabilities. Though not required, businesses with fewer than fifteen employees should consider accommodations as well.

A tax credit is available to an eligible small business, and businesses may deduct the costs (up to $15,000) of removing an architectural barrier. Small businesses should check with the appropriate government agency before making accommodations to make sure that everything is done correctly.

Retention

Employee retention rates play an important role in the cost of running a business. The first few years of an employee’s service are the most costly because money will be spent on recruiting and training the employee. It is only after the employee has been working for some time that he or she will start making money for the business.“Improve Your Employee Retention Rate,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/improve-your -employee-retention-rate.html.

Because of the costly and time-consuming nature of hiring new employees, many companies today increasingly emphasize retaining productive people.John M. Ivancevich and Thomas N. Duening, Business: Principles, Guidelines, and Practices (Mason, OH: Atomic Dog Publishing, 2007), 295. Even the smallest of businesses should be concerned about retention because high turnover will be disruptive to the operations of the business and, as a result, may lessen the quality of the customer experience and customer satisfaction.

A good training and orientation program at the outset of employment can set the stage for increased retention. TrainingA continual process of providing employees with skills and knowledge they need to perform at a high level. “is a continual process of providing employees with skills and knowledge they need to perform at a high level.”John M. Ivancevich and Thomas N. Duening, Business: Principles, Guidelines, and Practices (Mason, OH: Atomic Dog Publishing, 2007), 309. This continuing process is important. According to Inc.com, “the quality of employees and the continual improvement of their skills and productivity through training, are now widely recognized as vital factors in ensuring the long-term success and profitability of small businesses.”“Training and Development,” Inc.com, accessed February 3, 2012, www.inc.com/encyclopedia/training-and-development.html. Training programs will vary greatly depending on the size and the nature of the business. However, all training programs must be based on both organizational and individual needs, spell out the problems that will be solved, and be based on sound theories of learning.John M. Ivancevich and Thomas N. Duening, Business: Principles, Guidelines, and Practices (Mason, OH: Atomic Dog Publishing, 2007), 309. Many training and management development programs are not for amateurs, but the extent to which a small business can provide professionally delivered programs will be budget and needs related. In some instances, training is performed by someone who is currently doing the job—for example, using a particular machine, operating the cash register, stocking merchandise, and learning office procedures and protocols. Nothing additional is required.

Employee incentive programs are particularly important for small businesses because benefits satisfaction in small businesses typically lags behind benefits satisfaction in large corporations. A recent study“Building a Better Benefits Program without Breaking the Budget: Five Practical Steps Every Small Business Should Consider,” MetLife, 2010, accessed February 3, 2012, www.metlife.com/assets/institutional/services/insights-and-tools/ebts/small-market -whitepaper-v2.pdf. revealed that 81 percent of employees who are satisfied with their benefits are also satisfied with their jobs, whereas 23 percent of employees who are dissatisfied with their benefits are very satisfied with their jobs (Figure 12.11 "Benefits Satisfaction in Small Businesses").

Figure 12.11 Benefits Satisfaction in Small Businesses

Source: “Building a Better Benefits Program without Breaking the Budget: Five Practical Steps Every Small Business Should Consider,” MetLife, 2010, accessed February 3, 2012, http://www.metlife.com/assets/institutional/services/insights-and-tools/ebts/small-market-whitepaper-v2.pdf.

Given the importance of benefits to employees, small businesses need to be very creative about what kinds of incentives are offered to their employees. One of the biggest incentives may be the flexibility and camaraderie that are not available in larger businesses,“Employee Incentives for Small Business,” Yahoo! Voices, May 24, 2007, accessed February 3, 2012, voices.yahoo.com/employee-incentives-small-business -359161.html. but to increase employee retention and attract the best and brightest, there will need to be more.Sharon McLoone, “How Do I…Offer Employee Incentives,” Washington Post, December 4, 2008, voices.washingtonpost.com/small-business/2008/12/how_do _ioffer _employee_incenti.html. Creating a sense of community, offering leadership opportunities, creating a culture of recognition, and constantly offering opportunity can be powerful incentives.“Employee Incentive Programs on a Small Business Budget,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/employee-incentive-programs-on-a-small-business-budget.html. They can be very effective at increasing employee retention, particularly when there is insufficient money to provide large raises. People want to enjoy their jobs as well as earn money, and they may care about their community and passions equally as much as their salaries. This is an opportunity for small businesses because “smaller companies may be better positioned to provide work-life balance that makes for happier, healthier employees.”“Report: Cost-Effective Benefits Strategies for Small Businesses,” ESBJournal.com, October 19, 2010, accessed February 3, 2012, esbjournal.com/2010/10/report-cost-effective-benefits-strategies-for-small-businesses.

Termination

Termination or firing will always be unavoidably painful,“Employee Termination,” Inc.com, accessed February 3, 2012, www.inc.com/encyclopedia/employee-termination.html. but it is a managerial duty that is sometimes necessary. In small businesses, terminations are usually carried out by the owner. They should be done promptly to preserve the health of the business.“Employee Termination,” Inc.com, accessed February 3, 2012, www.inc.com/encyclopedia/employee-termination.html. Terminations can be termination at willThe employer doesn’t need to give a reason for termination as long as the termination is not unlawful or discriminatory. or termination for causeA person is fired (terminated) for a specific reason..

• Termination at will. Employment at will means that a person does not have an employment contract. The person is employed “at the will” of the employer for as little or as long as the owner desires. It also means that a person can stop working for an employer at any time. An employer “doesn’t need to give a reason for termination of an ‘at will’ employee, as long as the termination isn’t unlawful or discriminatory…Termination can be due to a merger, workforce reduction, change in company direction and business focus, poor company performance, or any number of other legitimate reasons.”“Employees: Job Termination Rights FAQs,” Lawyers.com, accessed February 3, 2012, labor-employment-law.lawyers.com/wrongful-termination/Employees-Job -Termination-Rights-FAQ.html#10.
• Termination for cause. When someone is terminated for cause, that person is being fired for a specific reason,Alison Doyle, “Terminated for Cause,” About.com, accessed February 3, 2012, jobsearch.about.com/od/jobloss/g/terminatedforcause.htm. one of which may be behavior. Common causes for termination include but are not limited to stealing, lying, falsifying records, embezzlement, insubordination, deliberately violating company policies or rules, absenteeism and tardiness, unsatisfactory performance, changed job requirements, sexual harassment, and failing a drug or alcohol test.Alison Doyle, “Terminated for Cause,” About.com, accessed February 3, 2012, jobsearch.about.com/od/jobloss/g/terminatedforcause.htm; “Employee Termination,” Inc.com, accessed February 3, 2012, www.inc.com/encyclopedia/employee-termination.html. Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. According to the EEOC, sexual harassment is “unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitutes sexual harassment when submission to or rejection of this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance or creates an intimidating, hostile or offensive work environment.”“Facts about Sexual Harassment,” US Equal Employment Opportunity Commission, June 27, 2002, accessed February 3, 2012, www.eeoc.gov/facts/fs-sex.html.

When an employee has been terminated, the small business owner should inform the other employees. As a general rule, the less said to coworkers and other employees about an employee’s termination, the better. People will be curious, but do not infringe on the terminated employee’s privacy or say something that might leave a person open to legal action.“Employee Termination: Informing Other Employees,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/employee-termination-informing-other-employees.html. The best approach is to inform immediate coworkers, subordinates, and clients by simply telling them that the company no longer employs the employee. Do not mention any details but do include an explanation of how the terminated employee’s duties will be carried out in the future.“Employee Termination: Informing Other Employees,” Small Business Notes, accessed February 3, 2012, www.smallbusinessnotes.com/managing-your-business/employee-termination-informing-other-employees.html.

When Is Outsourcing a Good Idea?

Outsourcing is a good idea when it allows a small business “to continue performing the functions it does best, while hiring other companies [many of which may be other small businesses] to do tasks that they can handle more competently and cost-effectively.”David L. Kurtz, Contemporary Business, 13th Edition Update (Hoboken, NJ: John Wiley & Sons, 2011), 303. Traditionally, payroll and personnel services have been outsourced by small businesses, but small businesses now use outside providers for a much greater range of services, including the following:Joanna L. Krotz, “Tips for Outsourcing Your Small-Business Needs,” Microsoft, accessed February 3, 2012, www.microsoft.com/business/en-us/resources/management/recruiting-staffing/tips-for-outsourcing-your-small-business-needs .aspx?fbid=WTbndqFrlli#T.

• Accounting and bookkeeping. A growth area here is outsourcing accounts receivable. This enables a small business to sell off its accounts receivable and invoices to a financing company.Peter Emerson, “Accounts Receivable Outsourcing,” Streetdirectory.com, accessed February 3, 2012, www.streetdirectory.com/travel_guide/162839/banking/accounts_receivable_outsourcing.html. As a small business grows, the process of collecting accounts receivable may become too cumbersome to handle without collection agencies becoming involved.“When Does Outsourcing Accounts Receivables Make Sense,” Streetdirectory.com, accessed February 3, 2012, www.streetdirectory.com/travel_guide/16826/outsourcing/when_does_outsourcing_accounts_receivables_make_sense.html.
• Specialist and expert help. Elance offers a range of services for small businesses. It has access to thousands of professionals around the world who can provide services such as graphic design, multimedia presentations, engineering, sales and marketing, writing, and translation.Joanna L. Krotz, “Tips for Outsourcing Your Small-Business Needs,” Microsoft, accessed February 3, 2012, www.microsoft.com/business/en-us/resources/management/recruiting-staffing/tips-for-outsourcing-your-small-business-needs .aspx?fbid=ZR0tpRAO-q#T.
• Public relations and marketing services. These services are costly, require specialized expertise, and are not usually full-time needs.“When Does Outsourcing Accounts Receivables Make Sense,” Streetdirectory.com, accessed February 3, 2012, www.streetdirectory.com/travel_guide/16826/outsourcing/when_does_outsourcing_accounts_receivables_make_sense.html. Many service providers specialize in the needs of small businesses.
• Virtual assistants. These people are independent entrepreneurs who provide administrative, creative, or technical support. A growing phenomenon, they work on a contractual basis via online or electronic communications. Virtual Office Temps and VirtualAssistants.com are examples of companies that can connect virtual assistants with any company that is interested.Adapted from Joanna L. Krotz, “Tips for Outsourcing Your Small-Business Needs,” Microsoft, accessed February 3, 2012, www.microsoft.com/business/en-us/resources/management/recruiting-staffing/tips-for-outsourcing-your-small-business-needs .aspx?fbid=ZR0tpRAO-q#T.
• Creating benefits package. A tremendous amount of time and creativity would be required for a smaller company to create a benefits package that is competitive in the marketplace.“Benefits Packages for Emerging Businesses: Creating Long-Term Value for Your Employees,” Monster Hiring Center, accessed February 3, 2012, grahambippart.files.wordpress.com/2010/03/benefitsfinal_6_12_07.pdf. Given the vast complexities of health care, including health-care laws that differ by state, outsourcing this activity makes good sense.

• Legal services. A small business may need to consult an attorney for a variety of reasons, including the following:

  • Choosing the business structure
  • Constructing a partnership agreement
  • Obtaining a corporate charter
  • Registering a corporation’s stock
  • Obtaining a trademark, a patent, or a copyright or intellectual property
  • Filing for licenses or permits at the local, state, and federal levels
  • Purchasing an existing business or real estate
  • Hiring employees, independent contractors, and other external suppliers (outsourcing)
  • Extending credit and collecting debts
  • Creating valid contracts
  • Initiating or defending against lawsuits
  • Keeping current on and compliant with business law and regulations (e.g., advertising, employment and labor, finance, intellectual property, online business law, privacy law, environmental regulations, and the Uniform Commercial Code)
  • Protecting intellectual property
  • Protecting ideas or inventions from others’ infringement“Business Law and Regulations,” US Small Business Association, accessed February 3, 2012, www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/business-law-regulations; “Small Business Planner: Protect Your Ideas,” US Small Business Administration, accessed February 3, 2012, www.sba.gov/smallbusinessplanner/start/protectyourideas/index.html; adapted from William M. Pride, Robert J. Hughes, and Jack R. Kapoor, Business (Boston: Houghton Mifflin, 2008), 159.

  However, the cost of a full-time attorney would probably be prohibitive. Outsourcing these services is an appropriate choice. Some legal firms offer small businesses a flat monthly fee instead of charging them by the hour,Rob Johnson, “Legal Advice…on a Budget,” Wall Street Journal, November 15, 2010, accessed February 3, 2012, online.wsj.com/article/SB10001424052748703615104575329193640764492.html?mod=wsj_SmallBusiness _MIDDLETopStories. a practice that is very helpful to the small business budget.

When Is Outsourcing a Bad Idea?

Although outsourcing has benefits, there are times when it is a bad idea. For example, sales and technology development are operations that are generally best handled in-house because they are full-time needs that are at the heart of any business.“When Does Outsourcing Accounts Receivables Make Sense,” Streetdirectory.com, accessed February 3, 2012, www.streetdirectory.com/travel_guide/16826/outsourcing/when_does_outsourcing_accounts_receivables_make_sense.html. Outsourcing might actually end up being the more expensive alternative, leading to a financial loss instead of a gain. An example would be the cost of a highly specialized expert.“When Outsourcing Is Not a Good Idea,” Streetdirectory.com, accessed February 3, 2012, www.streetdirectory.com/travel_guide/16669/outsourcing/when_outsourcing _is_not_a_good_idea.html. In addition, when outsourcing overseas, the small business owner and/or managers may not be prepared to manage projects across time differences and cultural barriers and may not have clear guidelines, expectations, and processes in place to manage product or service quality.“The Benefits of Outsourcing for Small Businesses,” New York Times, January 1, 2008, accessed February 3, 2012, www.nytimes.com/allbusiness/AB5221523_primary.html.

Virtual or Telecommuting Employees

Another boon to office productivity and adding to the bottom line is the virtual or telecommuting employeeAn employee who works at home, on the road, or in a satellite location for all or part of his or her regular workweek.. This is an employee that works from a location other than the traditional office. They can work from anywhere.Ruth Mayhew, “What Are the Advantages & Disadvantages of Virtual Offices and Telecommuting?” Chron.com, accessed May 30, 2012, http://smallbusiness .chron.com/advantages-disadvantages-virtual-offices-telecommuting-1167.html. There is no agreement on the number of US workers that are already telecommuting. However, it has been estimated that 40 percent of the US workforce hold jobs that lend themselves to telecommuting.“Analysis Shows Telecommuting Can Cut Persian Gulf Oil Use by Almost Half,” Telecommunte Connecticut, accessed May 30, 2012, http://www.telecommutect.com/employers/telecommuting_saves_gas.php; Peter Suciu, “Telecommuting Can Save Employers Money, Too,” AllBusiness.com, March 9, 2011, accessed February 3, 2012, www.allbusiness.com/labor-employment/working-hours-patterns -telecommuting/15480193-1.html.

The advantages of virtual employees include the following:“Flexible Telecommuting Has Many Benefits for Your Small Business,” AllBusiness.com, March 9, 2011, accessed February 3, 2012, www.allbusiness.com/labor-employment/working-hours-patterns-telecommuting/11493648-1.html; Peter Suciu, “Telecommuting Can Save Employers Money, Too,” AllBusiness.com, March 9, 2011, accessed February 3, 2012, www.allbusiness.com/labor-employment/working-hours-patterns-telecommuting/15480193-1.html; James Ware and Charles Grantham, “Flexible Work: Rhetoric and Reality,” Tech Republic, accessed February 3, 2012, www.techrepublic.com/whitepapers/flexible-work-rhetoric-and-reality/384538.

• Companies could save $6,500 annually per employee.
• Virtual employees tend to be happier, healthier, and less stressed compared to their office-bound coworkers.
• Virtual workers are significantly more productive than their office-bound colleagues. The differential is estimated at 15 percent.
• Virtual employees almost always give back more than 50 percent of the time they save by not commuting.
• Some virtual workers actually put in more time per week than those who commute.

From the perspective of the virtual employee, the advantages of telecommuting are as follows: no distractions from coworkers; no stress from office politics; spending more time with the family; saving money on transportation, parking, and clothing; and avoiding traffic or saving time by not commuting.Arnold Anderson, “Advantages of Telecommuting Jobs,” Chron.com, accessed May30, 2012, http://smallbusiness.chron.com/advantages-telecommuting-jobs-765.html.

Virtual employees offer terrific advantages to the small business owner who is always looking to cut costs and attract high-quality employees. However, it is not something that works for everyone and every kind of business. For example, a restaurant cannot have a virtual waiter…at least not yet. A small business that wants to use virtual employees must create the appropriate infrastructure—that is, technology, security, policies, behavioral protocols, performance management, and so forth—to provide the best support for telecommuting workers in how, where, and when they do their jobs.Stegmeier Consulting Group, “The Business Case for Web Commuting: How to Reduce Workplace Costs and Increase Workforce Performance,” Computer World, accessed February 3, 2012, www.computerworld.com/pdfs/Citrix_Business _Case_Web_Commuting.pdf. For support with telecommuting challenges, small business owners can tap into The Alternative Board, an organization with three thousand small- and midsized-business owners.“Flexible Telecommuting Has Many Benefits for Your Small Business,” AllBusiness.com, March 9, 2011, accessed February 3, 2012, www.allbusiness.com/labor-employment/working-hours-patterns-telecommuting/11493648-1.html.