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3 Tips to Hire Smarter. Hint: Don’t Skip the Cover Letter.

Given the modern recruitment technology that’s available, many job seekers might think their applications are simply automatically scanned, rather than being reviewed directly by a hiring manager–and for a small business, that’s likely you. However, a new survey shows this is not the case. 

According to a study from ResumeLabs, a resume software company, 83 percent of hiring managers think cover letters have a significant impact during the decision-making process. For the study, ResumeLab surveyed 200 recruiters, HR specialists and hiring managers from across the U.S.  

Despite hiring managers placing high value on compelling cover letters, most candidates–about six in 10–don’t submit cover letters with their applications, regardless of whether or not the job ad says a cover letter is required. 

While you shouldn’t automatically count out applicants who skip this important step, it’s important to know what to look for in a strong cover letter. Here are a few tips to make the application and cover letter review easier for you and your team.

1. Start using prescreen surveys.

Not every candidate who applies for a job with you–including those who take the time to write a cover letter–is necessarily qualified for your team. Avoid wasting time manually reviewing every application and cover lette by tapping into automated prescreen surveys. These questionnaires typically consist of a few true/false questions, including some “knock out” questions, enabling you to automatically eliminate applicants who aren’t a fit. 

If you need to hire an employee who has a specific certification, for example, you can include this as a “knock out question,” so only applicants who meet your requirements move forward for your team to review.

2. Look for what is motivating them to join your team. 

The ResumeLabs study found that the top factor hiring managers look for when reading through cover letters is an explanation of candidates’ motivations for joining the company.

If a cover letter comes across as very generic, without any specific details related to your company, chances are he or she simply sent the same cover letter to several employers. Ultimately, this might mean they’re simply looking for a new job, rather than being motivated to specifically join your team. 

When reviewing cover letters, keep an eye out for content that makes it clear that candidates want to work for your organization. For example, an applicant might highlight that they’re motivated by your company’s mission, align with your specific core values or have some sort of connection to the customer base you serve.

Sharing this type of information in the cover letter means candidates have done their research and are engaged with your company. As a result, they’ll likely be driven to succeed on your team, if hired. 

3. Compare a candidate’s experience and goals with your needs. 

Similar to going into detail about why they’re interested in joining your team, the most engaged candidates will find ways to align their past experience and career objectives with the information outlined in your job descriptions. 

According to the ResumeLabs study, 50 percent of hiring managers tap into cover letters to learn more about candidates’ career objectives and explain why they’re looking for a new role. If the job applicant’s cover letter is simply a regurgitation of his or her resume, they likely haven’t taken the time to review your job description in detail to determine whether or not they’re a fit. 

In cover letters, look for information related to tying candidates’ backgrounds to what’s required of your open roles. 

If you’re hiring for a sales role, and looking for great negotiation skills, for example, a candidate might share an anecdote about how they negotiated a particularly tough deal in the past. Or if you’re hiring an office manager, you might come across a strong candidate who has served as an administrative assistant for a few years and is motivated to make a step up in his or her career. 

Despite the low unemployment rate and highly competitive hiring market, it’s critical for your team to avoid rushing through the hiring process–or you might risk hiring employees who won’t drive the results you need. 

Published on: Feb 24, 2020

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Weirdly, Teams Might Perform Better When You Pay Them Less

Previous research showed people will accept a lower salary if they believe they’re having a positive impact on the world. What’s different about this research is that it revealed that in such organizations paying people less gets them to work harder. Here’s how:

First, a below-market wage acts as a recruiting filter, scaring away employees for whom money is the prime motivator. Being willing to accept a below-market wage marks a job candidate as somebody whose personal goals are aligned with the organization’s.

Second, a below-market wage becomes a badge of how committed an employee is to the organization’s goals; employees feel that they’re sacrificing for the greater good, thus freeing up money to be used to help the organization’s mission in other ways.

Finally, a below-market was can foster a band-of-siblings/us-against-the-world attitude that causes teams to “cooperate more effectively” according to the American Accounting Association, which vetted the research.

So, then, how can companies use this research to reduce labor costs? Well, based upon the research, the following criteria must be satisfied to get employees to work harder for less pay:

  1. A REAL social mission. High-fallutin’ inspirational mission statements (which even evil organizations spout) aren’t going to cut it. Your employees must see and believe that your organization is making the world a better place.
  2. Salary transparency. Unless everyone knows what everyone else is making, some employees will naturally assume that they’re making less than their peers. Such transparency must include managers’ salaries, naturally.
  3. Shared pain. It can’t just be the line employees who take the financial hit. Nobody will work hard for lower pay when the CEO, for example, rakes in huge compensation and jaunts around on a private jet.
  4. A living wage (at least). If the below-market salary you’re offering doesn’t cover your employees’ basic needs, they’ll bail as soon as they find another job that will.

So it’s a paradox: if your primary motivation is to increase profits, this technique will flat. It only works when everyone knows, in their heart of hearts, and can see with their own eyes, that the organization’s goal is worth the shared sacrifice.

Published on: Feb 13, 2020

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6 Reasons Why Your Earliest Employees Should Be Freelancers

Many entrepreneurs I have mentored make big mistakes in this area, by hiring friends and family with minimal skills or training and expecting them to have the same work ethic, passion, and business knowledge as the founder.

A solution I often recommend, as least in early growth, is using outsourcing for critical tasks. While this approach might appear to cost more, it actually often costs you less when you consider the hidden costs of redoing work, poor customer satisfaction, employee management, and training you’d otherwise face. (As your business matures and stabilizes, hiring in-house employees makes more sense.)

I just finished reading a new book for entrepreneurs, Secrets to a Successful Startup by Trevor Blake, which makes the same points, based on Blake’s own real-life experience with three successful startups.

Blake outlines the following benefits of outsourcing and freelancing:

1. Serving your business well is a competitive priority for workers.

With worldwide instant access to skills and alternatives via the Internet, I see a much more competitive and skilled remote workforce than ever before.  

Contract employees know they have to perform well at your company or they will be quickly replaced. The terms are clear, and there is no entitlement to deal with.

Of course, it still pays to consider the impact of cultural norms and languages, as well as time zones, particularly in areas that present your image to customers, such as customer service. Direct customer-facing non-technical roles should be the last ones outsourced.

2. Outsourcing can give your startup a more mature image.

Customers won’t know that vendors are not employees of your company. Outsource providers will adopt your company name when they interact with others, and their expertise can help you overcome the hesitation of some clients to do business with small and new businesses.

For example, if I’m a customer who needs help with product installation or customization, I don’t want to deal with someone who is clearly new to their role or inexperienced. Most freelancers are already experts and confident from previous assignments, and that image will help your business.

3. You can contract expertise rather than train employees.

If you do your due diligence when hiring, the contractors you outsource will already be trained and experienced in their jobs.

Their careers depend on keeping up their skills, and they must have the confidence to work unsupervised. Training takes time and energy you may not have yet.

One of the first places that many entrepreneurs effectively use outsourcing is in the initial hiring of key employees, and the execution of key human resources functions. HR is easily done on a contract basis, and may not be a full-time function for early businesses. 

4. You’ll void employee-related expenses and management.

By using contractors and vendors, you’ll avoid all the expenses and regulations that come with employees, including career management, worker’s compensation, health insurance, and tax withholding.

In addition, you can reduce the “soft costs” of mentoring, relationship-building, and socializing. 

According to a recent MIT study, the true costs of employees are typically in the 1.25 to 1.4 times base salary range, not including space and equipment requirements. This goes a long way in covering any premium that you might pay for comparable freelancers. 

5. Freelancers are ready to go to work immediately.

Outsourcing vendors hire, train, and manage their own employees, using their own human resources, performance, and appraisal systems.

They need no office setup, since they have their own. By outsourcing to experienced staff, you can focus your time and energy on your business growth. 

6. You can easily adjust services to control cash flow.

Services vendors typically offer a menu of services, so you can select what you want when you need it.

Outsourcing gives you the flexibility to add or cut back on services and volume according to demand, and meet your cash-flow management requirements. Startups need that flexibility.

It’s usually impossible to predict your growth and service needs, since you have no experience or history to guide you. In addition, you’ll often find the need to pivot as you learn more about your customers’ needs and your solution’s match to the market.

To be sure, there are potential negatives associated with outsourcing and freelancing, including threats to security and confidentiality, continuity issues, communication challenges, and impact on existing employee morale.

Yet, in my experience, the pros far outweigh the cons in modern startups, so don’t let managing employees be the nemesis of your great new business.

Published on: Feb 7, 2020

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