How To Help Small Business Create Jobs
Several things have to happen for me to decide to hire: 1) I have to have the business to support the new employee, 2) I have to have work for that new employee to do, 3) I have to be able to know that the employee is doing an appropriate amount of work, 4) I have to be able to find a qualified person, 5) I have to have no other choices.
I have to have the business to support the new employee. For my consulting business, I need a new project that I can place an employee at, that I probably cannot take on myself with my current workload. There may be a day when I hire to support the consultants in the field, but right now it’s about getting business that a new consultant will do. Getting this business may be about proper marketing and sales, and I am not sure what our government could do to help me get new business except for overall growth in the economy.
I have to have work for that new employee to do. Today this means getting that new project. Tomorrow it may mean supporting the business by answering telephones, filing, paperwork, and billing. There has to be some need to fill. Government is not going to create needs within my business to fill unless they make things more complex for me, meaning that I am hiring to do things that will not add value to the business. Adding value makes me more money, adding complexity and administration ultimately helps nobody.
I have to be able to know that the employee is doing an appropriate amount of work. People are different. One may love to work and will get tons done and another may have many distractions and will do little for you. While you don’t need to crack the whip, you need to be aware of what value employees are adding to the business, or if they are just dead weight around your neck. They do not have the motivation (profit) that you do, and there is nothing you can do to change that. Even something like profit sharing will mean nothing if the employee does not feel that they contribute to profit. They can and often do, but that can be difficult to communicate. So employees do need to be managed. In my case, I might just call them regularly to see how everything is going or follow up with the client. Not sure what government can do to help me manage employees.
I have to be able to find a qualified person. As much as some people would disagree, it can be extremely difficult to find the right person to fill an opening. In the past few weeks I have been trying to create a network of people I am willing to work with and I have asked for resumes of potential consultants for projects. I have gotten one resume. I have also asked people flat out, people I know are being cut from their position soon, if they would be interested in doing consulting for my company. I have actually gotten very little interest in return. I tried to fill a marketing position with an independent consultant and spent weeks trying, and finally I found somebody but why is it so hard? It might be my particular small business that is not appealing. However, with 10% unemployment in this country you would think people would be jumping at a potential job… and note that I have been extremely negotiable on salary or rate… The problem is that there is a shortage of qualified people for knowledge jobs. Government can help by getting more American citizens trained. There are so many people who want to go to college, or to be trained in other ways, but they are frightened by the costs. And they should be. Who wants to wind up with $100,000 in debt for a BS? We need more of our population educated, and not loaded down by all kinds of debt.
I have to have no other choices. I am not going to hire a person where I can easily do the task myself. Or maybe I’m overwhelmed by admin today, but I can improve my situation with technology. I don’t want to spend money for an employee to do things that can be handled a different way. Even at $10 per hour, an employee ultimately will cost at least double that with employer-side taxes, unemployment insurance, benefits, office space, computer, etc. So if software means that I don’t have to hire, software it is. Spending $5000 on software to avoid a hire will pay for itself very quickly. Because of technology in the past 20 years, many manual jobs have been eliminated. And businesses have benefited in productivity. Goods of all kinds are much cheaper than they used to be because technology has helped us squeeze out costs. This is all good except for the people who have not been retrained for doing thinking jobs rather than muscle jobs.
As I said last week, complexity is business’s enemy. But the enemy of the American economy and the reason for high unemployment is the severe lack of skilled workers and the overwhelming numbers of unskilled workers. We need to do much more for the individual who wants to be educated so they can get what they need and not be burdened with a lifetime worth of debt.
One thing that might help is if more (or all of an education) could be paid with Stafford loans with their current rules. We could even eliminate subsidized Staffords. With income sensitive repayments, students are only on the hook for 15% of their income over poverty for 25 years with the remainder of the loan forgiven. If somebody is extremely successful, the loan is repaid. If not, they are not overburdened. It’s really not about helping the individual student, but about helping business, society, and the American economy become stronger.
What do you think can be done to improve conditions for small business now or in the future?