The Wall Street Journal recently reported the obvious: Small businesses are not adding full-time workers like they used to.
The article cited Goldman Sachs’ exploration of the Labor Department’s Business Employment Dynamics survey of small entities employing 49 people or fewer. Their lukewarm findings alluded to weak demand, credit constraints and global woes.
I would argue that this government data is tardy and lofty evidence to consider if trying to tackle the actual challenges facing small-business owners in real time.
One common challenge we face working with troubled business owners is a high employee-turnover rate. Something’s just not right between ownership, workplace and staff. What’s more, the legal, accounting, health care and training costs of full-time hiring, termination and re-hiring are becoming more expensive for everyday small businesses across America.
Bottom line: Small- and middle-market business owners must attract and sustain long-term part-time employees better.
What we are seeing are more small businesses hiring part-time help on a just-in-time “gig” basis, or reducing full-time positions to reoccurring part-time “roles,” based on flexible or fair-weather demand. The rise of part-time gigs or roles is what the U.S. government and even Goldman Sachs are not explaining well or perhaps missing altogether.
The news is that many exciting and fruitful part-time jobs exist inside small businesses, especially entrepreneurial workplaces. These jobs are typically a fair-weather mixture of customer service, business development and vendor management, combined with light operations or occasional event-labor gigs.
Ideally defined, sustainable part-time employees add enough value to you, themselves and your small business to remain employed as needed. You love hiring them for whatever gig or role your business requires. You trust they would never lie, cheat or steal. They consistently bring in new or take care of existing customers. They prove time and again that your company’s best interests are their priority.
What’s more, your mutual schedule allows for a desirable part-time arrangement you both enjoy. They stay on board for years, and their good work justifies your compensation and incentives package. To some extent, they envision a flexible future working for you.
Another common challenge is that some business owners are awkward to work for. The company may be financially chaotic, operationally stubborn or too focused on the owner’s lifestyle or personal schedule to sustain employees. The working conditions may be impractical, uncomfortable or incomplete.
For these types of small-business owners, the dynamics and expenses of hiring are like riding a roller coaster. There is little incentive for key part-timers to stay and plenty of motivation for them to move on.
So, what type of business owner are you?
In my 22 years of experience turning around and growing small businesses (most in the 49-employees-or-fewer space), there are four general types of business ownership dynamics:
- The brilliant technician, artisan, chef, or retailer without formal accounting, legal or business administration education: These “creative owners” usually rely on an internal or external expert (or two) to fiscally run their business on a monthly basis, while the owner and staff focus on design, operations, customers, etc.
- The brilliant accounting, legal, or business administrator with little or no technical, artistry or chef skills. These “management owners” usually rely on creative employees to physically serve customers while they manage the operation fiscally and perhaps perform supporting PR or business development.
- The brilliant technician, artisan, chef, or retailer who also possesses a formal accounting, legal, or business administration background. These “creative and management owners” rely on themselves considerably. They typically work longer and harder hours, run a tight ship, and typically net greater returns than the first two types of owners because they are able to wear so many critical hats. Working for these owners can be intense.
- The absentee owner/investors. These entrepreneurs are typically 98% hands-off and 98% off-site, relying on managers, staff, or internal/external counsel to fiscally operate the business entirely. Absentee owners may be involved at the start and may visit to review the financial dashboard from time to time, but they have no day-to-day job or role in the operation. They typically have multiple businesses or locations under ownership. Working for these owners may be equally intense yet more autonomous.
When it comes to hiring, each of these ownership scenarios presents many dynamics, especially in the mind of that elusive, excellent part-time employee or right-hand assistant. Learning what truly motivates, compensates and satiates each of your support staff gigs or roles is a critical HR initiative to maintain.
Some reasons why some rock star part-timers legitimately leave your employment are not ownership’s fault. They may decide to go back to graduate school full-time, their Fortune 500 spouse may be relocated or they may win “American Idol,” whatever.
But many part-timers are simply not in the right phase of their life to fit your particular business model’s needs, culture or strategic trajectory. For some reason, turnover is still rampant. This is where the ghost enters the machine.
What is your ideal employee life stage?
Although this general claim varies by industry and niche, part-time employees are typically in one of three general life stages:
- Upward and mobile
These employees are going through school, interning, aspiring to be an expert at something or otherwise advancing their career and earnings. These folks are typically more youthful, have a high propensity to relocate, apply for new jobs or change life direction from year to year. Life first, job second is a common mindset. Is this type of candidate pool ideal for your part-time business model?
- Planting roots and staying put
These employees are getting married, having children or earning an MBA at night. Their spouse or partner may be starting a second business or getting a medical or law degree. They have a higher propensity for staying put for three to five years, traveling leisurely. Life and job are typically equal priority. Is this candidate pool more ideal for your part-time business model?
- Descending and life change
Some applicants may be slowing down or enduring a career challenge: A recently laid-off technician, a failed small-business owner (or their key employees), a downsized JD/MBA, a not-yet-employed fresh Ivy League graduate, a Bernie Madoff-style scam victim, a retiring pro athlete or coach, or the spouse or partner of any of these — I’ve seen it all. Is this candidate pool ideal for your part-time business model?
Life phases such as divorce, children off to college, early retirement or moving from military to civilian life can relate to any of these phases, so each candidate will always require custom consideration.
Assuming candidates have been qualified and vetted, potential employees experiencing career or life changes are usually highly motivated and compensation-concerned. They are typically job first, life second and looking for sustainable opportunity.
5 steps toward sustainable part-time employees’
When hiring for part-time positions sustainability, the critical first step is to understand the life stage of each candidate. Take the time to back up assumptions and first impressions with in-depth, thorough interactions.
The second step is to put yourself in the shoes of your ideal employee, as if you were a part-time worker in your business. Explain to yourself in detail why you would like and dislike your job. Consider why former employees have not worked out or why they really left you for greener pastures.
Another challenge is that many small-business owners have little or no HR manual or in-depth job description to present to candidates in writing — after your lawyer has approved it. That’s the third step.
The fourth step is to develop a more customized, motivating and satiating incentives-and-compensation plan for each ideal part-time role and candidate.
The fifth step is to align your part-time hiring strategy with your long-term, full-time hiring strategy. Whether the federal health care law stands or not (and all politics aside), hiring full-time employees from a trusted pool of well-known part-timers is still a more risk-averse practice going forward.
Reflection as a business owner can be sobering and at times uncomfortable. To attract and keep sustainable part-time candidates strategically, customize incentives that better fit X) your ideal pool of part-time candidates, and Y) your small-business ownership dynamic.
Baron Christopher Hanson is the principal and lead strategist at RedBaron Advisors in Charleston, S.C., and Palm Beach, Fla. A former rugby player, Harvard graduate, and expert on workplace and small-business turnarounds, Hanson has written for Harvard Business Review and SmartBrief considerably. He can be reached for consulting roles and speaking gigs via e-mail or over Twitter @RBC_ThinkTank.