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How Small Businesses Can Survive Economic Collapse

How Small Businesses Can Survive Economic Collapse

By: John Rossheim, Monster Senior Contributing Writer

In any economic environment, hiring and employee terminations are two of the most critical responsibilities of small business owners. In the recent recession, how to go about hiring employees and how to firing an employee can be life-or-death decisions for an entrepreneur. A wrong hire may cost your business more revenue than it can afford to lose; an ill-conceived termination may bring on a lawsuit that the business can’t survive.

That’s why savvy small-business owners are taking more care than ever when they hire or fire even a single worker.

The Hiring Beat Goes On

Does hiring seem like a distant dream or an irrelevant business practice right now? Yet you still need to maintain a minimum workforce to avoid losing customers.

While unemployment is high and rising, that doesn’t always mean you'll avoid common hiring mistakes. “It’s a mistake to assume that a glut of candidates equates to an enhanced pool of qualified candidates,” says Ken Dzierzawiec, vice president at HR consulting firm F&H Solutions Group.

In this buyer’s labor market, “small businesses will be inundated with applicants,” says Roberta Matuson, president of Human Resources Solutions. “Many small employers will just pick the first applicant that comes along. People don’t take the hiring process as seriously as they should until it’s too late.” Screening resumes carefully, probing deeply in interviews and doing background checks are as important now as ever.

Jennifer Miller, owner of Printing & Promotional Partners, attests to the volume of applications that a job posting can draw. Quality applicants are out there in force for employers willing to carefully screen a large pool, says Miller. “The applicants I get now are very good; some have four-year degrees.”

If you’re inclined to take a chance on a candidate who could be overqualified, consider making a temp-to-hire offer. “Contingent employees make sense,” says Matuson. “It’s a great way to see how someone fits into your company.”

Plan Carefully Before You Begin Layoffs

What if your finances are such that you must reduce headcount, say for the first time in years, or ever? Be careful how you handle employee terminations, and be humane. “The rules of thumb for termination are to be fair, recognize length of service and qualifications, be truthful, and communicate the issues in an upfront manner, rather than let the rumor mill take hold,” says Dzierzawiec.

“Have your layoff plan reviewed by an attorney,” says Matuson. “At least have a 10-minute conversation about how you’re going to do it.” Entrepreneurs who don’t chart their layoffs carefully often have regrets afterward. “Many small-business owners tell me, ‘I had no idea that this layoff might be perceived as discriminatory.’ ”

If you must terminate an employee, “the most important thing is to do it kindly and appropriately, with broad advance notice to your workforce,” says Alan Genitempo, a partner with Piro Zinna Cifelli Paris & Genitempo. That way, when the time comes for layoffs, there’s no trauma. "Summoning a security escort for a terminated worker can invite a lawsuit, he says. Instead, “have someone the employee knows walk them out.”

Genitempo, who most often represents plaintiffs, has been very busy during the recession. “I’ve been getting calls from at least four employees a week,” he says. A year ago, he typically received one or two calls every two weeks.

Looking for more information on how to hire or terminate? See the National Federation of Independent Business’s Small Business Toolbox for HR. Also useful is the SBA’s Small Business Development Center. Finally, SCORE, a nonprofit partner with the SBA, provides resources and even free advice from experienced executives, many of whom guided businesses through the deep recessions of the 1970s and 1980s.