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In large organisations hiring is a relatively routine activity, and getting individual hires wrong represents but a minor inconvenience. For smaller employers, every single hire is considered high-stakes, as every employee contributes significantly to the wellbeing of the organisation. This means that hiring good employees is a particularly mission critical activity for small businesses, as the cost of failure could literally mean the collapse of the company. With this in mind, what steps should small businesses take in order to hire good employees, and thus mitigate this risk?

This article will outline four key strategies designed to maximise the quality of hire, and ensure that small businesses can hire the best possible employees available to them.

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If you would prefer to watch a video, here Ben talks about personnel selection methods:

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The unique recruitment challenges of small businesses

Small businesses face distinct recruitment challenges compared to larger corporations. With limited resources, they lack a dedicated recruitment team, making it challenging to devote the same level of time and effort as larger employers. This demands a more strategic approach to hiring. Additionally, smaller applicant pools mean each candidate is more valuable, and small and medium-sized enterprises (SMEs) must make informed decisions without the luxury of a vast array of applicants. The stakes in hiring are also higher for SMEs; a single mis-hire in a small team can have a substantial impact, unlike in larger organisations where such errors are less noticeable. Therefore, SMEs need to approach recruitment with greater caution and precision, adapting their strategies to these unique challenges to attract and retain the right talent.

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Source as Many Candidates as Possible

It is no secret that the largest employers tend to hire the best performers. This isn’t because larger employers utilise more effective selection processes, it’s simply a numbers game. If you want to hire the top 1% of candidates, that means you need to evaluate 100 candidates for every 1 hire, requiring a huge applicant pool. For large employers, especially when hiring emerging talent, these ratios are quite achievable, and thus they readily identify the cream of the crop. For small organisations however, who lack the power to attract thousands of applicants, building a large candidate pool can be tough. Nevertheless, smaller organisations must do everything they can to cast a wide net, and attract as many potential candidates as possible, maximising the probability of eventually reaching those great employees.

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Use a Wide Range of Assessments

Because smaller organisations typically work with smaller applicant pools, this means that differences between candidates on important skills, traits, and abilities tend to be less pronounced. As a result, you will need to test candidates far more thoroughly than a larger organisation would, ensuring you can meaningfully differentiate between applicants. With smaller applicant pools, you can’t simply rely on high-pass marks to identify those top performers, and instead will need to evaluate candidates as holistically as possible. This is by far the fairest way of assessing candidates, and minimises the probability of good employees slipping through the cracks. For example, a comprehensive assessment process could include personality questionnaires, aptitude tests (a combination, such as verbal, numerical, and inductive reasoning tests), and then interviews for shortlisted candidates.

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Avoid Overreliance on Interviews

Traditional employment interviews are powerful predictors of performance. However, they have several key limitations which must not be ignored. Firstly, interviews are not short-listing tools, as they do not scale effectively with volume, and thus should only be used at the end of the process. Secondly, they are very limited in scope, only measuring communication ability and social skills. This is important to remember when assessing for resilience, industriousness, conscientiousness, or creativity, as these traits simply aren’t measured using interviews (although skilled interviewees could manipulate you into believing they can). Lastly, although highly predictive, interviews are less effective at predicting task performance than ability tests, and are less effective at predicting contextual performance than personality questionnaires. Therefore, you must not overestimate the utility of interviews, as high performance on an interview is not synonymous with being a great employee.

For small businesses, it’s best to use interviews as a final assessment step, focusing on cultural fit and communication skills while relying on additional tools like skills tests and personality assessments for a well-rounded evaluation. This approach improves the accuracy of hiring for small teams where every hire has a big impact.

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Don’t Settle for “Good Enough”

When managers are pressed for time, they may default to a “that'll do” strategy, and will hire the first candidate who meets the minimum requirements. Although this represents a time-efficient strategy, it will lead to suboptimal hiring decisions, as it will inevitably result in finding mediocre employees. Instead, small business should take their time with hiring decisions ensuring that a wide range of people are evaluated and only the best are offered positions. Naturally, this presents an opportunity-cost for hiring managers, who will need to spend more of their time interviewing, but this represents a relatively low cost considering the tremendous benefits of hiring good employees.

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How Test Partnership Supports Small Business Hiring

Test Partnership ranks among the psychometric test providers that offers suites of assessments specifically for low volume, high stakes recruitment. Whereas most psychometric test publishers focus solely on high volume recruitment and large enterprise clients, Test Partnership has developed assessments which are uniquely positioned to support smaller organisations. These assessments offer the highest levels of precision possible, identifying even slight differences between the candidates in smaller applicant pools.

Test Partnership also offers a level of support to smaller organisations that is unheard-of in the psychometric testing industry. Clients of all sizes are assigned an account manager who is either a BPS trained assessor, or a professional business psychologist. This ensures that businesses of all sizes have access to the highest level of support, advice, and guidance possible. This level of support is especially useful to employers that are new to psychometric testing and are implementing psychometrics for the first time.

We recommend our:

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Top Hiring Tips for Small Businesses

Here is a summary of some top points to consider when hiring as a small business:

  • Define Your Needs Clearly: Write specific job descriptions to attract qualified candidates.
  • Tap into Local Networks: Use local job boards and social media to reach community talent.
  • Leverage Employee Referrals: Encourage your team to recommend candidates they trust.
  • Consider Flexibility and Remote Options: Attract top talent by offering flexible work arrangements.
  • Use Targeted Assessments: Psychometric tests, like ours, can help identify the best fit for your small team.
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Common Questions About Small Business Hiring

How can small businesses attract top talent without large budgets?

Small businesses can offer unique perks like flexible hours, close-knit teams, and career growth opportunities. Highlighting these in job postings can draw motivated candidates.

What’s the best way to assess candidates effectively?

Combining interviews with personality and skills assessments helps you get a well-rounded view, essential for small teams where each hire matters.

How long should the hiring process take for a small business?

Aim for a process that’s thorough but efficient—ideally, two to four weeks. Taking extra time to evaluate candidates will reduce turnover and ensure the right fit.

What are common hiring mistakes to avoid?

Avoid hiring in a rush, overreliance on interviews, and skipping background checks or assessments. Each new employee in a small business has a significant impact, mis-hires can negatively affect small businesses much more than larger businesses.

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