Managing people in difficult times

There is much less employee loyalty around now than was the case, mainly due to the behaviour of employers who, in reacting to very fast, and often very painful, changes in the business environment, have had to become markedly less loyal in the other direction.  This means that people are more willing than before to move to a competitor to build their careers.
So, if you make wrong decisions in staffing and have to put them right by firing people and letting people go, you may find yourself with a morale problem leading to the loss of the people you desperately needed to keep.
One way out of this dilemma of “Do we need another person and is this the right one,” is to use temps and contractors.  (Be very careful of the tax position on contractors, especially in the IT business.  The Government is bearing down on contractors who use their employer’s equipment and only have one customer.  They regard such individuals of being in reality employees and want the tax and National Insurance contributions appropriate to that status.)
But temps and contractors are not in fixed costs.  You can dispense with their services whenever you want and they are never regarded as full members of the team.  This means that their departure is met with more equanimity than if they were.  The two disadvantages of this approach are cost and the fact that you have no real hold over the people. 

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Tip from Shaf – managing talent
Talented people are more difficult to manage than drones.  The best tip on managing talented employees is to give them as much responsibility as you can.  Give them objectives of course, but let them break them down into the tasks needed to achieve them.

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When you lose a key person how do you get the right replacement quickly?  Using headhunters is a luxury that a new business, and any business that you happen to own, should avoid.  Put simply they have two major flaws:

1. They are very expensive.  Not only that, but if you take the advice of this book and negotiate for everything it may not work with these particular people.  Suppose you cut their commission down from 25% of first year salary of the person they place to say 15%, which is entirely possible; you end up with the awful feeling that you may not be getting a look at the best potential staff members because they are reserved for the people who pay full whack
2. By definition you do not have any first hand knowledge of the candidates nor even reliable second hand knowledge of the individual derived from a person who is 100% on your side

There are three key elements to hiring someone.  Do you trust them?  Can you and your team work with them?  Are they competent or better at the job?  Most experienced businesspeople would put the questions in that order of significance.  The role of the headhunter can now be seen to be operating on the least important of these three questions.  They should be reliable on whether candidates have the skills and experience to do the proposed job, but have less knowledge of whether the new business can trust them or work with them.
To be sure you can trust someone really needs good previous knowledge of him or her.  Hire people you knew in your a company you owned before or from your customers and suppliers.  Hire from any source where you know the person you are about to hire.
Second best to this is to hire people who are known to people you already trust and work with – that is your existing staff.  If you do not use headhunters you can afford to be very generous in offering incentives for your staff to introduce new people from their acquaintances and colleagues.  Do this and lo and behold you have grown your own headhunters.

Think constantly about your key people: they have the ability to make or break your businesses