Referrals, Not Resumes, The Small Business Hiring Playbook

Hiring is one of the riskiest decisions you'll make as a small business owner. You face the same challenges that every business does, but with fewer resources and higher stakes.

How do you reliably vet and hire great people? And once you do, how do you keep them around?

You're up against fierce competition, with many of your large competitors able to offer better salaries and benefits packages than you can.

Let's start with the first challenge.

How do you reliably vet and hire great people?

Yes, you can post an open position on a lot of job sites, read a lot of resumes, do a lot of interviews, and call a lot of references.

But the honest answer is you can’t vet and hire great people with anywhere close to a 100% success rate.

Most tips you’ll find or read for judging resumes are next to useless. I’ve hired exceptional people with terribly formatted resumes and subpar performers with beautiful resumes.

Beyond the basics, there’s just one thing I look for on resumes.

Have they worked a long period of time for at least one of the jobs they’ve had? I define "long" as 3-plus years.

If the applicant has a track record of changing jobs every 12 to 18 months, assume their next stop will follow that pattern and not be the exception.

Recruiting is one of those things in business where, for whatever reason, we're not comfortable admitting that it has more to do with dumb luck when we hire a very high performer than our interviewing skills or hiring process.

Agreeing to give a stranger $50,000, $60,000, $100,000 a year of your company's money after one, two, or even several interviews makes about as much sense as proposing to someone after a couple of dates.

But we do it anyway, because short of internships, no real process for long-term vetting exists in the workplace.

It's just not possible for you to get a true sense of who someone is, nor them you, through any kind of conventional hiring process.

So if the traditional hiring process isn’t reliable, how do you improve your odds of finding a great hire?

By relying on your top performers to refer and recommend candidates.

Call it nepotism if you want, but hiring someone vouched for by a trusted team member isn't just favoritism, it's also risk mitigation.

The single greatest compliment a member of your staff can give you is not a Christmas card or a wedding invite, it’s referring someone they are close with to work at your company.

As a general practice, people who hate their jobs usually aren't recruiting their friends and family to join them in their suffering.

It's one of the most important metrics you can look to for measuring employee satisfaction at your company.

When you tell the team you're hiring for a new role, is there a flood of excitement and referrals? Or is it crickets?

The highest performers at your company tend to know people who are a lot like them.

When hiring for a new role, go beyond just dropping a note in Slack or Teams.

Go to your top performers in whatever department you're hiring for.

Give them the praise they deserve and tell them you'd love to hire someone for the open position as talented and hardworking as they are.

Let them know that any endorsement or recommendation they give a candidate will come with a great deal of weight as you review all the potential applicants for the role.

The more intimate and close the connections, the better. College roommate, cousin, husband or wife, if your best people vouch for them, it doesn’t matter.

The closer the relationship, the more social pressure there is for the candidate to perform, because now the quality of their work reflects not only on them, but the person that recommended them.

It’s not foolproof. We all have stories of someone vouching for a friend or family member who didn’t work out, but again, what we’re trying to do is take the near random odds of hiring someone exceptional and tip them just slightly in our favor.

At a small, cash-strapped business or startup, by the time you hire for a certain position, you or someone else at the company has likely been doing that job along with several others and are overworked and stressed.

This makes the costs and stakes of you not hiring the right person for the role much higher than at a larger company.

Large companies often have entire departments dedicated to nothing else than training and onboarding.

Contrast that with your situation: you're still doing everything you were before, plus now you're trying to train and onboard someone new.

Because of what's at stake, if you can increase the chances of a new hire working out even slightly by it being someone you or your team already knows and endorses, then you have to do it.

Once you’ve managed to hire top-tier talent, how can you get them to stay?

According to a Gallup research study, having a best friend at work is one of the biggest factors in whether someone chooses to stay or leave a job, often weighted more heavily than salary, benefits, or PTO policies.

Assume that, as a busy business owner, you don’t have the time, energy, or skills to design the perfect mixer where everyone who works for you will get to know one another and become fast friends.

Then hiring someone who already is friends with someone who works for you is a cheat code to giving them a friend at work.

This is great news for small business owners. You can cancel the awkward icebreakers or forced team building games you were planning, and fast track a culture of connection and community by simply leveraging the existing friendships and relationships your team has outside of work.

There’s risk of cliques forming. You need to be wary of this, as they come with the possibility of making others on the team feel excluded.

However, cliques are an unavoidable byproduct of any social group reaching a critical mass of numbers.

Walk into a freshman college orientation, and a group of people that knew next to no one will, within hours, have formed cliques.

A workplace where no cliques exist is perhaps more concerning than an overabundance of them. It indicates such low social and emotional connection in the workplace that no one has even bothered to make friends.

When your company is early and growing, the potential rewards of favoring team endorsed candidates far outweigh the risks.

Hiring great people is hard, especially when you're small. But you can stack the odds in your favor. Look to your best people. Trust their judgment. Reward referrals. And don’t overlook the underrated power of a workplace friendship.