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How to Recruit the Right People: 10 Steps for Small Businesses

A bad hire can cost up to three times the salary. Ten practical steps to define the role, attract the right candidates and choose well first time.

In this article
  1. Analyse the job before you advertise it
  2. Build a person specification: essential versus desirable
  3. Keep your recruitment process legal
  4. Define your EVP so good people want to work for you
  5. Write a job advert that filters as well as attracts
  6. Keep your applicants honest
  7. Screen applications fairly and consistently
  8. Make your selection with the right tools
  9. Make them an offer they can’t refuse
  10. Assess and review your recruitment process
  11. Where to start

You need another pair of hands. Sales are up, you are stretched thin, and you just want someone in the seat who can do the job. So you write a quick advert, see a handful of people, pick the one you like best and hope for the best. When it goes wrong, you pay for it.

Knowing how to recruit the right people matters because a bad hire is expensive. Estimates vary, but the cost is generally put at somewhere between 50% and 300% of the annual salary for the role. Hire someone on £20,000 who lasts three months and you are likely to be at least £10,000 down, before counting rehiring, lost productivity and unhappy customers.

1. Analyse the job before you advertise it

Start by looking hard at what you already have. How do your current staff measure up to what the business needs next, in terms of experience, qualifications, skills and behaviours? The gap you find is the basis of the role. Then picture what someone doing the job well would look like.

Write or refresh the Job Description, covering:

Set the salary and benefits now too, checking adverts for similar jobs so your package can compete.

2. Build a person specification: essential versus desirable

The Job Description tells you what the job is. The Person Specification (or Person Profile) tells you who can do it, across experience, knowledge, qualifications, skills and behavioural competencies. Split every attribute into two columns.

Before you put something in the essential column, ask what would happen to performance if it were missing. If the honest answer is “not much”, it is desirable. Think too about the behaviours you expect, because they usually reflect the culture, values and standards of your business. A clear list of competencies, such as Analysing and Solving Problems or Drive and Initiative, makes recruitment far more objective.

Your Job Description, Person Specification and whole process must stay within employment and anti-discrimination law, so you are not unfairly advantaging or disadvantaging anyone. If a decision is challenged, the onus is on you as the employer to justify it.

Be particularly careful about indirect discrimination. A tribunal will look at whether far fewer people from a particular group could meet your criteria, whether you can genuinely justify those criteria as a real requirement of the job, and whether the person lost out as a result. ACAS, the Federation of Small Businesses and the Recruitment and Employment Confederation are good places to get advice, often free.

4. Define your EVP so good people want to work for you

Smaller firms often battle a perception that they are less stable, offer fewer career opportunities, pay less and work out of uninspiring premises. Your answer is a compelling EVP, your Employee Value Proposition: what makes you different from, and better than, other employers. You should be able to say it quickly and concisely.

Look beyond standard benefits and holiday. The guide’s example: “all of our promotions are based on performance and not time served; 90% of our supervisors and managers have been promoted from within the business.” An SME can offer a bright candidate the chance to learn more and directly influence how the business grows. But know the going rate and be ready to at least match it, because good candidates will not join for less. And make your workplace one people are proud to show their family.

5. Write a job advert that filters as well as attracts

Your advert is a wide filter. It should draw in people who match your profile and encourage the wrong ones to select themselves out. Be clear about your culture and the role’s downsides, and spell out the essentials.

Choose your channels with care. National press is expensive, local and trade press cheaper but narrower, and job sites quick but variable. Brief any agency fully and agree all costs up front, as fees can reach 25% of first-year salary. Do not overlook internal candidates. Then check your advert is on the right TRACK:

6. Keep your applicants honest

Most candidates polish their CV, so experienced recruiters treat it as the start of a conversation, not the verdict. Tell applicants up front that you will check their documents, then actually check certificates, identity and right to work in the UK. At interview, ask about their experience, qualifications and skills, and probe beneath any answer that does not ring true.

The best protection for a small business is a selection process with several stages, so you are never relying on the CV alone.

7. Screen applications fairly and consistently

Three traps catch people out: not being clear what you are looking for, favouring someone because they remind you of yourself, and rushing the sift. Use a simple tick-box screening form based only on your Person Specification, allow undistracted time, and have a colleague double-check your scoring.

Decide which background checks the role needs, such as references, qualifications, employment gaps, criminal records, driving licence and right to work. Employers can be held legally responsible for their employees’ actions, but candidates have privacy rights too, so only gather what you need and follow data protection rules.

8. Make your selection with the right tools

With a shortlist of three to six, you need methods that make finer distinctions. Use a structured interview, a work sample exercise (a welding test for a welder, for example) or ability tests where they fit the role. For senior or complex roles, an assessment centre can add presentations, in-tray exercises, group exercises, role plays and further one-to-one interviews.

Treat unsuccessful candidates well, because they will talk about you. Tell them promptly, thank them personally and offer a named contact for feedback.

9. Make them an offer they can’t refuse

Move quickly, because good candidates do not hang around. Make the first offer by phone, be enthusiastic, explain the full package and know exactly what you can agree to if they negotiate. Follow up with a personal offer letter setting out the main terms, and ask for a signed copy back.

Offers can be conditional on references, right-to-work proof, a criminal records check, a medical (applied to everyone, not selected individuals) or a probationary period. Use the FAST approach to references: Focus on verifiable facts, Ask questions tied to your Person Specification, Seek more than one, and Treat non-factual opinion with scepticism. And do not let your runner-up go until your first choice has accepted.

Before day one, register with HMRC if this is your first employee, get their P45 and National Insurance number, check your employer’s liability insurance and plan a proper induction.

10. Assess and review your recruitment process

Reviewing your recruitment and selection process is vital. Track how appointed people perform at the end of probation and later reviews, and compare that with what you judged at interview. Ask candidates and interviewers for feedback.

To succeed in business, you need to know everything you can about that business.

Graham Jarvis

That includes how you hire.

Where to start

Before your next vacancy goes live, sit down for an hour with the role you are about to fill. Write a one-line job purpose, then list every requirement and force each one into either the essential or desirable column, asking what would really happen if it were missing.

That single exercise will sharpen your advert, make your shortlisting fairer and give you a clear yardstick for every interview.

The full guide

Get the complete step-by-step guide

This article is drawn from our Top Ten Tips guide “Recruiting the right people”. The full guide, and more than 100 others, comes with every BBE plan. If you'd like to see where your business stands first, start with the free diagnostic.

Frequently asked questions

How much does a bad hire cost a small business?

Estimates vary, but the cost of a bad recruitment decision is generally put at 50% to 300% of the role's annual salary. That excludes the cost of rehiring, lost productivity, damaged customer relationships and the time it takes up for you and your managers.

What is the difference between a job description and a person specification?

A job description sets out the role itself: its purpose, scope, duties and title. A person specification describes the experience, knowledge, qualifications, skills and behaviours someone needs to do that role well, split into essential and desirable attributes.

What checks should I do before offering someone a job?

Common checks include references, qualifications, right to work in the UK, employment gaps and, where the role requires it, a criminal records check, driving licence check or medical. Only carry out checks that are necessary for the role, tell the candidate what you will check, and make the offer conditional on satisfactory results.