By guest author, Marc Simms
RPM Business Advisors, LLC

Recruiting, hiring and retaining top-talent is much different than it was 10-20 years ago. However, many employers haven’t changed their approach to this critical area of managing their business. Because of this, many business owners are spending too much time working in their business and not enough time working on their business.

A recent Gallup poll of 1 million workers found the number one reason people leave their job is because of a poor relationship with their direct supervisor. To retain and attract top-talent, invest in training front-line supervisors and managers. Teach them skills to become coaches that are proactive, not reactive in their approach and lead the workforce of today.

Top 10 Tips For Hiring Top-Talent:

1. Know what you are looking for, just fogging a mirror doesn’t cut it.
2. Define the results you want from the job.
3. Know what behaviors, attitudes and values are required for success.
4. Utilize open-ended and behavioral-based interview questions to determine the best fit.
5. Invest in assessment tools to validate interview results.
6. Check criminal, credit, driver’s license and references. Implement drug testing. Others are testing; you’ll get what’s left over if you don’t.
7. Be flexible. Don’t let your emotions get in the way of negotiations and create a win-win situation.
8. Pay for performance. You always overpay poor performers.
9. Initiate an employee referral program or offer a delayed sign-on bonus
10. Recruit and interview all the time

As an entrepreneur you don’t want your business to manage you. Assess your own talents then recruit and surround yourself with complimentary talents. If you find yourself overusing your strengths, they become limitations to growing your business and leave you in a state of critical mass. Invest in your people, create a culture of learning and watch your business soar.

Many businesses hire people to perform services on an irregular or ad-hoc basis. These so called "contract labor" arrangements are often perfectly legal but they can run afoul of IRS regulations if you exercise too much control over the individual. Here's an example.

You paid John $35 per hour last year for 425 hours worth of work. John built shelves in your warehouse, changed the lighting in your showroom, assembled office furniture on several occasions and repainted the stripes in your small parking lot. On each occasion you called John, told him the task that needed to be done and established a rough deadline for completion. He used his own tools, purchased any materials needed and you reimbursed him upon receiving the original receipts.

In all likelihood IRS will agree with your classification of John as an independent contractor. However, assume you change your agreement with John so that you can count on him at regular intervals. Now he comes in every Monday and Wednesday from 8 to 12 and performs routine maintenance as needed. Under this scenario it is more likely John will be considered an employee.

The difference is important. Employees are subject to social security and medicare withholding, federal income tax withholding, hew hire reporting requirements, workman's compensation coverage, and a whole host of other regulations not imposed on independent contractors. So what makes the difference between an employee and a contractor? CONTROL. Here are the factors IRS looks at to make a determination.

Behavioral control. IRS considers instructions you give such as when and where to perform the work, how to perform it, who to use to help perform it, training provided, and where to purchase supplies and materials. The more instructions you give the more likely you have an employee.

Financial control. If a worker has unreimbursed business expenses or if the worker has to invest in their own tools or facilities they are more likely a contractor. IRS also considers whether you are the sole source of income to the worker or whether they offer their services to other businesses as well. Contractors are also more likely to receive flat fees and bear a risk of financial loss whereas employees usually receive a regular wage or salary.

Type of relationship. IRS will also look at written contracts and the nature of the worker's relationship compared to other contractors or employees to make a determination. If the worker performs a vital service that is part of the businesses regular operations they are likely an employee.

Independent contractors may also be subject to reporting requirements under the rules for issuing form 1099. If this is the case you should get the information you will need to fill out these forms by requiring the contractor to fill out form W- 9 prior to receiving their first check for services.

Much more information regarding this topic can be found on the IRS web site or in IRS Publication 15.

I have just finished my second reading of "The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It" by Michael Gerber. This book is a gold mine for small business owners or those thinking about opening their own shop. Gerber, a self styled wandering nomad turned mid life business consultant, touches on principles we struggle to address with startups and growing business all the time. Here are a few of my favorites.

Map out your company before it's finished. In our experience the businesses that grow the fastest are the ones that have things like written goals, defined business plans, budgets, etc. Different people go about memorializing their vision in different ways, but they all do it; they all write it down. Gerber encourages you to start by writing your goals and vision down on paper, then progress through an organization chart, job descriptions, etc. Not everyone will follow such detailed and tedious advice, but by adapting the suggestions to your style you will still reap the benefits of sound planning.

Work on the business as well as in it. This has been said so often it's cliche, but Gerber gives good nuts and bolts examples of how it can be done in real life. Building operations manuals is horrendously time consuming work, but so is training your tenth sales clerk in two years. We have seen the suggestions Gerber puts forth pay future dividends over and over again, but like all investments the receipt of future dividends requires an up front payment of time and energy.

Creativity flourishes inside boundaries. Google, the poster child for business innovation has very rigid and structured procedures for evaluating new business concepts and products. This is surprising to some people, but Gerber also acknowledges the role of boundaries and procedures in creativity. Employees, managers, even owners, need the security and ballast provided by consistent business systems in order to step out and take risks. If you don't have a system for handling complaints how can you expect employees to exercise initiative and creativity in addressing customer grievances? This is probably the most misunderstood area we see among businesses in "creative" industries. Vague instructions and non-existent business processes don't empower employees, they encourage loose canons.

On the whole Gerber's book is a good one, although most people will pick out the nuggets and leave some of the more tedious pieces for their accountant or business consultant to handle.

Here are some other books on my night stand at the moment.

• The Art of the Start by Guy Kawasaki
• Fish by Steven C. Lundin
• Wealth and Democracy by Kevin Phillips
• On Intelligence by Jeff Hawkins
• A Company of Leaders by Gretchen Spreitzer and Robert Quinn