Managing employees can be most challenging ... Here, three entrepreneurs show how to do it right

By Geoff Williams

Issues. As entrepreneurs, we all may be different colors, genders, heights and nationalities, but what often ties us together are the issues we face as business owners—issues that can perplex, frustrate, confound and confuse us, except when we conquer them. So we looked at three issues that drive a lot of entrepreneurs crazy, and found three people who we felt had worthwhile solutions.

Hiring the right people
Dana Korey was at a crossroads all successful entrepreneurs eventually face: She knew she needed help. When an entrepreneur realizes he or she can’t work alone, three options are generally available: You can outsource, you can hire someone full time, or you can hire someone part time. Korey had started her Del Mar, California, professional organizing business, Away With Clutter Inc., in 2001, when she was 36 years old. After about two years, Korey’s business had expanded so much, she knew she needed an employee. You can’t really outsource help in something as specialized as professional organizing. She didn’t feel she had the infrastructure or income to hire anyone full time, so she knew she would be hiring part time.

But who to hire? Korey decided to recruit a local rival. It was a rather bold move considering Korey had recently taken down this competitor’s flier at a local gym—and then put up her own. They had every reason not to work together. But Korey was getting so much work, and she knew she couldn’t hire just anyone to assist her in helping businesses and residents organize the paperwork overtaking their offices and rooms.

About a month after the gym incident, Korey called the competitor and explained her thinking, saying she couldn’t keep up with demand, especially after some recent publicity on news shows and in newspapers. Michaela Kuechenhoff, 37 at the time, cautiously agreed to come onboard. Kuechenhoff did some amazing work, which brought more clients. Before Korey knew it, she was hiring more people on a part-time basis.

Eventually, Korey realized she needed a partner. She turned to Kuechenhoff, her first employee, who still ran a competing professional organizing firm. It took some convincing, but Kuechenhoff eventually realized that Away With Clutter had better brand awareness, and that she would be smart to align herself with Korey. They joined forces and are now
co-owners.

The lesson? Be creative in how you find your employees, and be open to unusual ideas, like joining forces with a competitor.

Finding someone who is a good fit for your company is key. Bill Lee has been helping companies hire the right people for more than 18 years as owner of Greens-ville, South Carolina-based Lee Resources Inc. and author of books on the subject, such as 30 Ways Managers Shoot Themselves in the Foot. He has several interesting tips for nabbing the right employees, including getting applicants’ permission to tape the interview so they can be evaluated by several people. He also recommends asking each applicant the same questions so you can compare their answers.

In addition to using tried-and-true screening methods, Lee says you should also “trust your gut” and not “be misled by perfect resumes.” He notes that we all have spectacular failures and can often learn a great deal from them. Says a bemused Lee: “I often ask myself, If everyone has done such great things with their lives so far, why is the world still messed up?”

Coping With Health Insurance Costs
Brooke Pfautz didn’t set out to lower his health insurance costs by encouraging his employees to be healthy, but today, it’s one of his main health-care strategies.

Pfautz, 31, is the president and CEO of First Commonwealth Funding, a mortgage company in Hunt Valley, Maryland. From his company’s beginnings in 1999 when he had just seven employees, Pfautz always had a health insurance plan. “I remember hearing from my insurance agent, ‘Brooke, a lot of companies of this size don’t do it this way,’” but Pfautz insisted on providing a good plan: The employees paid half the monthly premiums—and received benefits like a matching 401(k) on top of their health insurance.

The way Pfautz sees it, the mortgage industry has high turnover, and if he can provide strong benefits like a good health plan, then he increases the likelihood of good employees staying. Providing health insurance in today’s excruciatingly expensive marketplace may make some entrepreneurs want to call a doctor, but as Pfautz explains, “You need to recruit and retain the best employees possible.” First Commonwealth, it should be noted, now has more than 90 employees.

Pfautz helps keep his premiums down by providing a free gym membership to every employee who goes to a gym three times a week, and he just began reimbursing employees who use any form of nicotine patch or gum in an effort to stop smoking. He may never know if he saves anyone from smoking-related diseases, but he imagines there will be an immediate benefit for the company if any of his cigarette-wielding employees take him up on the offer. “We’re on the fourth floor of the building, and you have to take the elevator going down. So let’s say an employee smokes four cigarettes a day, and they take 15 minutes per smoke break. That’s an additional hour a day, which comes to five hours a week, or six and a half weeks of vacation time they’re getting from me a year,” says an exasperated Pfautz. But of course, he really just feels that encouraging employees to quit smoking is the right thing to do.

Whatever the reason, offering health insurance to your employees is a good plan. And indeed, it’s something that business consultant Lawler Kang recommends. “As popular as 401(k) plans are, they’re less important than having a good, quality health plan,” says Kang, author of Passion at Work: How to Find Work You Love and Live the Time of Your Life. “It’s having the comfort and safety net of knowing that [employees are] protected; that’s what employees want, and people won’t mind paying for some of their coverage as long as the plan is branded with a major health carrier.”

Sure enough, most of Pfautz’s employees have stayed, and he’s especially proud that four employees who he was sorry to see go came back asking for jobs. He attributes their return to his ethical and perk-driven business practices, which many of his competitors don’t have. Pfautz rehired the four employees, observing, “I used to have a no-rehire policy, but I decided against that. I try not to burn any bridges. . . . So far, what we’re doing is working.”

Motivating Employees
Jeff Lambert, managing partner and founder of Lambert, Edwards & Associates in Grand Rapids, Michigan, was delivering a speech to his 20 cramped employees as they traveled in an uncomfortable bus on their way to a daylong motivational seminar. Recounting the history of his PR and investor relations firm, founded in 1998, Lambert talked in a monotone, seemingly oblivious to the bored stares he was receiving. It was clear to everyone else on the bus that the day’s seminar was going to be anything but fun.

Suddenly, Lambert told the driver to stop. He ordered everyone to file off the bus—and told them to board several limousines waiting for them. The energy changed immediately, with several people beginning to wonder if this was a stunt like in 2004, when the entire staff flew to a seminar in Mexico. The 2005 Day O’ Fun, as Lambert calls it, didn’t quite match those heights, but during the course of the day the staff participated in a scavenger hunt, bowling, roller skating, lunch, a cocktail hour, shopping and dinner—and everyone went home admitting they’d had a day of fun.

Kang says Lambert is definitely on the right track. “By all means, you should get to know your employees personally,” he says, “and establish those relationships with them. And it’s often something that’s much better done outside the workplace than in the office.” Lambert says the company spent about $4,000 on the Day O’ Fun—a considerable amount, but not so much when one considers that the firm is now making about $2.8 million a year. It’s crucial to motivate your employees, says Kang, because in the end, most people don’t work just for the money. “At the end of the day, what keeps people coming back to work is when they have passion for what they’re doing,” says Kang. “It’s hard to have passion for what you’re doing if management doesn’t show [you] respect.”

Respect is something Lambert definitely appears to have for his employees. “Just to give you some context, we’ve gone to a lot of retreats in the past, and we’ve tried to involve a nice place to go, but it’s still about learning and sharing the best business practices,” Lambert says. “But in this case, we really felt we had a very good year. Revenues were up about 25 percent in 2005, the staff has grown significantly, we’ve moved offices, and we even had a small acquisition in 2005. We wanted to do a retreat, but we also wanted to let people know we appreciated their hard work all year-round.”

It was also a day that Lambert had been daydreaming about since he began his enterprise in his basement. “When I started the business, I always thought it would be fun to be able to do this sort of thing, to just drop everything and go have fun, and for it to be on the company,” he says. It was the type of day Lambert had never experienced when he was an employee at another firm. Echoing Kang’s words, Lambert says: “Compensation comes in many forms. For some people, that’s strictly money, and for others, it’s affirmation. But I think for everyone, it’s to be able to talk with pride about the place [where] they work.”

Lambert says the culture he has created has helped in recruiting—when prospective interviewees hear about the Mexico seminar and presumably now about the Day O’ Fun, finding the best people to hire isn’t so difficult.

And then Lambert says something that makes one realize that almost all issues entrepreneurs face, no matter how different they seem to be, generally come back to finding good employees and treating them well. “In our organization, we put not our clients first, but our staff,” says Lambert, “because without a good staff, I don’t keep the clients or serve them well. So there’s actually an echo effect. And when the clients see you investing in the people who serve them, there’s a very tangible benefit—that is, continued strong morale and business.”

Geoff Williams is a writer in Loveland, Ohio. Contact him at gwilliams1@cinci.rr.com