No matter what type of business you're in, your success heavily depends on finding and selecting the right employees. Having the right people in the right place at the right time will improve your company's ability to compete.

Great hires can have a tremendous impact on a company's financial results. Research in the manufacturing sector has shown that the best plant managers grew their business' profits by 130 percent, while the lowest performing managers showed no profit improvement.

As we noted in June, 36 percent of small-business owners recently reported plans to hire full- and/or part-time staff in the coming months, on par with 39 percent reported last spring. Among those, according to the semiannual survey OPEN from American Express Small Business Monitor, seven in 10 said they need to hire to handle their growing business or to help increase business volume (both 72 percent), and the number of respondents who report they would not be hiring over the next six months (29 percent) hit a six-year low.

Human-resources services firm Gevity, which serves small and mid-sized businesses, recently released its list of the top five hiring mistakes made by small. Developed from Cornell University/Gevity research and surveys of small business owners, the list is a handy tip sheet for recruiting and hiring top talent.

Following up on Tuesday's popular, career-heavy IMT e-newsletter, here are Gevity's top five hiring mistakes — plus one of our own — and how to avoid them:

1) Offering Candidates Uncompetitive Compensation
"Offering prospective hires a competitive compensation package is critical for small businesses, which often struggle to compete with larger companies on the basis of pay and benefits," Gevity notes. Although a competitive salary is a key part of any compensation package, candidates aren't simply looking for cash. Benefits such as health insurance play a large role in a candidate's decision-making process.

Only 48 percent of the smallest companies (3-9 employees) today offer health benefits, according to the Employer Health Benefits 2006 Annual Report, from the Kaiser Family Foundation and Health Research and Educational Trust (via the U.S. Small Business Administration).

Additional factors: retirement plans, opportunities for growth and advancement, a positive work environment and flexibility. Gevity recommends small businesses focus the prospective hire on the total compensation package.

2) Relying Solely on Traditional Recruiting Sources
Of course, knowing where to find employees, both internally and externally, is critical to small businesses.

Gevity points out:

While placing a classified ad in a newspaper may work in some markets and for some jobs, employers need to understand the full range of options that are available to them — such as online job boards, university job fairs, recruiters or employment agencies.

Often you can build a pipeline of quality candidates by establishing relationships with key talent sources such as professional organizations and colleges and universities.

At the same time, being overly influenced by advanced degrees can be a mistake. Candidates with plenty of letters after their names have no doubt worked hard to earn their degrees, but there is no substitute for real-world business experience; people often make the mistake of overlooking candidates with track records but not degrees.

3) Not Having a Long-Range Plan
Hiring someone to fill a current need can help you through a busy time, but unless you're hiring someone on a temporary basis, you need a long-range plan for that employee beyond your immediate need. This includes how you plan to develop the hired employee and how he or she fits in with your company's long-range plans.

Likewise, waiting until someone leaves to fill a critical position is a huge mistake. Not planning for, or turning a blind eye to, turnover is one of the most common mistakes small employers make, according to Gevity. "Start building a talent pipeline now, so when you do have a position to fill, you can quickly fill it with top talent."

4) Not Looking for a Good Fit…
...with the position, with the firm, and in the future.

While employers large and small tend to hire based on a candidate's job skills and experience, research has shown that job fit is less important than organization fit. Most businesses require a rapport among employees. If you hire someone who does not fit in with the team's chemistry, you may find yourself with unnecessary problems.

"So when interviewing prospective hires, make sure that a good organizational fit is the ultimate goal of your selection process," Gevity suggests.

5) Failing to Market your Company
Finally, don't forget that while your company is evaluating applicants, those applicants are evaluating your company. Make their choice easier by highlighting your company's strengths, opportunities and positive culture.

"The key to attracting exceptional employees lies in avoiding these hiring mistakes and establishing a well-thought-out recruiting plan for your business," according to David Sikora, director of research at Gevity. "You can't expect great employees to find you. You have to develop a recruitment and hiring strategy to identify, target and reach them.

"Once you do this, you'll greatly improve the caliber of your job candidates, lower your recruiting costs and ultimately produce better business results," Sikora explains.

I'd add to this list:

6) Expecting Way Too Much
An all-too-common problem today is that of firms looking for one person to save a sinking ship. This is basically a firm hiring someone for the wrong reason.

An unrealistic, lengthy list of qualifications and background requirements — as frequently seen in employment ads — creates a situation where you settle for someone who you think is well versed and able to do a bit of everything, but does not excel in the key areas. Narrow your focus to the most important aspects of the position.

By avoiding these common mistakes, you should be better able to recruit and hire candidates more effectively and efficiently.

Resources

Gevity 1, 2

Vistage

McKinsey

AllBusiness.com

OPEN from American Express