Trials, Probations and just good common-sense Recruitment

How should we use the 90 day trial, probation and recruitment to get the best staff?

The National Party’s first ERA amendments have taken effect from 1 March and one of the most controversial results of this is that small businesses (with less than 20 employees) now have the right to terminate someone’s employment within 90 days of them starting work, for no reason. Unions are branding it “unfair” (Helen Kelly, The Press March 2) and it is widely referred to as the “fire-at-will” legislation, but the reality is that it just may encourage employers to take a few more risks in hiring staff. And let’s be honest, many people currently looking for work will be very happy with part-time or temporary positions and will benefit from the creation of a few more. It needn’t be seen as “firing” but as canning a venture that didn’t work out.

I believe that the introduction of a trial period for small businesses adds a productive option to the current mix of probationary periods, fixed term employment and good common-sense recruitment.

This legislation significantly reduces the difficulties of terminating an employment relationship so, where
• an employer is unsure whether they can maintain enough work to keep a new position open (often the case for a small employer) or
• they know they do not really have the skills to ensure that they recruit someone with the right skills and character to fit their position and can’t afford the cost of undoing a mistake (also generally true for small business),
it will encourage more risk-taking with recruitment; i.e. a small employer can now take a small business risk without having to go through a formal review process at the end if it doesn’t work out. It just may make the difference between them being willing to hire or not – it just may give someone a chance!

The same argument does not so readily apply to larger organisations. Far more so, they have the time and resources to get their recruitment right. I sense that large organisations wishing to use a trial period are either trying to avoid due diligence on recruitment or are in a situation where they could validly use a fixed term agreement.

And where an employer has the resources it makes sense that they use their best efforts when recruiting. Research indicates that the true cost of recruitment can amount to over 50% of the recruit’s annual salary. So, even if there are no costs to terminating an employee early, re-hiring should be avoided if at all possible.

Probationary periods are very different from the newly introduced trial periods. They have been with us for years and companies that use them correctly find that this is really no more than structured performance management in the first three months. This takes time that small businesses generally don’t have but which can be a great help to enabling a new employee adjust to a new job. Such systems are designed to ensure a good fit and proper induction into the job. As a result it generally means that there is no performance issue at the end of probation because if someone is not “making it” they will probably have left first.

Finally, for those worried that they will be unfairly treated in a trial period, small employers must still maintain good faith with their employees and not mislead them. Any trial period must be agreed up front as part of their employment agreement, so there is no surprise. And the bottom line is that, whenever recruiting, an employer should do so carefully, using a trial period to test an option (not performance) and, whether or not they can make use of a trial period, they should ideally use a probationary-style system to help the individual settle and make a success of their job – good for both parties.