The first thing to realize about finding good employees is that the best ones usually are working for someone else. Capable people don't stay unemployed for long. Once in awhile, you might bump into a top-notch person who just got laid off, moved into your area or for some other understandable reason, is in need of a job. Just don't hold your breath waiting for it to happen.

Most often, if you're looking to hire an employee who can be productive right off the bat, you have to hire that person away from someone else. Good ones seldom get fired and most responsible people do not quit their jobs without having another one lined up. If they do, it may signal impulsiveness or some other issue that might give you pause about hiring them.

This means that if you want to hire a top-notch person, you'll probably have to make a better offer to someone already employed by somebody else. Which opens up a giant can of squiggling worms.

This crime pays!

Many business owners consider it unethical to "steal" a competitor's employee. I don't buy that.

To my way of thinking this is America and America is about freedom for both employers and employees. The term "stealing" an employee suggests ownership but ever since President Lincoln's Emancipation Proclamation in 1863, nobody in this country has held ownership rights over any other human being. We are all free agents and if you have the wherewithal to treat people better than another employer, you have every right to make them an offer.

I understand that there may be complexities in the real world. Local competitors sometimes belong to the same trade association and may be social friends. Then it boils down to a business decision weighing your company needs vs. the value of the friendship. You may decide that a personal relationship is more important than your business interest and that's OK. Just understand that this does not make it an ethical or moral issue.

In most cases, employers invoke friendship, ethics or morality to disguise the real reason they resist hiring people away from competitors. It's the fear that someone may do the same to them. Nobody wants to get into an employee bidding war, so an unspoken rule evolves that holds it to be unethical to go after a competitor's people.

An odd thing about this is that the rule never seems to apply except between direct competitors. If a contractor hires someone from another trade or a different business, nobody looks at it as doing anything wrong. It's just when you hire someone from a company that competes against you for work that it somehow seems against the unwritten rules. Can anyone find any logic in this?

In any case, the way to ensure that nobody does it to you is simply to treat your employees better than your competitors. Here is where the topic of hiring good employees blends seamlessly into the subject of retaining them.

Golden rules

If you focus on keeping the good people you have, you'll automatically create the kind of company that will also attract the best people anyone else employs in your local marketplace. At the same time, you'll insulate yourself against competitors hiring your best people away, simply because you offer better jobs than they do.

Better jobs don't automatically correlate with highest pay, although pay scales certainly need to be competitive. Contractors often gripe about disloyal employees who jump ship because a competitor offered them a few bucks an hour more. My first thought upon hearing such complaints is they must be lousy managers if their people are so willing to leave for a few extra bucks.

Here are some ways to make your working environment an attractive one for employees who may be getting wooed by competitors.

1 Be generous with praise and recognition. Various surveys show that employees rank recognition and "being appreciated" even higher than pay in their evaluation of desirable employment.

TD Industries is a large mechanical contracting firm based in Dallas that year after year lands on Fortune magazine's list of the nation's best employers. I wrote an article about TD years ago and witnessed a lot of things the company does to earn these honors. One that remains etched in my mind is its "Wall of Honor."

It's in a handsome wood-paneled alcove near the main reception area of its headquarters facility. Subdued lighting and the absence of intrusive decor gives it the ambience of a chapel. The focal point of the room was the designated "Wall of Honor" featuring dozens of professionally photographed pictures of every past and present TD employee who has worked for the company at least five years. They were arranged not by management hierarchy but tenure. Employees who had worked there the longest were in the top rows. When I visited the most honored positions belonged to the founder and, next to him, a foreman who had been with the company for something like 35 years. The foreman's photograph occupied a more prominent position than those of the corporate executives then leading the company, because they hadn't been there as long.

TD's pay scales were not extraordinary by industry standards. Numerous surveys have shown that money does not rank at the top of what employees crave in their jobs. Ranking higher are respect and the feeling that they are making a valuable contribution.

2 Be generous with compensation. I just said that money doesn't count for everything but that doesn't mean it doesn't count. You don't need to be the highest paying company in your area to instill loyalty but you need to be closer to the top than the bottom.

Note the term "compensation." This encompasses pay and benefits. You can pay a little less and still attract great employees if you offer a first class health care package, retirement program and other benefits, such as flexible work schedules.

Common sense tells you that you get what you pay for, in anything. Usually, there's a direct correlation between the amount of money made by a company and the caliber of its people. Compensate them accordingly.

3 Practice open-book management. Some companies in this industry are small, privately held firms. The tendency of small business owners is to keep financial details secret. The prevailing attitude is that it's nobody's business how much money you make.

This is perfectly true. However, the best companies are those whose employees behave as if they own it. This may not be literally true. I'm not advising you necessarily to cut employees in on a piece of the action. However, an open-book management system has the effect of making employees feel a sense of ownership and a stake in the company's success.

Simply show your people the company's P&L statement. This documents for them how important it is to keep expenses under control and profits up. Even better, create some sort of incentive compensation plan so that all employees share in the company's prosperity.

You don't need to show them every last detail of the company's finances. For instance, they don't need to know how much the owner takes in income. Such details can be buried in general administrative expense categories. But it helps to make them feel part of your team if you show them how the company is doing on a regular basis.

4 Be slow to hire and slow to fire. The boom and bust cycle is one of the biggest drawbacks to the construction industry. Lack of job security leads many trade workers to go into business for themselves in order to avoid layoffs. I've met numerous contractors over the years who make less money than the people working for them. They're just happy they never have to worry about being laid off.

A business can't carry excessive employees forever, which is why you are well advised to go slow in hiring new people. Make sure everyone is working at peak capacity before you take anyone on, just in case a slowdown catches you by surprise. Explain to your people that though you're working them hard, the more people on the payroll, the less there is to go around for everyone else. Before you hire someone else, make sure your work backlog will support them for more than the next job or two.

One of these days a downturn will occur and you won't want the unpleasant job of giving pink slips to good employees simply because you can't afford them.

5 Praise in public, criticize in private. This is one of the most fundamental rules of managing people. You must correct and, if necessary, discipline people who don't perform or stray from company policies and procedures. But never make a public spectacle out of it.

Do make a public spectacle when they do something well, however. Recognition in front of peers is something every employee craves.

6 Award with choice perks. Give employees tickets to sports and entertainment events, convention trips, restaurant dinners, etc. It's especially effective when the spouse gets to share in the reward.

Be fair with these, however. They have to be perceived by all employees as a reward for exceptional performance or else given to everyone on a rotational basis. It would be counterproductive to have perks perceived by employees as favoritism.

7 One bad apple can spoil the bunch. Nobody wants to be too quick to fire anyone but a bad employee can poison your well for everyone. Employees resent it when the boss covers up for a non-performer or someone who habitually breaks rules that apply to all. Firing a problem employee who's been around for a long time can be traumatic but you'd be surprised at how many others will feel better and work harder after you do the dirty deed.

With a lot of small businesses, the problem employee may be a relative. Small business owners have the right to put relatives on their payroll. Just understand that nothing is as destructive to employee morale than to observe a family member who's overpaid and not pulling his or her weight.

8 Be on guard against the Peter Principle. Your best trade worker does not automatically become a good foreman. Don't use promotions as an automatic reward for good performance. First make sure the person is capable of handling the elevated position and even wants it. Often, they don't.