Another Option: Keep HR In-House

Kathy Gornik, president of Thiel Audio, a high-end speaker manufacturer in Lexington, Kentucky, has kept human resources inhouse since the company was founded in the mid'70s, and she wouldn't have it any other way.

Control over HR gives her more ability to instill the Thiel culture in her 30 employees. "One of the things I value so much in having my own company is having a really strong culture," she says. "And I want my employees to have an allegiance to Thiel."

For example, Thiel processes its own payroll using a basic software package and the company pays weekly instead of bi-weekly. "My people love getting paychecks once a week," she says. "It's almost viewed as a benefit."

Thiel's accountant/controller processes the payroll, manages benefits like the 401(k) and health insurance, and handles paperwork like W-4s.

Gornik still does all the hiring herself, but it hasn't been easy. Despite decades of experience in interviewing, conducting due diligence and checking references, Gornik admits that she has some weak spots. "Although I'm an intuitively insightful person, I'm just not good at predicting how a given person will do in a particular job." She fixed that by instituting a "paid extended interview." When Gornik finds a job candidate she wants to hire after going through all the traditional steps, she then asks the candidate to come to work for a trial period of five days. That gives Thiel a chance to actually see how the person will do in the job. Gornik says the extended interview has saved her from making bad hires on several occasions. "A person cannot maintain the interview posture over a week."