Staff Overhaul Should you use the tight job market to replace mediocre employees?

Last year, Matt DeLine, founder and CEO of San Diego HotelReservations Inc., was hiring almost everyone who applied. Thescramble to fill jobs was insane: "There wasn't time evento do reference checks," he says. "It was a frustratingtime."

He wasn't alone: A Challenger, Gray & Christmas surveylast year found that three out of five small-business owners werehiring virtually anyone with a pulse-including underqualifiedworkers who affected the bottom line with poor customer service anddecreasing product quality. "[Employers] had to get theirorders out, so they hired people who weren't as productive andcouldn't do the job as well," says John Challenger, CEO ofChallenger, Gray & Christmas Inc., an international outsourcingand research firm in Chicago.

But as dotcoms continue to fail and larger companies restructurein a softer market, hot talent is suddenly pounding the pavement.For entrepreneurs in growth phases, it's like manna fromheaven. "Many employers now are breathing a sigh ofrelief," Challenger says. But temptation also forces a harddecision: Do I fire some employees to upgrade my work force whilethis hot talent is available?