Whether you realize it or not, your approach to hiring can make or break your organization.
While good employees support your operations and contribute to what your business can accomplish, bad hires do the opposite: increasing your expenses, reducing your profits, and ultimately putting the success of your company in jeopardy.
To attract successful individuals and appropriately complete the hiring process, it’s best to have a concrete plan in place. Yes, sometimes an impromptu job ad can net you a world-class employee, but your odds are best when you take a more tactical approach. So what do you need to hire an employee? We did the heavy lifting and created a handy checklist to ensure no stone goes unturned.
Before you start fantasizing about the benefits a great employee can offer, there are likely some housekeeping tasks you’ll need to accomplish in advance, whether you’re hiring full-time employees, part-timers, or contractors. Everything from meeting legal requirements to crafting the perfect job description can increase your chances of a successful hire, so be sure you’re fully prepared to move forward.
✔ Establish an EIN
An Employer Identification Number, or EIN, is a tax ID number required by all companies operating in the United States for tax administration purposes. EINs are free and can be obtained instantly online through the internal revenue service (IRS). After filling out the IRS form, the EIN issued to you will be included on tax documents, including 1099s and W2s for income tax purposes. Establishing an identification number is an essential part of deducting the cost of wages paid, so be sure you have it before starting the hiring process.
✔ Set Up Records for Withholding Taxes
Paying employees requires upfront paperwork. Unless you plan on having a workforce made up entirely of independent contractors — a possibility, of course — you’ll need to set up the proper framework to pay employment taxes.
Each employee working for your business will need to have their income tax withheld. This includes federal, state, and possibly city taxes. Income tax withholding is achieved by having employees fill out a W4 form known as the Employee’s Withholding Allowance Certificate.
As an employer, you will also have to pay payroll taxes: a portion of Social Security and Medicare tax on behalf of your employees, so take this into account as well. Most payroll programs are set up to accommodate these needs but do your homework to ensure you’re not missing any required withholdings or tax payments. The IRS has a tax guide dedicated to the subject.
✔ Define the Job Position
In preparing to make hiring decisions, it’s important to answer one fundamental question: who do I want to hire? While a seemingly simple query, the answer to this question should be detailed and in-depth, going far beyond “server” or “retail associate.”
Start by thoroughly considering the tasks you need covered. For example, a server at a restaurant will need to be able to take orders, master a POS system, provide above-average customer service, multi-task, expedite food orders, handle side work, and work long hours on their feet. If you need assistance in fully fleshing out positions, feel free to read over other companies’ postings for job duties and descriptions to help craft your own.
You’ll also need to consider prior experience or education, and do your best to be realistic. While it might be nice to have college grads working the floor at your retail store, this may not be realistic; instead, take time to consider industry norms.
✔ Determine Wages
Many employers want to believe their employees come to work because they love their jobs and are passionate about work, but at the end of the day, wages still make a huge difference. Most employees are working to feed their families, not out of the goodness of their hearts.
While you don’t need to break the bank issuing paychecks, you do need to come up with a reasonable number that falls into regional industry averages and is enough to keep employees content and dedicated without going over budget. If you’re committed to the idea of cutting costs and hovering around minimum wage, that may be okay, but be aware that paying too little can drive off good employees, increasing turnover and, subsequently, hiring costs. Therefore, offering low wages can be more expensive in the long run.
Instead of choosing a fixed dollar amount, determine the top and bottom of your range. If an applicant decides to negotiate, you’ll need to know your limits.
✔ Post Your Job Description
Once you’ve created a job advertisement that meets your needs, it’s time to post. In general, it’s best to get as much visibility as possible, increasing the number of applications you receive and the pool of candidates you have at your disposal. Job boards exist in many shapes and sizes, including national listing options like Indeed, LinkedIn, Monster, CareerBuilder, and Glassdoor, in addition to more niche options, like Snagajob for hourly labor. You may also want to consider local boards and college job databases.
✔ Follow The Law and Prepare For The Worst
As an employer, you need to familiarize yourself with your legal obligations and arm yourself against insolvency should one of your employers become injured on the job.
Before hiring your first employee, check your worker’s compensation coverage. Having worker’s compensation insurance is required in every state save for Texas, but you may want to purchase more than the minimum requirement — especially if your employees will be climbing ladders, lifting heavy things, or performing similarly dangerous tasks.
Brush up on the Fair Labor Standards Act, a federal law that established a minimum wage and created standards around overtime and record-keeping. Your state also has its own labor laws, which can be found at the Department of Labor. As a small business, you may be exempt from having to offer employee benefits like health insurance, but understand that offering benefits is an excellent tool for retaining quality employees.
Labor laws also exist around the hiring and firing of individuals. In order to comply with equal employment opportunity laws, you’ll need to create certain parameters around your job posting and interview questions, and always be cognizant of where the line is and if you’ve crossed it.
If you’re not a human resources expert, don’t be afraid to outsource these many responsibilities to a company that specializes in HR. An ounce of prevention is worth a pound of cure.
✔ Fine-Tune Your Hiring Techniques
Once your job ad is posted and you’re fully prepared to take on an employee, it’s time to focus on the next major hurdle: hiring. A lot goes into the vetting process, far beyond the time it takes to review resumes, so the more you prepare now, the better chances you have to hire and keep the best employees for your business.
✔ Evaluate Available Candidates
Once resumes start pouring in, you may find yourself overwhelmed with the options you suddenly have available. With potentially hundreds of applicants for a single posting, you very likely will have plenty of excellent candidates at your fingertips. If you’re struggling to narrow it down, these tips and tricks may help.
Create three categories: yes, no, and maybe. Put applications in their applicable stacks as you read, helping you to stay organized when reviewing resumes.
Search keywords. If you need particular skills, education, experience, or other qualifications, screen for these primarily. Any applicant who doesn’t fit your base expectations can be put aside.
Set up a point system. If you’re genuinely inundated with options, consider assigning a points system. For example, if you’re hiring a manager for your retail store, specific retail management experience may be worth five points, while a more general management background is worth three points and no experience is worth zero. A business or management degree may also be worth five points, while a degree, in general, is worth three. Those with the highest totals will likely be the best fit for your position.
Hone in. Once you’ve narrowed your options substantially, focus on the assets and attributes that set applicants apart. For example, some may have more relevant experience or degrees than others. These kinds of details can help you make your final decisions.
✔ Schedule Interviews
Once you have three to ten potential candidates, it’s time to start setting up interviews. Start with the ones you’re most excited about, and work backwards from there. You can schedule all interviews at once, or stagger in hopes that early candidates are a good fit.
You have two different ways to handle interviews: scheduling in-person meetings first, or beginning with phone screenings.
Candidates for higher level service jobs or specialized roles, however, are a good fit for a phone screen. A 15 to 20 minutes phone interview provides an opportunity to ensure that a candidate seems professional, qualified, and able to discuss their experience and career background in a coherent way.
When interviewing, look for confidence in abilities; a positive attitude; an affinity for teamwork and flexibility in a group environment; dependability, and integrity. Give your applicants an opportunity to address any red flags, like excessive excuses for performance at previous jobs, unexplained employment gaps, or unusually short job stints.
During interviews, going with your instincts can be very important, as long as you keep your internal biases in check. If you get a negative vibe from a candidate, they likely don’t have a place in your establishment. A candidate on paper can be very different from a candidate in person.
✔ Verify Employment Eligibility and Background
Over the course of your initial interviews, perhaps you find a good fit. After another meeting or two, you become convinced that this is the employee for you. Great! But you’re not done yet.
Before having an employee sign paperwork or get started, you’ll want to verify a few details, both personally and legally. Most recruiters recommend a background check, encompassing job history and criminal history, to ensure employees are who they say they are, especially for those entering management or senior positions. (While interviews are an excellent way to assess character, not everyone is honest.)
Also, you need to be sure your prospective employee is eligible to work in the United States by providing an Employment Eligibility Verification, Form I-9. As a part of your screening, you’ll want to request proof of U.S. citizenship, like a birth certificate and social security card, or passport. If you are hiring someone not native to the U.S., citizen and immigration paperwork can provide the assurance you need. The U.S. Citizenship and Immigration Services offers many resources for small business owners.
✔ Reject or Accept: Making Your Final Choice
After resume screening, interviews, and employment eligibility verification, it’s time for one last step: making a job offer. This is often done by phone or email, with contract paperwork to follow.
When you contact an applicant to offer a position, don’t be surprised if they attempt to negotiate. Conventional hiring wisdom dictates salary negotiations, especially for skilled jobs. If you have wiggle room and your candidate is worth it, consider acquiescing to demands or meeting in the middle. If not, don’t be afraid to be firm, especially for hourly associates. If your candidate agrees to your terms, send over contract paperwork and establish a start date.
When you have a signed agreement in hand and a start date on the calendar, it’s time to let other candidates down gently. This is routinely done via email to minimize awkwardness. Simply let unsuccessful applicants know that while you were impressed by their credentials, you chose to go in another direction but will keep their information on file.
✔ Master the Art of the Onboarding Process
After hiring is complete, it’s time to start the employee onboarding process. This gets employees acclimated to your workplace, a process known as employee orientation. Onboarding can be formal or casual, but it should include everything a new employee needs to know.
✔ Report Your New Hire
When you hire a new team member, the first thing you need to do is report your hire to the proper authorities. In most areas, this includes both the state employment agency and the IRS. When your new hire signs their paperwork, they’ll have to fill out a Form W-4, or Employee’s Withholding Allowance Certificate. This paperwork denotes tax withholding information for you to use in your payroll and provide the IRS as evidence of employment.
✔ Create a Handbook
An employee handbook is a valuable tool for your business, providing essential information about working at your company, conditions of employment, and important policies. While your handbook can be as in-depth or high level as you’d like, it should generally include: anti-discrimination laws; workers’ compensation laws; unemployment insurance benefits; at-will employment rules, if applicable; a non-compete agreement, if applicable; code of conduct rules; safety and security practices; pay policies, including pay schedules, timekeeping rules, and break times; benefits details, like insurance providers; PTO and vacation policies, including holiday schedules; sick leave, family leave, parental leave, and bereavement leave policies;
assessment procedures for promotions or raises.
All employees should have access to a handbook at the start of employment. If changes are made, be sure to notify your team accordingly.
✔ Tackle Payroll
You definitely don’t want to be writing checks by hand on payday, so a payroll service is essential. Your payroll provider can take the stress out of each paycheck generation, including calculating any income tax withholding, staying current on changes in compensation and tax laws, and ensuring checks are always on time.
As a part of your payroll process, it’s important to choose a provider that can offer direct deposit to your employees. Direct deposit can be a significant asset, providing paychecks in a matter of seconds as opposed to the time, effort, and cost it can take to generate paper checks. When you offer onboarding paperwork, request direct deposit information as well, including bank account and routing numbers.
✔ Make Training a Success
Once your new employee has completed all of the previous steps and is ready to work, you’re almost there, but there’s one big step left: training. Virtually no one you hire will be ready to go without training, so you’ll need a process in place.
While training will vary from one company and industry to another, these best practices can ensure employees learn all they need to know.
Set guidelines. Training shouldn’t be spontaneous, so know exactly what you want to show and when. Structure job tasks in a controlled manner, scaling up from the most basic duties so that new candidates aren’t overwhelmed.
Know when to be hands-on and hands-off. Some training can be done independently, like video training, while some must be guided. Determine which tasks fit which categories, and plan accordingly.
Utilize shadowing. Sometimes it’s hard to differentiate what you know from what an employee doesn’t know. By allowing new team members to shadow you or others in the same position, they’ll get a better perspective on exactly what is expected.
Be patient. Not everyone learns at the same speed. Instead of expecting newcomers to be pros after day one, understand that mastering new skills can take time. It’s true that some employees may never learn and ultimately won’t work out, but others will need a little more time.
✔ Display Posters
Hanging posters in your workplace may sound a little strange, but it some cases it is a legal requirement. Many locations require information regarding confidential reporting, labor laws, and union laws to be displayed for clear employee access. If you live in one of these regions, you’ll need to understand area rulings and comply accordingly.
✔ Set Up for Small Business Success
Launching a small business can be a challenge, but the right approach to talent acquisition can spell the difference between success and failure. Use this checklist when hiring an employee to elevate your hiring practices and increase your odds of finding the perfect fit.