How to Hire Your First (or Next) Employee: Follow These 7 Steps, Even in a Tough Market

Hiring your first (or next) employee is a big step and is a sign your business is growing. If you’re not sure what you should do to make the process run as smoothly and effectively as possible, these seven steps will make sure you’re prepared to do it right, especially with the current hiring environment.

Why human resources matters

Hiring is more than finding someone to the do the work. According to SCORE KC’s Everything Human Resources event, businesses that have even one employee are subject to 21 employment laws. But in addition to following the law, having HR policies and documentation protects your business. These rules provide a level playing field for everyone.

About 4 million people quit their jobs in December 2022, according to the U.S. Bureau of Labor Statistics. The Great Resignation of that year indicates that the pandemic has made employees more apt to leave jobs if they aren’t happy.

For employers, this means that employee retention is more important than ever. But keeping good employees doesn’t start on their first day on the job. It starts before the hiring process, too.

Here are seven ways to build a strong HR foundation for your business so you can attract, hire and keep the employees who will help you reach your goals.

1. Write a clear job description.

Owning a business can be exhausting. But before you bring someone on to help, know exactly what you need help with.

Create a job description that outlines expectations and required duties. Be clear about what skills and background the person will need. Does the job require an advanced degree or a high-school diploma? Is travel required? What technical abilities does the applicant need? And how does this position fit into the big picture: Is it a temporary need or a long-term leader?

If you aren’t able to clearly state what you need, it may not be time to hire just yet. Waving your arms around and saying, “Help with this,” isn’t the start of a great working relationship.

2. Determine the type of position.

There are two types of employees: exempt and nonexempt.

Nonexempt positions:

· paid hourly or salary

· eligible for overtime pay

· only paid for actual hours worked

Exempt positions:

· paid salary

· not eligible for overtime

· wages can’t be reduced due to quality of work

· can be charged paid time off (PTO)

· makes a minimum salary of $684.00 a week

A third option is a 1099 worker. This person is an independent contractor and not a full-time employee. They’re considered a vendor and pay their own taxes. While exempt and nonexempt employees get a W-2 come tax time, these workers receive a 1099-MISC. Your business won’t withhold taxes or provide benefits to 1099 workers. Many small businesses that don’t have a budget for HR hire 1099 workers.

When in doubt about what kind of worker best meets your needs, check out the KCSourceLink Guide to Hiring and Retaining Employees.

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3. Get an EIN, workers comp and more.

Federal, state and local agencies have different regulations for employers. But no matter what, your business will need:

· An employee identification number (EIN). Think of this as a Social Security number for your business.

· Workers’ compensation insurance. If an employee is injured on the job, your venture needs to be protected.

· A system for employment tax records. Not only will you be responsible for withholding taxes, but you are also required to keep these records for at least four years.

A great resource is KCSourceLink’s Hiring Checklist. This free list will help you find the applicable tax and insurance forms and connect with the appropriate offices in Kansas and Missouri. Plus, it’s free!

4. Establish an employee handbook.

This document should clearly state what’s expected of employees and what processes are in place to deal with conflict, performance issues and more.

A good employee handbook is always a work in progress. But before you hire your first employee, make sure your handbook includes details about:

· dress code

· business hours and attendance expectations, including time and attendance tracking

· use of social media

· equipment guidelines

· drug and alcohol policies

· disciplinary policies

· holiday and inclement weather guidelines

· vacation, sick leave, parental leave and bereavement leave

· discrimination and harassment policies

· performance review timelines and policies

Establish and maintain a way for employees to ask questions about the handbook and suggest additions. An open channel of communication can prevent problems and benefit the entire company.

5. Post the job.

Now it’s time to come back around to that job description. Let the world see it! Utilize a common and accurate job title and sell your business in the listing as well. Your venture is growing and there’s most likely an opportunity for employees to grow with the company, right? Point that out.

List the job where your ideal candidates will see it. Consider sites like Indeed, CareerBuilder, LinkedIn and ZipRecruiter. Seek out any sites that may cater to people in your specific industry. And of course, ask around. Friends and colleagues may know just the person.

Staffing agencies and executive search services may also be good options, depending on the type of role you need to fill.

6. Interview smart.

Once the applications come rolling in, start sorting. But don’t feel like you have to bring everyone in for an interview. A 15-minute phone screen is an efficient way to eliminate candidates who aren’t qualified or clearly aren’t a great fit. Use the phone conversation to clarify what you’re looking for and confirm résumé details.

Once you’ve narrowed down the list of applicants, move on to in-person interviews. To prepare, create a list of questions that ask candidates to provide examples. If you need a bit of help crafting the best questions, download our guide that will help you go beyond a candidate’s résumé during the interview to reveal their true potential. As for what you need to prep for, know how you’re going to sell yourself and the company.

Remember, any hiring situation calls for honesty and consistency. For example, if you ask one applicant to take a typing test, all applicants must take the same test. Provide time for the candidate to ask questions. And establish a timeline so they know when they will hear from you.

Once you identify your top choice, call and make a verbal offer. Follow up with a written offer and send a timeline for acceptance. Then, run a background check if it’s relevant to the job.

7. Onboard like a pro.

The first day of a new job is chock full of paperwork and new people. Your to-do list should include:

· completion of I-9 and W-4 tax forms, as well as applicable state and local tax forms

· direct deposit

· collection of emergency contact information

· job description signature

· benefit enrollment

· discussion of employee handbook and employee signature

Don’t overlook the first-day practices that truly welcome a new team member. Introduce them to vendors and other employees. Go out to lunch. And make sure they have the tools they need to be successful in their new role. These steps can really start an employment journey off on the right foot.

Bonus: Get help with HR

Not many entrepreneurs start out with a full HR department. Fortunately, you don’t have to go it alone. KCSourceLink’s Resource Partners can provide insight into the do’s and don’ts of hiring.

Check out the KCSourceLink Calendar to find upcoming programs and classes that can help you figure out the HR puzzle. Our Resource Navigator™ can help you find the organizations that can educate, connect and empower you as an employer, too.

Not sure where to begin? Start with a Personal Action Plan. Our Network Navigators will create a FREE individualized checklist of the KC experts to meet and what to do. Share a little information about your venture, and we can help you become an in-demand employer.

Thumbnail image by Anna Shvets via Pexels.