How to Hire Employees: A Guide for Small-Business Owners

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Learning how to hire employees is an important task for small-business owners. You may have started your business as a sole proprietor, but you'll love having talented team members on whom to lean once business is booming. Does that mean you should slap a name tag on the first person who expresses an interest in working for you? If you want to preserve your brand's long-term success and your own sanity, this is not a good idea.

The process for hiring employees takes time. First, you need to figure out the tasks with which you need help on a regular basis and transform that into a role with a title and a detailed description. You'll also need to decide on a salary or an hourly wage, investigate federal and state laws to make sure you're covering all your bases and create a benefits package. Then comes the truly exciting part: sending your job description into the world and waiting for those resumes to come in.

Before you get inundated with job applications, it's wise to sit down and think about the criteria that's really important to you. How will you evaluate each candidate on paper and in person? Once you've narrowed down your focus to a few job candidates you really like, it's time to interview. Then, when you've found the most promising applicant, you can welcome him aboard as a new hire and train him in his new position.

Defining Roles and Responsibilities

A typical small-business owner ends up becoming a jack of all trades. You do a million things each day to manage your business. Pause for just a moment and start writing down to-dos that fit the following criteria. (If you already have a team working for you and are trying to develop a new role, ask everyone on the team to complete this exercise independently too.)

  • Tasks you simply hate doing and always put on the back burner
  • Tasks that are easy to do but take up a lot of time
  • Processes in which you create a bottleneck
  • Things you don't know how to do but know they need to get done
  • Things for which you never have time even though you know how to do them

Then, rewrite your list by grouping tasks together based on the types of skills required to do them (such as attention to detail or perhaps a technical background), the end goal of the tasks (such as increasing sales), etc. You should see a pattern start to form. Defining responsibilities this way helps you identify true skill or time gaps that are preventing your business from growing. Plus, it leaves you with tasks that you still enjoy doing or that are truly meant for you as a business owner.

Picking an Accurate and Appealing Title

Now that you've grouped tasks and responsibilities in a sensible way (don't hire an IT manager and expect her to also be your janitor, for example), it's time to create a job title for this new position. Job titles should convey the amount of authority an employee has while also indicating the type of work for which she's responsible. The best job titles go a step further and give the new employee a sense of pride rather than shame.

Words that convey the level of authority include assistant, clerk, associate, technician, developer, creator, designer, project manager, department manager, director or executive. Phrases that describe the type of work done will completely depend on your business. Frequent descriptors include sales, customer service, marketing, maintenance, advertising and information technology.

As far as conveying a sense of pride, pay close attention to the connotation associated with certain words. Break open a thesaurus for inspiration if needed. For example, some companies prefer not to use the word "cashier" and instead opt for "sales associate" as a job title.

Ironing Out the Details

Next, think about whether this is a part-time or full-time position. Potential employees want to know how much of a time commitment they'll be expected to make, so be sure to also determine when the employee is expected to clock in and out each day and which days of the week he'll work. If the schedule will vary from week to week, you should at least know how many hours per week the employee will work.

Next, look at your budget and determine how much you can afford to pay an employee in this position. You may need to make some financial projections because filling the right position with the right person could lead to a potential increase in sales. Will you pay by the hour, or will you pay a salary?

Do some research to look at other job openings similar to yours to make sure you're offering competitive pay. You can also look up statistics on the Department of Labor website to understand the average salary for similar positions.

Creating a Benefits Package

A paycheck alone is not the only thing that can help you attract applicants. Some companies make up for low-end salaries with an excellent employee benefits package that includes things like the usual health insurance, paid time off and workers' compensation insurance plus lucrative extras like a gym membership, discounts at popular stores, tuition reimbursement, free continuing-education opportunities, free massages each month, employee discounts on company products or services, free lunches at the company cafeteria, an extended maternity- or paternity-leave policy, discounts on child care, etc.

Research legal requirements for a benefits package and then think about any extras that you could provide in order to make your employees feel valued. You'll also want to make sure you "walk the walk" if you have a specific company culture or values. For example, if your company is all about promoting health and wellness, then consider a forward-thinking policy like a "paid Friday yoga hour" to encourage your employees to get away from their desks for a moment.

Writing a Job Description

Now that you have a job title, a task list, a basic schedule, a salary or hourly wage and a benefits package, it's time to put it all together in a job description. This is what you'll send into the world to attract appropriate applicants, so take your time.

Start by describing what your company does and the kind of work environment you provide. Then, list the job title and a bullet list of responsibilities. Mention to whom this employee will report (i.e., the marketing director) and with whom she will collaborate. Write a paragraph or two describing a typical day in the life of this employee while on the clock.

Next, list the pay and benefits. If you have specific instructions for applicants, like questions that you'd like them to answer in a cover letter or a particular way they should submit their resume, then list it at the end.

Where to Post Your Job Opportunity

Posting your job opening online is a must, but on which site? If you have a website or social media page (especially LinkedIn), be sure to list the job opening there. Print newspapers may not be as popular as they once were, but they still have a well-read help wanted section.

Paid sites like Monster, Indeed, Glassdoor and CareerBuilder represent other useful options, as do recruiters or staffing agencies. You can also list a job opportunity on Craigslist for a small fee. There may also be industry-specific job boards that you can find with a simple web search.

Evaluating and Organizing Resumes

It's important to keep resumes well-organized so you know which you haven't yet reviewed, which require a second opinion, which don't make the cut and which are definitely getting an interview. Label file names by last name and organize them into appropriate folders on your computer. If you're more organized with paper than with digital files, print all resumes and organize them in a binder or file cabinet.

As you evaluate each resume, it's important to think about which skills or criteria are necessary for this position. Are you looking for a certain level of education? Do candidates need to pass background checks? If you get a large amount of resumes, consider organizing them in a spreadsheet to easily see which candidates satisfy major criteria.

Remember that resumes allow you to filter candidates based on easy disqualifications, like not having the right experience or failing to follow simple directions. The only way to get a feel for a candidate's personality is to conduct an interview. If you have a lot of resumes that look good, filter them further by asking for references. Then, conduct phone interviews with the remaining candidates followed by in-person interviews with your final three to five applicants.

Preparing for and Conducting Interviews

The interview process helps you determine how easy it is to get along with an applicant. Does he seem to communicate well, and can you see him fitting in with your current team? If this will be your first employee, do you feel like this person respects you?

You can also learn a lot from an interview without exchanging a word. If the candidate shows up to the interview on time and looks to have made an effort to dress for the role, then it's clear he's taking this opportunity seriously. If he shows up late without bothering to call ahead or looks like he just rolled out of bed, he's making it clear that he don't respect you or your position. Move on.

Decide ahead of time what kinds of interview questions to ask a new employee (and learn which questions you legally cannot ask under the Equal Employment Opportunity Act). Break the ice by talking a little bit about your company and the position and then ask the candidate to talk about why he's interested in the job, what previous jobs may have prepared him for this opportunity, etc. You don't necessarily need to try to trip up an applicant during an interview or test his knowledge, but it might be a helpful exercise if the race is tight.

Decision Time: How to Hire Employees

Hopefully, by the time you complete all of your in-person interviews, you'll have a strong inclination toward one particular candidate. It's time to make a hiring decision and extend an official job offer with a specific salary or hourly wage. Give the candidate time to think about it; she may be waiting to hear back about another exciting job opportunity. You should also be prepared to negotiate the employee's hourly rate or salary.

Once the candidate accepts your offer, invite her to meet you at the office for the onboarding process. Your new employee will need to sign a contract and fill out some other human resources paperwork for insurance and tax purposes, such as IRS Form W-4. The onboarding process continues with the new employee's first day on the job as she is trained about her new roles and responsibilities.

If this is your first employee, you'll also need to spend some time making an employee handbook and understanding how to use a payroll system. You also may need to brush up on your management skills so that you can lead without micromanaging. Once you know how to hire employees, the process will become more efficient with your next hire.