Hiring new employees is a considerable undertaking for small businesses. Growing companies also have the option of tapping top professional talent by bringing in contractors.
By FINSYNC
How do you know when it’s time to hire a new employee? As a small business owner, you’re used to wearing many hats, and doing whatever needs to get done at any time. Still, even you have to sleep sometimes. If you’re having to turn down clients, preparing to launch a new product or location, or have a specific set of tasks that require a different set of skills than you have, it may be time to bring in some help.
Hiring is one of the biggest challenges for small businesses; in one survey, half of small business owners ranked it at the top of their list of difficulties. From recruiting and hiring the right candidate to setting up payroll and retaining employees, hiring is a huge time and financial commitment. Fortunately, contractors offer another option to help growing businesses scale and complete critical tasks.
Recruiting Talent
Start by writing a job description — you’ll want to consider what skills, requirements, and experience are needed for the job, as well as which soft skills and preferred qualifications would make for the ideal candidate. Be sure to include information about your company, the day to day responsibilities of the job, your contact information. Also request documentation you want candidates to submit, such as a resume, cover letter, or portfolio.
Take your time to really think about this — a well-written job description will help you identify well-matched candidates and attract highly qualified candidates to your listing. Consider including compensation and benefits information to make your job listing more competitive. Once you’ve perfected the job description, it’s time to place an ad. Paid online job boards such as Glassdoor, Career Builder, and Monster.com are a great place to start.
Ask around! Social media is a great place to get the word out, especially LinkedIn. LinkedIn has a paid job board and allows you to see how you may be connected to a particular prospect. If they have a robust profile, this can both signal their professional readiness. It can give you additional insight into their character, working style, and fit for the job.
Don’t stop with LinkedIn, though. Post on other social media and get in touch with your network; often family, friends, and business associates will know someone who is just right for the job.
The Hiring Process
Organize the resumes you’ve received by yes, no, and maybe. Some ways to narrow it down include matching the qualifications that you absolutely need, checking for major errors or sloppiness, and reviewing for soft skills that will fit your company culture.
Once you’ve narrowed down the applications to the candidates who you want to interview, plan out your interview questions and establish an interview process. Be sure to avoid questions about a candidate’s age, race, national origin, or religion, due to U.S. Equal Employment Opportunity Commission (EEOC) regulations.
The best questions allow you to learn more about how the interviewee might function in a given role, how they think, and how they solve problems. For example, in a customer-facing role, you might ask someone to describe how they handled a difficult interaction with a customer in the past.
You can also ask about past experiences where a candidate felt proud, challenged themselves, or assisted others, as well as why they’re interested in your company specifically and how they see themselves completing their first 90 days. Finish up by asking if the prospective employee has any questions for you and establishing next steps for the hiring process.
When you’ve chosen the candidate who’s the best fit for your business needs, decide on the compensation that makes sense for the role. Then extend an offer letter. Each state will have different requirements for what must be contained in your offer letter. Be sure to check out your state’s department of labor website. Feel free to call your candidate over the phone and let them know they’ve been hired. You may do this before extending the formal offer letter. It’s a great moment for both of you to share!
Setting Up Payroll
If this is your business’s first time hiring employees, you’ll need an Employer Identification Number (EIN). This is like your company’s Social Security Number. If you have a bank account in your business’s name (which you should, in order to build business credit), you will already have an EIN.
In addition to an EIN, which is a federal tax ID, you’ll need a state or local tax ID. Whether you need a state or local tax ID will depend on your state’s individual regulations; check your state’s government website for more information.
All employees will need to fill out and return a W-4 form. Decide on your pay schedule, leave and vacation policies, and which benefits you will offer. Some benefits, such as social security, workers compensation, and new parent leave are required by law. Others, such as disability leave and unemployment insurance, vary by state. There are also some optional benefits that you may opt to offer to employees. For example, health insurance and retirement plans.
Have a plan to administer payroll. Learning all of the complex filing requirements and keeping money moving is probably not something you have time to learn and then keep current on an ongoing basis. Where you can add value on payroll is being sure your team’s hours are correct and reimbursement requests are getting paid. FINSYNC’s cloud-based payroll software can help you automate your payroll along with many other time-consuming back-office tasks, such as invoicing.
Employee Retention
Experts estimate that it costs upwards of twice an employee’s salary to find and train a replacement. Employee retention starts with hiring the right person in the first place, so interview carefully. Consider the compensation and benefits you’re offering as well. Even if your small business doesn’t have the budget to rival major corporations, you can do your best to be competitive in your field.
Create a positive work environment. Listen to employees’ expressed needs and whatever they choose to share about their day-to-day lives. Encouraging open communication, with ownership and between employees, makes employees more comfortable expressing ideas, needs, and concerns when they arise.
Meaningful praise and recognition from management does wonders for employee morale. Clear expectations and aligned goals help employees feel that their work is valued and valuable. It gives them a clear measure to work against.
Find ways to be flexible based on employee needs. This is where the importance of listening comes in. Considerations such as telecommuting, flexible work hours, a condensed work week, and back-up child care can make all the difference to busy professionals.
Working with Contractors
The process of recruiting, hiring, and retaining new employees can become a job in and of itself. Especially for a small business owner with so many demands on your time.
It can take an average of 36 days for a company to fill a job opening, and the hiring process overall costs companies an average of $4,425 per employee, and as much as $14,936 for an executive.
Not only is the process itself expensive in terms of money and time, getting it wrong can be costly as well — each bad hire costs businesses an estimated $17,000. Between the required benefits and taxes companies must pay for full time employees, and the additional benefits that you may choose to offer to attract top level talent, hiring costs continue to pile up. According to the US Department of Labor, benefits alone account for more than 31.4% of the average full-time employee’s total compensation.
For many small businesses, contractors are a less expensive option. The hiring process is truncated, turnover is less of a risk to the business. There’s also no need to pay additional taxes and benefits on top of the contractor’s compensation. Contractors are also ideal for projects that don’t require a full-time employee. With contractor talent, you can scale your team up and down according to business needs, temporary needs or projects.
Find qualified contractors without the hassle of screening and hiring with FINSYNC’s virtual assistance network.
FINSYNC partners with independent professionals in the fields of Bookkeeping and Accounting, Financial Analysis, Corporate Strategy, and Human Capital Management. Fill out a quick questionnaire, and get matched with a vetted professional that fits your business’s needs, projects, industry, and budget.
Growing businesses need support, but hiring a full-time employee isn’t always the most time or cost-effective option. For many small businesses, contractors help to close that gap. They provide high-quality professional services without the challenges of hiring full-time employees. For ad hoc projects, seasonal needs, professional services, and even ongoing work. Contractors are often the best of both worlds, allowing small businesses to tap top professional talent to scale their workforce up and down as needed.
Whether your small business is looking to build its team with full-time employees or augment your workforce on an as-needed basis, recruiting and hiring the best fit for your business is the first step to success.
FINSYNC helps you centralize control of payments, process payroll, automate accounting, manage cash flow and grow with less time and better results.