Upsize Stages: Hiring employee
UPSIZE STAGES: THE EARLY YEARS
08 :: Hiring employees.
Adding staff means
knowing laws,
offering benefits
Entrepreneurs often think they can handle each and every part of their business. They can?t. Live with it. And bring people in who can help.
There are few more varied, detailed and complicated aspects of a business than dealing with hiring, human resources and benefits plans. Acknowledging early that these areas are a challenge will serve the business better than making mistakes.
First, create an employee handbook. It doesn?t need to be complex and it should be reviewed so it doesn?t create an actual contract with employees. But it should spell out the important policies and practices employees must follow while at work.
The need for noncompete contracts depends on the type of company. They are getting harder to enforce in court anyway, but firms that deal in intellectual property still might consider them. If so, they must be narrow. Confidential documents must be marked so or they are not considered so legally.
On a benefits front, the basic starting points are a medical plan, a retirement plan, a dental plan, then perhaps life insurance, long-term disability, and short-term disability.
Many group plans require five employees. One thing to consider in lieu of offering expensive benefits plans is that some employees will prefer to take a higher cash compensation instead or additional time off ? perhaps as high as five weeks right out of the gate ? rather than a mid-level benefits plan. That might be a way to buy some time before spending money on benefits.
With hiring, it?s critical both legally and in creating the right atmosphere for a startup that you ask the right questions. First create a structure for the positions and skill sets you are seeking to hire. Then follow an application process, stay away from personal questions and stick with behavioral questions such as “what have you done in the past?” and “what will this person say if I contact him or her about you?” Remember that there is a strong correlation between past and future performance.
On the human resources side, one option is completely outsourcing to a professional employer organization (PEO). This can be expensive, but doing so puts these complex functions in the hands of experts whose job it is to follow legislative developments, tax loopholes and other tricky items that change under the radar screen regularly. People at these firms do nothing else for a living. Some suggest if you are considering going this route that you do so right away.
More frequently, firms will handle most HR functions in-house while outsourcing a few items such as payroll. When going that route it?s important that the entrepreneur make sure the firm follows through on making tax payments, files promised extensions and provides the business with regular reports ? and that you read and study them to ensure you are receiving the services you pay for.
Finally, there are entrepreneurs who decide to immerse themselves in each and every HR function of the business, at least initially. The advantage to this strategy is that the owner will understand how every job at the company functions, know how the systems work and where the cash is coming from.
If you decide to take that route make sure you seek some background. The U.S. Department of Labor?s e-laws are an online source of information that helps employers understand their rights and responsibilities. The U.S. Small Business Administration and the Minnesota Workforce Development Centers also are good sources of information and training.
It?s vital ? there?s a proliferation of lawsuits nationwide covering issues such as HIPAA, Cobra and other privacy issues, and companies are losing the suits if they don?t know what they are doing.
Finally, if you take on these tasks, you?ll probably want to hire someone with this kind of background to help make sure you cover all your bases. You?ll want to keep off-site records as backups.
And train, train, train. HR rules and policies change frequently and whoever is in charge of knowing them at your company must constantly be getting updated on whatever changes take place.
