There’s more to hiring an employee than finding the right person for the job, interviewing, and training. In addition to finding the right person, an employer is also responsible for paying payroll, withholding taxes, reporting and state and federal agencies and more. We have a few tips to help you with hiring your first employee.
What skills are you looking for?
While it would be great to find one person who has the skills in a variety of areas, it’s hard to find someone who can do varied tasks well.
Instead of looking for that one perfect person, start out by making a list of all of the tasks you do on a daily basis or need help with. Group the similar tasks together and identify the must have’s and like to have’s this new employee to do. This gives you a beginning for a job description and you can more effectively search out people who are talented in the things you need done. For an example an ad for a marketing person may bring lots of results as marketing can include graphic design, search engine optimization, print ads, radio ads, television ads, website advertising and so on. Each of these subcategories of marketing require different skills and ultimately you want someone with specific experience to grow your business.
You may not be able to hire for all of those positions right away, but you now have an overview of what people you need to take the day-to-day responsibilities off of your shoulders so you can focus on the big picture items or tasks you are uniquely qualified to do.
You may find that in some cases you may not require a full-time person for certain positions and may actually be better off outsourcing them to a company or bringing on a freelancer.
Do employees know what they need to do?
A common complaint from business owners is that they can’t find employees that “want to work” or “know what they are doing”. Some of this frustration lies in attracting the wrong candidates as mentioned in the point above, but the second problem is many business owners have difficulty adequately explaining what they want done.
This is generally tied to two primary issues. One is the business owner did all of these tasks from the very beginning of the business and have a hard time of letting go. In turn the owner doesn’t give the employee the opportunity to do the job they were hired for and micromanage the process, eliminating any time savings. The second is that the business owner has all of the details on how to do the job in their head. They tell the employee how to do it once or maybe twice and expect the employee to do it flawlessly from then on. The problem is, expecting someone to remember those details is unrealistic. The business owner is frustrated because the job isn’t getting done right or the employee has to keep asking the owner how to do things.
In order to have an employee do the job the way you want them to is to document the processes. Write the steps and in some cases make a video from start to finish. This way the process is available anytime an employee is unsure of the steps. Instead of them asking the business owner each time they have a question, or guessing how it’s done, they have access to the right information.
Many times, it wasn’t a bad employee, it was the lack of a defined process or clear instructions of what the owner wanted done.
It’s a lot of work to document processes. Mistakes will happen, but let them. The “price” of these minor mistakes will more than pay for themselves by getting some of the workload off of your shoulders, so you can focus on the important tasks of the business. Other benefits include the employee coming up with better ways of doing things and should the employee leave, the training time for the next person is much shorter.
What is the real cost of an employee?
It’s easy enough to do the math to figure out the wages for a new employee. If you hire someone at $15 an hour and they work 40 hours a week for 50 hours a year, that employee will cost you $30,000. What you need to know as an employer is that an employee costs more than their hourly wage or salary. Additional employee costs include:
- Payroll taxes Include federal and state income tax withholding, Social Security and Medicare. Federal and state income tax withholding is withheld by the business from the employee’s paycheck, but the employer has to pay into Social Security and Medicare, also known as FICA or the Federal Insurance Contributions Act.
FICA is a mandatory tax that is paid by both the employer and employee. The employer and employee pay 6.2% to Social Security and 1.45% to Medicare. For the $30,000 a year employee this additional 7.65% means the employer pays an additional $2,295 annually on top of the employee’s wages.
Don’t forget about state and local taxes as well. These vary depending on where you operate and is a tax that is paid by the employer.
- Worker’s Compensation (sometimes referred to as workman’s comp) is an insurance that provides medical expenses, lost wages and rehabilitation expenses for employees that are injured on the job. Required in all states for most occupations, this is an added cost for an employer. The cost of Worker’s Comp insurance varies depending on the amount of payroll paid by an employer, the risk factor of the work being performed and the industry of the business.
It’s a good idea to get a quote for Worker’s Comp insurance before hiring to get the true cost of the new hire.
- Miscellaneous Costs like uniforms, training, supplies, etc. will add up. These costs should also be factored into the budget.
All of these costs add up, and it’s better to figure them out now and seeing if the real cost of hiring someone is worth the investment over the long-term.
What are your responsibilities as an employer?
When a business brings on employees, there are several new responsibilities the owner didn’t have before. With employees, the business now registers, reports and needs to understand regulations with usually no less than 5 state and federal agencies. Not only is the owner now responsible for withholding income taxes, paying payroll taxes, and reporting to several state and federal agencies, there are state and federal laws to comply with. Every state has different requirements when hiring an employee. Click on your state below for more information