When you first launched your business, you probably did most of the work yourself. But if you truly want to expand your business, you’ll need to consider hiring your first employee.
This is an exciting step that shows that your organisation is on the right track. However, hiring someone to join your team comes with extra responsibilities, especially if you’ve never done it before.
In this article, we’ll look at how to go about hiring employees for a small business and how to manage them once you’ve done so.
Here’s what we’ll cover:
- A small business owner’s guide to recruiting
- Do you really need to hire new people?
- Budgeting and finances for employing your first staff member
- Hiring employees for a small business
- Managing employees in a small business
A small business owner’s guide to recruiting
There are a lot of variables to keep in mind when hiring for a small business. Some of these include practical, budgetary, administrative, and people management issues.
It might be overwhelming at first, but it’s rather simple in practice. When employing someone, it’s a good idea to make a checklist of the duties you’ll need to complete.
According to Sage research, many people who want to start a business overestimate the difficulties of running a firm and over-index on the personality attributes needed.
But, when it comes to things like hiring staff, it’s often easier than you might think.
Do you really need to hire new people?
Taking on a new employee may seem like an obvious choice, especially if you’re having a particularly demanding period at work. But, in some cases, outsourcing may be more cost effective.
Granted, freelancers are typically more expensive per hour than full-time employees, but if you require someone for a short time, it may still work out to be less expensive in the end.
Budgeting and finances for employing your first staff member
It’s also a good idea to run the numbers to see whether you can afford to hire someone.
Look at your current sales data and estimates to determine your predicted revenue for the coming year (this information is easily accessible if you use cloud accounting software).
This will indicate whether you will be able to pay someone a consistent salary.
The following are some of the costs associated with hiring new employees:
- Recruitment agencies: Most recruitment agencies typically charge a portion of the employee’s final salary as a fee. This could be as low as 10-25% or as high as one month’s salary.
- Job boards: Some of the better job boards charge a fee to advertise your job on their site. Make sure you’re aware of these costs and factor them into your budget.
- Salary: The role your new employee will fill (full-time or part-time), how much experience they need, and their unique skills will determine a fair salary. Use websites like Glassdoor, Indeed, and Career Junction to get an idea of industry rates.
- Benefits and extra costs: What benefits will you offer your new recruit? Will you be contributing towards their medical aid? Have you factored in UIF, pension, and the Skills Levy?
While this may seem like a lot at first, it’s important to remember that a new employee will help you generate more income and will most likely end up paying for themselves in the long run.
Hiring employees for a small business
Most business owners have worked as employees at some point in their careers, so you’re already familiar with the hiring process, but recruitment is a skill in and of itself.
It’s all about identifying people who can execute the job while also fitting in and contributing to the business.
Here’s how to find the best talent for your small business:
- Decide what you want the employee to do: Write a detailed job description and title. This should include a description of day-to-day tasks as well as the skills, experience, and education the applicant needs.
- Post a job ad: Using either a recruiter or a job board, advertise your new position. Once you start receiving applications, you’ll need to read through all the CVs and shortlist the candidates you think are most suitable.
- Interviews: Depending on the number of applicants, you may want to start with a few short phone interviews to get a sense for each person. After that, you can reduce your shortlist and arrange in-person or video interviews.
- Preparing for the interview: Interview preparation is a key skill for managers. Think about the questions you’d like to ask the applicant. Job interviews normally cover:
- The candidate’s employment history and achievements.
- Evidence of skills and experience through a portfolio, certificates, and qualifications.
- Understanding why the candidate wants to work for your company.
- Time for the candidate to ask you questions about the role, the company, and what is expected of them.
- Equal opportunities: You have a legal obligation to conduct fair interviews with all candidates. When it comes to inviting people for interviews, or offering them the position, employers must follow equal opportunity laws.
- Create a formal job offer: Once you’ve found someone suitable, make them an offer. You might need to negotiate the salary, so have a ‘ballpark’ figure in mind. They may have specific expectations regarding benefits in addition to the salary. Once you come to an agreement, create a formal employment offer with a contract and a start date.
- Make it legal: When hiring your first employee, you’ll need to register as an employer with SARS. This must be done within 21 days of becoming an employer. Set up all the necessities like UIF, pension, the Skills Levy etc., take out employer’s liability insurance, and create policies for disciplinary hearings, personal data management, and health and safety.
- Put your new employee on the payroll: Most employees are paid monthly and it’s your responsibility to ensure they get are on time. Cloud payroll software makes the whole process more efficient.
Now that you’ve done the hard part and hired a new employee, how do you manage them?
Managing employees in a small business
If you’ve recently hired your first employee, you’ll want to help them achieve their full potential, which will benefit both you and your company.
Some of the main characteristics of a good manager and employer are knowing how to motivate employees and having concern for their wellbeing. All of this, fortunately, can be learned.
Here are some pointers for a first-time small business manager:
Give them a big welcome
Your employee will most likely be nervous on their first day. Give them a warm greeting, show them around the premises, and help them to settle in.
If they work from home, you can do this through a series of video conferences.
Give them an induction pack
Induction packs can include information about the company, your employees’ tasks, and any important connections they should be aware of.
As your company grows and you hire more people, the induction process may include time for new workers to meet the team and learn about their roles in the company.
Source employee details
You’ll need to obtain some information from your new hire, such as their ID number, bank account information, and other personal information, including their address and an emergency contact.
Store all this information in a safe place. Even as a small business with only one employee, you must still comply with the Protection of Personal Information Act (POPIA).
Consider using cloud HR software to make things easier. Your employee can enter all their data into the software themselves.
What’s the advantage for you? You’ll save time and there’ll be fewer errors.
Make sure they know what’s expected of them
Make sure your new employee knows what is expected of them.
Early in their first week (preferably the first day or two), meet with them in-person or virtually and go over their responsibilities.
Will they need training?
Depending on the position and the employee’s background, you may need to provide basic training before they can begin working.
As your employee progresses in their position, they may require additional training and development. You won’t necessarily need to spend a lot of money on this. Your employee can learn in a variety of ways, from free courses and YouTube videos to online offerings that may have a fee but aren’t prohibitively expensive.
If you do need to invest in training, keep in mind that the ultimate result will be a more skilled team member who can add value to your company.
Regular performance reviews
Checking in with your new employee to see how they’re doing and providing frequent feedback can be beneficial, especially in the first few months.
Regular one-on-one meetings will help your employee stay on top of their tasks, ask questions, and receive the assistance they need to be successful in their role.
Get a sense of their goals and ambitions
If you’re looking for ways to motivate your employees, ask about their professional goals.
You could discover that there are some tasks they could undertake that are a good fit for their own interests.
Develop a company culture
Getting to know your employee on a personal level and learning about their hobbies and interests is beneficial.
Socialising outside of work (going for lunch or after-work drinks) boosts morale and helps your employee feel involved in the company. If they work remotely, that doesn’t mean they have to miss out – socialising can be done virtually too.
Last words on recruiting your first employee
Recruiting your first employee is an exciting time for any company. It does, however, come with several significant responsibilities and obligations.
Keeping track of these will not only benefit your new hire, but will also aid in your company’s success.