After founding your business, hiring your first employee may well be the most seminal decision that you make as a business owner – but when is the right time, and how do you do it?
To help you assess the needs of your own company, Business Advice has put together a guide to highlight the common pitfalls in employing your first member of staff, and what considerations should be taken each step of the way.
We also spoke to three entrepreneurs who provided an insight in their own experiences in hiring their first employee.
Business Advice also offers the wisdom of HR expert of Steve Rockey, a director at Esoteric HR – a people consultancy company that enables small businesses to grow through their people.
When should you hire your first employee?
Richard Walton is a serial entrepreneur who, straight out of university, founded GVI – now one of the world’s most successful social enterprises, employing 250 staff in 40 countries.
Walton’s most recent venture, AVirtual, is a startup that provides high-quality virtual assistants in South Africa to the UK’s own community of busy entrepreneurs.
The business builder first realised that the time had come to employ his first member of staff at GVI when he found that micro-managing each area of his business was seeing the growth of his company suffer as a result.
He warned against the tendency of small business owners of being “spread too thin, trying to do everything” in the quest to keep margins healthy and general costs down.
“They take on social media, HR, finance and anything else required, all whist the most important things sometimes get neglected or not done to the best standard,” he added.
“I had to hire an employee to carry out the non-critical work and free up my time to focus on doing things that generated growth.”
Rockey believes the decision should be an easy one. “In short – if it’s on your mind, then it’s time to do something about it,” he explained.
Different kinds of employment
Managing each individual aspect of your business may have a detrimental impact on growth, but it is also important to consider the different kinds of employment that you can offer.
Andrew Dark is the co-founder of Custom Planet, a corporate clothing company that provides custom-made products for its customers. Founded when the owners were at university in 2008, Custom Planet now employs a whole team of workers at its base in Newcastle.
Dark recommends a more gradual approach to full-time employment, by starting with part-time workers and progressing from there.
“There are plenty of skilled people looking for part-time work, which will give you more flexibility to advance the firm, without committing to paying a full-time salary. As the workload builds, you can then increase their hours or take on another part-time worker and build from there.”
Attracting the right candidate
As the owner of a small business, your time is one of your most valuable assets, and you are unlikely to wish to spend more time than is necessary on finding your first hire.
In short – you will want to find the best candidate as possible, in as few interviews as possible. This means advertising your job effectively, through writing a job description that best represents your business and marketing it in the correct channels.
Rockey stressed the importance of communicating your business’ values through the job description, and that an advert for a role best achieves this by being written by the owner of a business.
“Write your own job description, bring in your values and your story. If you talk your language, then you will only attract those who get it. If you’re not a wordsmith, then find someone to help you achieve this. Make sure your website reflects not just you as a business, but you as an employer. Because that’s the first place a potential recruit will look.”
How should you handle your legal obligations?
Hiring your first member of staff sees you making the crucial transition to an employer, and becoming an employer will re-shape the administrative side of your business.
You are required to register for liability insurance, register as an employer through HMRC, as well as perform “right to work” checks for any potential workers.
As an employer, you also owe a range of legal obligations to your employees. All staff must be paid at least the National Minimum Wage (NMW), and all employers must declare whether or not an employee is eligible for the government’s auto-enrolment pension scheme.
Rockey’s advice is pure and simple – outsource it.
He suggested that a payroll provider and an accountant will be able to take care of the bulk of the administrative tasks in hiring an employee, leaving you to focus on obtaining a good interview and recruiting the right candidate.
Paul MacKenzie-Cummins is the founder and managing director of clearlyPR – a corporate communications agency that hired its first employee two years ago, adding a further five people to the team in the last 12 months.
In describing his first encounter with the legal side of recruitment, MacKenzie-Cummins recalled the “minefield” of legislation.
“The most important thing is to get your head around what legal considerations are associated with hiring your first employee before that person starts working with you.”
He advised that to maintain the upmost credibility of your business, the administrative side to taking on a new employee should be completed in time to ensure a smooth start.
“Attracting people to work for your startup over a more established business is a tough sell, so you need to ensure you get everything in order from the very start of your new employee’s time with you; they are taking a punt on you, so act as though you are an established business and your new staff member will feel part of a ‘proper’ business too.”
“Don’t leave things like contracts, induction programmes and sorting out whatever insurances that you will need until the last minute – that will leave you looking like an amateur outfit.”
GOV.UK provides small business owners with a seven-step guide to the legal requirements of hiring their first employee – which may be of use for further reading.
How should you consider the values and culture of your business?
Rockey believes that you should not underestimate the importance of the values that you hold as a business owner.
“Culture and values in any business is its life blood. However, it is much more recognisable in a small business. It should be applied to everything that you do – your business decisions, your interview questions, your uniform. Even down to what stationary you have.”
The HR expert emphasised the need to balance business values with competency in skills. A candidate’s cultural fit can be assessed through a task set at application stage.
“We ask people to provide three reasons why they are the perfect fit along with their CV. We then consider their answers alongside our values and if they are a match, they are invited in for an interview which is not based on competency but on value fit.”
Business values must remain on the agenda after the recruitment process and into the employee’s career with your business. Rockey suggested that, in the early stages of recruitment, values are the only real indicator of success.
It pays to invest in people
“If you invest in your people the rewards will come – it won’t ever happen overnight, but an investment in your people is an investment in your clients, your business and yourself too,” MacKenzie-Cummins said.
As the owner of your own business, you have the benefit of control over every aspect of its running. Regardless of the outcome of the first hire, treating the experience as a learning process will inform and benefit the way you handle recruitment in the future.
If you don’t get it right first time, deal with a bad hire in a good way – avoid any negative repercussions for your brand by giving them a positive exit experience, and learn from what went wrong.
Have realistic expectations of your employee. Remember, you may live and breathe your business, but your new employee won’t. Rockey advised: “If they are 80 per cent as enthusiastic as you about what you are doing, then that’s a great start.” The remaining 20 per cent is down to you to build as an employer.
If you’re about to hire your first member of staff, then we hope this guide has been useful. If you’ve already been through the process, then please share your experiences by getting in contact with the editorial team on firstname.lastname@example.org.
Read what advice our recruitment expert gave in order to prepare an effective interview process.
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