Whatever your 2022 goals are, hiring an employee might be on your radar. Perhaps you have been considering the next steps in growing your business for a while. Or perhaps business is booming and, to meet your your customer needs, you require extra hands on deck.
If you’ve considered the pros and cons of hiring for your small business (for a guide to the main factors to consider, check out this post!), it may have become apparent that you require help. And, in order to grow, you might need more consistent availability than freelance contractors can offer.
But what will you need to do and know in order to take on your first employee? What common mistakes can you avoid to ensure that hiring your first team member works for you and your business? Read on to hear my top tips for getting it right first time!
This is a guest post from experienced HR Consultant Emma Jenkins. Find out more about Emma at the end of this post.
Hiring an employee (particularly your first direct employee) can feel like a daunting step – after all, as an employer, you have both legal and moral responsibilities for your employees. Your regular fixed costs will increase, and what if you hire the wrong person?
As with everything in business, there is inevitably some risk associated with hiring an employee. These can be mitigated, however, if you start the process informed, aware of the pitfalls and of how to avoid them.
What will hiring an employee cost & what will you need to do to become an employer?
There are a number of key things you need to do to set up as an employer. See this government site for a handy UK checklist! You are legally required to:
(a) obtain Employers Liability Insurance. It is worth obtaining a number of quotes for this, but it’s often included in (or available as an add on to) your existing business insurance. You can find a summary of your responsibilities here.
(b) register with HMRC online as an employer so that you can be allocated a tax office etc. Sign up here!
(c) work out how you will pay your employee. This may be a service you can outsource to your accountant if you have one. Otherwise, you can easily manage this yourself via HMRC’s free payroll software.
(d) Look into the rules around pension auto-enrolment. Depending upon the salary and age of your employee, you may be required to auto-enrol them into a pension scheme. Here is a useful tool to help you assess what your pension responsibilities will be. As a rule of thumb, if your employee is eligible, you’ll need to set up an online account with a provider such as NEST, and make employer contributions of 5% of salary if the employee does not opt-out.
(e) Prepare a contract of employment that acts as a written statement of particulars. You’re legally required to provide this to all employees before the employment relationship commences. There are specific areas this must cover, such as annual and family leave entitlements, remuneration, mandatory training if relevant. You also should establish a couple of basic policies. You’ll certainly need a Disciplinary Procedure to clarify how you’ll address any issues in advance, to make it easier to address any matters that arise.
So there are some upfront costs?
In a word, yes. There are some upfront costs to becoming an employer.Generally, however, these are one-off costs that will be an investment in the business if you intend to grow more significantly in the future!
Having an office space, which was previously one of the biggest roadblocks, is less important since the pandemic. Working from home is increasingly becoming an expectation rather than an exception, removing this barrier.
How do you hire your first employee and avoid common pitfalls?
The most critical thing when hiring an employee, is to clearly identify exactly what you need. Sounds simple, but it is easy to lose track of this when you start to recruit. It’s easy to be seduced by the opportunity to bring in someone who may not fit this initial brief.
Taking time to nail down exactly what tasks you need your employee to do will ensure you stay focused. Working out the knowledge, skills, experience required, how many hours a week it’s likely to take (or what skills/how much time you can afford at this stage), and what you can sustainably budget for is essential.
Additionally, identifying the right person whose values and career aspirations align with both yours and those of your business is crucial. You need to find someone who you feel comfortable you can work effectively with. This person will act as a brand ambassador for you, after all.
Spending time outlining this will hopefully result in a strong cultural fit, and increase the likelihood that the person you hire will stay committed to and add value to the business for longer.
To help achieve this, there are a few things you can do:
- Write a job description, clearly outline expectations on both sides and how you will likely work together
- Know what you can afford. Factor in Employers NI (currently 13.8%, increasing by 1.25% from April 2022), pension costs, ad-hoc costs such as equipment etc.
- Design the recruitment process to assess values as well as skills fit and be honest about how things will work
Overcoming barriers when hiring an employee
Flexibility is important – and can open the door to opportunities/people that may otherwise not have been accessible to small businesses. Consider options such as Modern Apprenticeships, fixed-term contracts, part-time and/or variable hours arrangements.
These options give both parties maximum flexibility and allow you to manage fluctuating workloads. Your first hire does not have to be a huge commitment.
The time needed to train your new employee can often be a barrier to starting the journey as an employer. There is certainly a need to invest time in this, which you have to be ready to do. There are, however, plenty of resources available, many free of charge, to help with this!
Relinquishing full control of your business and trusting another to do things as well as you can be another challenge. This can take time to overcome and should be recognised as a risk as well as an opportunity.
Not letting go will likely ultimately result in an under-utilised and, therefore, unmotivated employee. This, in all likelihood, will not work out in the longer term. The benefits of delegating can be immense though! You might even find they have a better approach than you, allowing you to focus on what you do best.
What if it doesn’t work out?
There is always the possibility that the person you hire will not be right for your business. But don’t let this put you off! With the right processes in place, you can take steps to reset the relationship or part ways if this happens.
This can include probationary periods and regular reviews to identify and resolve issues. With the right approach, this is not something to fear and risks of this to the business can be minimised. The benefits to your business of getting it right most definitely outweigh the downsides.
Thanks so much to Emma Jenkins, Director and Founder of Mission HR, for this guest post. Mission HR partners with SMEs, helping them navigate the people issues that matter and achieve their business goals through developing cultures in which they and their people thrive.
To read more about this topic, have a look at these:
Why Your Staff Should Be Part of Your Marketing Strategy
The Pros and Cons of Hiring Employees for Your Small Business
How I Balance Work and Life As a Small Business Owner
6 Things to Consider Before Growing Your Small Business