7 Things Startups Need to Know When Employing Staff for the First Time
If you’ve never worked in HR or recruitment, you might not know the ins and outs of hiring new talent. The process may seem simple, ask questions and see if you like the candidate. However, there are more steps and factors to be aware of when hiring for your startup or established business.
Your team includes you and everyone who you’ll be working with on your business.
Remember that when you build a team and a working environment for that team, you’re building a community. You’ll spend a long time – together, and work on some really great things – together. This makes it especially important to consider not only the skills your team will bring to the table but how to bring together a team that works well together.
Lucky for you, we’ll cover all the important areas of employing someone today.
In this article you’ll learn:
- How to hire someone
- How your business structure affects employment
- The legal obligations of hiring someone in the UK
- The costs of hiring someone
How your business structure affects employment
The structure of an organisation is very important, particularly as it grows. It can provide guidance to employees by showing who they report to and who has final responsibility for different situations. It’s also easier to add new positions in the company, and employees will be able to see opportunities for internal promotions. Some organisations are very flat structures, with little hierarchy and reporting structure. Others are very hierarchical and structured.
Small businesses often lack a formal structure, and their small number of employees tend to end up ‘wearing many hats’ and undertaking many different tasks. However, most employees in small organisations know who they report to, as it is usually a single person or partners.
Employing staff for the first time
Your staff will be one of the most important resources that you have. They are the ambassadors of your brand, and either literally or figuratively it is they who will build your brand.
Building the right team for a startup is a key component to success. Investors are often looking at how investible the team you’ve built is as much as the business idea itself. Teams with skills, drive and passion are highly investible.
People often talk about finding staff members that ‘fit.’ This generally means that they align with your company ethos, are easy to get along with and believe in the vision of the company. All important aspects when you’ll likely be working in close proximity with each other.
Just be careful that you don’t judge ‘fit’ exclusively on how well you get on with them. That’s a great way to employ lots of people exactly like you!
When employing people, look for a diverse range of skills and people from different backgrounds. While having a mixture of personalities and expertise brings challenges it also brings more ideas and points of view to the table.
The structure, culture, management style and working environment are all important components to making sure your staff are happy and effective.
Think about what you are employing staff to do. Each role will require a very different skill-set. Hiring the right people can be a challenge, but it’s worth investing time into this, as the person you employ will be representing your business!
How to find the right candidate
If you get this wrong, it can be an expensive mistake to make.
Before you start looking at where to find your ideal employee, you should think about the following:
- Define the role
- List the main duties and responsibilities
- List the required experience or qualifications
- Decide on the expected salary range
- Is the position permanent, full time/part time, on a fixed contract basis, fixed term contract (ie covering maternity leave), zero hours or rolling contract
The salary range should be based on the type of role that you are recruiting for, with the skills and experience required. Is there an industry benchmark for the type of role you’re recruiting for? Try checking the salary ranges for similar roles in other companies.
Geographic location will also play a part – for example, central London salaries will usually be higher than other parts of the country.
If you need someone with professional qualifications, then you will need to pay the right salary in order to secure this level of training and education/experience.
Offering benefits like health insurance, gym membership etc. can also make your company look more attractive to potential candidates. At this point you’ll start to see the true cost of a member of staff to the business is not just their salary.
How much does it cost to employ someone?
Alongside the salary, there are other costs associated with taking on new staff. Let’s take a deeper look into some of those costs that come with hiring staff.
- Pension payments
- Employer National Insurance Contributions
- Healthcare schemes
- Company cars
- Payroll costs
- Training costs
- Office and facilities costs
- Initial recruitment costs (advertising or agency fees)
Advertising the role
The costs for advertising in press/magazines will be lower than using a recruitment agency, who normally charge either a fixed fee or a percentage of salary. However, if you are very short on time, or need a very specialised role, a recruitment agency can do a lot of sifting through CVs and preliminary interviews for you. They’ll only send candidates that match your brief and that the agency think are a good fit for your company.
There are also many CV databases where you can post your job advert – or search for the ideal candidate.
Once you (or the agency), have drawn up a shortlist of candidates, then you can start the interview process.
How to interview someone
Interviews are a two-way process, not only to see if the candidate is right for the company but that the company is right for the candidate.
Think about the style of interview, and where you want to interview them. If your premises aren’t suitable, then think about hiring a small office for the day, or using a hotel.
Telephone interviews can be useful for first-round interviews. It may also be a good idea to include existing staff members in the interview process. Although you don’t want a decision ‘by committee’, involving the people that the new hire will be working with can often help identify the right fit for the team.
Depending on the role, and the number of candidates, you may wish to have two or three rounds of interviews, possibly including a presentation of their ideas for the role.
Legal obligations in the UK
When your chosen candidate accepts your offer, then there are several checks that you need to carry out initially.
Your offer of employment should depend on the successful outcomes of these checks:
- You must check if someone has the legal right to work in the UK.
- Check if staff need to be DBS checked (formerly known as a CRB check) if you work in a field that requires it eg with vulnerable people, children or security.
- Check previous work references (and educational references if applicable).
As an employer, there are many rules and regulations that you need to be aware of. You must ensure that:
- You have the employers’ liability insurance as soon as you become an employer
- You confirm with all Health and Safety and Welfare regulations
- You will consider flexible working requests
- You avoid discrimination in the workplace
- You tell HM Revenue and Customs (HMRC) by registering as an employer – to deal with payroll, tax and National Insurance Contributions. You can do this up to 4 weeks before you pay your new staff
- You make reasonable adjustments to your business premises if your employee is disabled
- You have a payroll system set up (even if you outsource this function to a third party)
- You have checked to see if you have to automatically enrol your staff into a workplace pension scheme. All businesses must now offer auto-enrolment into pension schemes for their eligible employees. Depending on the number of staff you have and their salaries this could be a significant cost of your business
- You are paying the employees’ National Insurance Contributions
You also have some responsibilities to your new employee:
- Written details of the job (including terms and conditions). Written statements of employment or contract are required within 2 months of starting work. If you’re employing someone for more than 1 month, include details of how much you will be paying them. You must pay your employee at least the National Minimum/Living Wage. These figures depend on the age bracket of your employee and are subject to change over time – so it’s worth checking before sending a contract to the new employee.
- You must give them details of their holiday entitlement. The statutory minimum level of paid holiday in the UK is usually 28 days, which includes bank holidays; you should also give them the length of rest periods within their working days
When they have started work, you should give them a payslip showing all deductions, eg National Insurance contributions (NICs); statutory Sick Pay (SSP); maternity, paternity and adoption pay.
It is normal for most employees to have to undertake a probationary period when starting a job with a new company. There is no legal length of the period, but it is usual to be between 1 and 6 months. After 2 years of continuous service, employees are entitled to increased employment rights.
Types of Employment Contracts
If you don’t want to employ someone as a member of staff, you can employ agency workers, freelancers, contractors or consultants. Whichever route you choose, there are still rules that you need to follow regarding payments, rights of staff, terms and conditions, contracts and health and safety.
Looking after your team (and yourself)
It’s important to give thought to the kind of workplace culture you want to cultivate.
The ways you deal with workplace stress, arguments and illnesses are important. Consider your leadership style and the kind of relationship you want to have with your employees. Planning for these ‘soft’ practicalities is crucial to building a business that not only makes money but is a great place to work.
Starting a new business can be stressful. By planning well you can anticipate many of the dangers and pitfalls the business will face. But as a business owner and leader, you will have a lot of responsibilities and it is important that you do not neglect your own wellbeing.
Take your role as a leader seriously – you are vitally important to the business you build. It’s important to learn how to lead effectively. Here are some of the things you can do to build a successful work environment:
- Avoid blame culture. Everyone makes mistakes. Look at the problem together and find out the best next steps to take.
- Communication. Talking about a situation can raise new, better and cheaper solutions than keeping issues to yourself.
- Help manage stress. Everyone gets stressed – find out how to help you and your team.
- Acknowledge achievement across the business. Don’t let members of your team miss out because their tasks are less visible than others.
Health and safety of staff
It is your responsibility to ensure the health and safety of anyone affected by your business – be they customers, employees, contractors or suppliers. Taking reasonable steps to ensure a safe environment is a legal requirement! For most small businesses, this is just common sense. If you employ over 5 people, you’ll need a written Health and Safety policy.
All staff should be working in a safe environment suitable for the work they are doing. There must be adequate washroom facilities, drinking water, somewhere to store personal items/clothes (particularly if staff have to change into a uniform or specialist clothing for their job) and somewhere to eat/have rest breaks.
You will also need to ensure that you have an Emergency at Work trained first aider, with a properly stocked first aid box. You must also keep records of certain injuries, and any cases of work-related illnesses. You may need to report these incidents to the HSE (Health and Safety Executive) or your insurance company if required.
Fire Risk Assessments
You should also produce a fire risk assessment of your workplace, and this must be regularly reviewed. It should identify any risks of ignition, or flammable substances, fire exits, warnings and emergency plans for evacuation. When you have identified all the risks, you should then put together a plan on how you can control them.
Aside from everything we’ve gone through in this guide, starting a business is about learning to get along with and manage people’s energy towards the completion of the business’ goals. We’ve written some additional resources on the following topics:
When employing staff and building a team, there are lots of costs you have to consider, not just their salary.
It’s important you work out how much employing staff will cost and whether you’re able to grow your team or if you have to wait a little later down the line. Use Brixx to understand your startup costs and what you will be able to afford and when you will be able to take on a team.
Employing someone for the first time is a big commitment, however, if you find the right person they can add a lot of value to your company.
Next week we’re going to be covering how to create your brand.
This blog post forms part of our series on how to start a business in 90 days. For an overview of the series and all the blog posts so far click here.