How to Hire Employees in 7 Steps [+ Free Checklist]

Hiring great employees is the key to growing your business. A thoughtful hiring process includes well-written job descriptions, recruitment ads, interview processes, and strong compensation packages. All of these steps will help you find the right talent for your work requirements. A sound hiring process also prevents potential labor law violations and turnovers.

Download our free How to Hire Employees checklist following these seven steps.

1. Identify the Work You Need Completed

Before you begin searching for a new employee, you need to document what you need to be done, the responsibilities of the role, and the type of qualifications necessary to do it. Any new employee you place within that identified, defined position will then have to be qualified to perform said duties. Additionally, clarifying upfront what your expectations are for this role helps set pay and compensation. We strongly recommend that employers document work requirements on a formal job description before hiring employees.

2. Set Yourself up for Hiring Employees

Most business owners know to set up a tax ID and register their business with each state they do business in—but if you haven’t done that yet, those startup tasks need to be completed before you hire your first team member. You’ll also want to find HR/payroll software as well as a workers’ compensation plan to cover your employees.

In fact, some small businesses find these administrative tasks daunting and choose to employ workers without hiring them directly. Instead, they find 1099 independent contractors or sign up with a virtual assistant company (VA) to provide them with staff. However, before you go that route, make sure you don’t run afoul of the IRS by misclassifying workers. You need to understand the difference between W2 employees and 1099 contract workers.

You can avoid reporting pitfalls by using Zenefits, an HR service provider that can help you get set up for your first hire or if you have been hiring employees for years. Zenefits offers labor law compliance, hiring, state new hire reporting, tax filings, payroll, new employee self-onboarding, employee benefits and more. In fact, if you need one-on-one consulting for how to hire or pay employees, Zenefits provides that too. In addition to getting a four-day free trial when joining, you get a free demo of Zenefits to see how they can take the stress and paperwork out of hiring and managing employees.

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3. Consider Pay + Benefits = Total Compensation

While a job description is essential, job seekers pay close attention to the salary and perks a business offers as well. Make sure you set the appropriate compensation level for any new roles at your company. In addition, when thinking about how to hire employees you’ll want to consider how best to pay them, what benefits to offer, and any other perks that might pique a job seeker’s interest. It is not just about what paying what the market bears in your part of the country, within the position’s orbit (for example, what CFO’s or electricians make in your part of the country and so on). The critical point here is to be competitive in your overall compensation package.

Determine a Reasonable Pay Rate

Pay rates vary so much across geographic regions, industries, and within job categories (again, CFO’s make a different salary than entry level marketing professionals and so on). You’ll need to do your homework before deciding on the correct compensation plan. Indeed is a great place to look as you can see what similar jobs are paying in your location and industry using the Indeed salary tool. You may also want to determine whether your employee will be paid a salary or hourly and how often (weekly, every other week).

Indeed’s salary tool helps applicants and employers alike seek reliable data on pay and compensation.

Decide on Benefits Offerings

Employee benefits go far beyond health insurance and often include paid time off (PTO) or vacation and sick time. Some states mandate paid sick leave be given to employees, but health insurance itself isn’t required under the Affordable Care Act (ACA) until your business has at least 50 employees, although it’s the No. 1 benefit employees want.

Offering Perks That Employees Want

Small businesses that can’t compete with larger firms in terms of benefits may want to consider other perks employees want such as flexible work schedules, casual dress, in-store discounts, or the ability to bring their pet to work and so on. Creative perks are the currency that some of the most sought after employers use to keep ahead of their competition as it relates to attracting and retaining their top talent.

Total Compensation

A savvy way an employer can display to employees the total value of their benefits and compensation package is to present a total compensation statement. These statements can look a lot of different ways. The more detail that an employer can provide in these statements the more information the candidate will have to make their decision as compared to other potential employment options. Helpful and common attributes to include in a total compensation statement include:

• Salary/hourly rate
• Medical benefits coverage (include amount paid by employee and employer and how long the waiting period will be)
• Flexible Spending Account (FSA) or Health Savings Account (HSA) information
• Paid leave—include vacation/sick/PTO, holiday, personal, bereavement, military pay, jury duty, state required paid leaves and so on
• Disability insurance
• Life insurance
• Employee assistance program (EAP)
• Retirement benefits—include 401(k)/403(b), pension plans, etc.
• Educational assistance or repayment programs
• Learning, training and development programs and opportunities
• Potential career-advancement opportunities
• Relocation expenses

Download: 7 Steps for How to Hire Employees

4. Job Posting, Advertising, and Recruiting

Once you’ve done all the prep work, it’s time to post or advertise your job. These days, most businesses use job boards for recruiting, but posting a job ad online isn’t the only option. Here are some tips provided by business owners on common ways to find employees.

Write a Compelling Job Ad

The difference between the job description and a job ad is subtle. A job ad starts with a job description’s most critical details (certainly not the entire thing) but it also adds marketing details and a call to action to entice job seekers to apply. For example, it might include a bit about your company culture, showcase the benefits you offer or include a hiring bonus. Here’s an article on how to write a job ad for hiring employees.

Employer Branding

To optimize your ability to hire the best talent, it’s a good idea to create the type of firm, high-quality candidates want to work for. You wouldn’t hire someone based only on a resume, and candidates aren’t going to decide based only on a job description. Employer branding is how your company is perceived by prospective and current employees both online and on-site. And, positive employer branding can reduce hiring costs by attracting more candidates per job opening.

Promote Your Great Culture

Generally, employer branding includes defining the cultural and management values your company stands for, explaining how employees benefit from working for you and getting the word out in job descriptions and general marketing communications. In fact, Indeed, like Glassdoor, offers a free Company Reviews page that can serve as your company branding site. You can ask existing employees to post online reviews showcasing your business as a great place to work.

Here’s an example of how one firm brands itself:

Employee Branding-Related benefits ad on Glassdoor (Source: Glassdoor)

Post the Job Online

You can post a sign at your business to attract walk-in applicants, but the most common means of finding qualified job candidates is to use an online job board for hiring employees. Once you post a job, you can share it on social media or email individuals you hope will apply. In addition, some employers prefer to use a free applicant tracking system to keep track where their jobs are posted and who has applied to each job.

We find Indeed to be a great job posting site because it’s free and contains its own ATS. It’s also the largest job board producing up to six times more hires than its competitors. It’s a great place to post jobs as well as showcase your company’s employment brand. Here’s a quick guide on how to maximize your Indeed job posting if you want to learn more.

There is an endless list of job posting sites that you can utilize to get your job out there and noticed.

Lastly, there are free resources that can help jump-start your recruitment process. Although some only offer free trials, such as with ZipRecruiter, just to get you going, some are free services that allow you to post for free and have a large reach to thousands of candidates.

Ask Employees for Referrals

Employees are a great, and perhaps the best, source for untapped job talent as they may know of individuals with just the right skills to join your company. If you post your job on an online job posting site, you can share the link and job description with existing employees and ask them to help you recruit their next co-worker by making referrals.

Hire a Recruiter

Another popular option for a small business is to hire a recruitment firm with expertise in sourcing candidates. Typically a recruiter will charge you a percentage (30-40%) of the new hire’s first-year salary—but that may be worth it to get a top-notch candidate you may not have found on your own. Read our article on HR Managers vs Recruiters if you’d like to learn more about when it might make sense to use a recruiter.

An ATS like Freshteam makes it easy to post to multiple job boards (including Indeed), engage with candidates, and collaborate with hiring team members, all from one dashboard. In addition, all your recruiting is done online letting you see on one dashboard where candidates are in the recruiting pipeline. Freshteam is free for small businesses with up to 50 employees. Sign up for free.

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5. Evaluating Resumes and Interviewing Candidates

Once you begin receiving job applications, the time-consuming process of evaluating job applicants begins. If you’ve used a job posting site, you may have found it provides online tools to assess job applicant qualifications in advance—such as resume screening. Otherwise, you’ll start by reading applications and resumes to determine which candidates to interview.

Thoughtfully Read Through Resumes

Rule number #1 when reviewing resumes … Do not review resumes when you are tired from your day, or morning, or the last meeting and so on. Resume reviewing fatigue is a very real thing, and you can look over amazing candidates if you are not fully engaged in your review process. When you sense that you are need fully engaged, or your mind is wondering, take a break from resume reviewing for another task.

Use of Employment Applications

We recommend a new way of thinking when it comes to employment applications. In the past, people thought making job applications time-consuming would rule out casual job seekers. The lengthier your application process is, the greater the risk of having passive job seekers (candidates who are presently employed) pass you up. We recommend that you make it as easy as possible for passive job seekers to apply for your positions.

As you read through job application forms and resumes, it’s best to have the job description handy. That way you can see which job seekers best match your open job role (by skills, education, and experience). You’ll find that a large percentage of job seekers fire off resumes with no regard for whether their skills match the ad posting. It’s easiest to set those aside into a “no” or “not qualified” pile once you recognize that candidates do not qualify for your role.

Sorting your resumes into three groupings is a great way to get a handle on which candidates you may want to follow up with. Oftentimes you have a “yes” pile, a “maybe” pile and a “no” pile. The “no” pile will typically be your largest, followed by your “maybe” pile and then your “yes” pile. Your end goal is to have a short stack of three to six individuals to interview.

How to hire employees by sorting applications into three groups

Schedule Interviews

Once you’re done sorting, it’s time to schedule interviews. Be certain you have a good interviewing process established, which should always include more than the hiring manager or the HR representative. Additionally, knowing what you can and cannot ask in interviews is essential. Another Fit Small Business article we strongly recommend is “Your Ultimate Guide to Employment Laws When Interviewing And Hiring.” This guide walks you through the legal mind fields of interviewing and both good and bad questions.

Consider setting up a quick phone interview to assess each job seeker’s interest in the role before committing yourself or your managers to a full interview appointment. (Some applicants may have already accepted a job with another firm, others may not be as good a fit as they appear to be on paper.) Here are a number of the most common forms of interviews, each with their own merits and potential drawbacks.

Phone Interviews

A phone interview is generally brief. You contact the candidate, thank them for applying and ask if they would mind answering a few questions. How they react will tell you much about their true interest in the role. Not sure what to ask? Here are sample phone interview questions.

Video Interviews

Video interviews are best if you’re interviewing with someone who is still working, or an individual moving in from out of town. They’re also great for team interviews (with more than one of your managers) or for remote and work-from-home candidates. Don’t worry if you don’t already have video conferencing software (many are free).

In-Person Interviews

In-person interviews are the most common interview type managers think of when they imagine interviewing a new hire. But in-person interviews are notoriously inefficient and may result in you selecting a candidate based on how similar they are to you, rather than how qualified they are. Here are tips on how to interview someone to avoid that kind of interview bias.

Use Caution When Interviewing

Be aware that recent labor law updates at the federal and state level may restrict the kind of questions you can ask: i.e., criminal background, salary history, and so on. In addition, new anti-discrimination laws are being added in some locations like New York (New York City bans discrimination based on hairstyles). Check out our examples of interview questions to avoid.

Thank Candidates for Applying

Remember to communicate just as promptly with those who didn’t make the cut as those who did. For those that you’re going to be turning down, send prompt rejection letters. You are representing your company’s brand with each candidate you speak with, even if they are not a candidate of choice, they may be a customer or, in general, a fan of your brand.

Select the Best Person for the Job

The best person for the job is the individual who best fits the job requirements and who has the highest likelihood to succeed in the role within your organization. It’s a good idea to contact prior employers and check the candidate’s references to get insight into the candidate’s strengths. It’s also not a bad idea to take a look at your candidate’s LinkedIn profile to be sure it matches the attributes listed in their resume.

Note: In some roles, like finance or child care, it’s also important to conduct a background check and/or a pre-employment drug screen once you choose which person to hire and after they have accepted in writing (via a signed offer letter).

6. Write a Job Offer

It’s best to put your job offer in writing so there’s no confusion on what the role is, when it starts, and what it pays. When describing your company and the position being offered, make sure the personality and culture of your company come through. Highlight why your company is a great place to work and how it’s organized. Include benefits as well as your company’s unique mission too.

Offer Letter Template

The good news about writing a job offer is that you don’t often have to do it from scratch. Job posting sites like Indeed offer templates and you can create your own. What’s most important is that you document the job offer title, start date, and pay rate. It’s also a good idea, since we have mentioned it above, to make the job offer contingent upon a successful background check, required physicals, drug tests or any other pre-hire criteria you plan to do. You can use our job offer template as a starting point.

Negotiating the Offer

Don’t be surprised if your job candidate doesn’t accept your first job offer. Be willing to negotiate unless you simply can’t pay a penny more. Many new hires are open to receiving off-site training, getting a few more days PTO, or working remotely in exchange for a lower-than-desired salary.

At Will Employment
In most states, there’s a concept referred to as at will employment which allows either you or the employee to end the employment relationship at will. However, the court system is a bit tougher on employers to maintain documentation and demonstrate that there’s no discrimination going on should a worker file a lawsuit. They tend to favor employees. That’s why it’s a good idea to educate yourself on the employment rules in your state as well as overall labor laws. Make sure you take this into consideration when putting together any employment contracts.

7. Plan to Onboard Your New Hire

Once your new hire has agreed to your job offer, it’s time to plan their onboarding. Think about what they’ll need for a good first experience at your company. It may be a fully stocked desk. It may be a uniform, computer, name tag or campus I.D. and a copy of the employee handbook. Or you may want to celebrate their arrival with a welcome breakfast on-site or lunch with their supervisor (which we recommend).

Before First Day

Before the employee’s first day, it’s a good idea to stay in touch. Let them know where to show up, what time, how to dress, where to park and what to bring. For example, paperwork is often the priority on their first day so ensure they’re set up in your HR software platform and are able to receive direct-deposit on payday. They’ll need to bring ID, complete an I-9 form and perhaps a voided check showing their bank routing and account number at the minimum.

About a dozen states, such as Utah, Georgia, and South Carolina, require employers to use E-Verify. Read our article on new employee forms to ensure you don’t miss any important documentation.

Employee’s First Day

We recommend using a new hire checklist to ensure you give the new hire a solid welcome and get them off to a good start. The checklist will remind you of all the things you need to do on the employee’s first day. Most of all, don’t forget to welcome them to the team and introduce them to co-workers.

Orientation & Training

Employee orientation is more than handing the new staff member an employee handbook to read. It may include going over company policies, teaching the new hire how to use your software, or answering process and procedure questions. A great orientation and onboarding approach increases the chance of your new hire being successful on the job.

Employee Retention Reduces Your Need to Replace Employees

When you take into account recruiting expenses and new employee training costs, retaining good employees is the most profitable way to keep your business fully staffed. Sources differ on the best retention strategies but most agree on the solid HR employee recommendations suggestions below.

Share Frequent Employee Feedback

Everyone likes to know where they stand. Employees value receiving personalized feedback on their strengths and growth opportunities. A strong performance management process with 360 performance reviews can help them feel more secure and happier in the long run. This will lead to them staying longer. Performance management software can make it easier for you to keep employees motivated and engaged at peak performance.

Promote Employee Training

Employees value relevant, high-quality training. It increases their chances for success and shows that you care about their professional growth. And some training requirements are mandated at the state level, such as anti-discrimination training in New York and Delaware and anti-harassment training for supervisors in California. It’s a great practice to let a seasoned employee help train your new hire as both will benefit from the experience. Or consider finding a training vendor to provide developmental courses for your staff.

Let Employees Know They’re Appreciated

One thing that can demotivate employees is not being appreciated for their hard work. Have a program that provides employee recognition when appropriate. This could be personal recognition directly to the employee or, even better, public acknowledgment that’s visible to the entire company like on a bulletin board, Slack channel, or at a company event.

Make Sure Employees are Engaged & Motivated

A more engaged employee is a happier employee. Have a program to make sure employees are engaged and motivated. This could range from volunteer opportunities for growth to culture-building team events, to peer praise apps. Employee engagement surveys are a great way to find out how your employees feel about working for you.

Frequently Asked Questions (FAQs) About Hiring Employees

While hiring employees seems simple enough, it is not always the case. Here are some common questions that we have heard over time and may help you as well.

When should I have my employee start?

It’s often best to hire employees up to a week before you need them to be productive on the job. That allows you to orient them to your business, train them on your software, bring them up to speed on your product or service approach and ensure they’re able to serve your customers. Here’s more on what to cover during that employee’s first week on the job.

Where can I find employees to hire?

The best place to find employees is by posting your open job on a job board. Many job advertising sites, like Indeed, are free to employers. Here’s a list of free job posting sites.

How do small businesses pay employees?

Most small businesses hire a payroll service provider or use payroll software to pay their employees, ensuring taxes and deductions are calculated correctly. For more information, read our ultimate guide on how to do payroll.

What forms are required to hire employees?

New hire forms include federal and state tax withholding documents (W-4s) and employment verification forms (I-9s). For a complete list of documents to gather from new hires, read our article on new hire forms, it includes a downloadable checklist.

Bottom Line

Maintaining a clear vision on what you want from a position is the first step to great hiring. You have to know every detail about the position so you know who will be the best candidate to fill it when you see them. After defining your role though, it’s all about recruiting, selecting, and onboarding your new team member.

Take your time to find the person most likely to be successful in the job based on the candidate’s resume, interviews, and employment references. Finding and retaining great employees to grow your business and promote your brand is a huge building block in your company’s foundation for sustained success.