Hiring great employees is the key to growing your business. It’s best to use a standardized process when hiring employees. That includes well-written job ads, interviews, and fair compensation to increase the chances of you finding the best-matched talent for your work requirements. A sound hiring process also prevents potential labor law violations.
Download our free How to Hire Employees checklist following these seven steps.
1. Get Specific on the Work You Need an Employee to Do
Before you begin searching for a new employee, you need to document exactly what you want that person to do. That’s because you’ll be paying them a wage in exchange for work and need to be clear from the get-go on what the job requires―in terms of responsibilities and skills. Most employers document work requirements on a formal human resources (HR) job description when hiring employees.
Start With a Job Description
A job description helps you communicate with and find qualified job applicants as well as clarify their work expectations once hired. A great job description focuses on more than minimum requirements like experience and education, although those are important. It also clarifies the kinds of interpersonal or “soft skills” you want your employees to have so that they fit within your overall culture and work style.
Here are some criteria to think about when building your job description.
When you create your job description, make sure you’re describing traits that will help a candidate be successful in the role. That means focusing on the soft skills necessary for success. These may be learned skills like being able to delegate or innate skills like an approachable demeanor. Defining the skills that your company needs will help you later when interviewing candidates for a match.
According to a LinkedIn study, the top soft skills are:
- Time management
Of course, the exact soft skills required will vary by job or industry. For example, a sales role will require a person with good listening, selling, and persuasion skills while an accounting role will require an individual who is organized and attentive to detail.
Most business owners list a minimum educational requirement in their job description based on the job role when hiring employees. For example, a solar installation company may desire its workers to have at least a GED or high school degree to be able to read complex instructions. A CPA firm might prefer its associates to have a business or accounting degree, and a Biomed testing facility may need Ph.D. candidates for licensing purposes.
However, when you’re thinking about how to hire employees, ask yourself whether a degree is really necessary. If not, skip the college degree requirement on the job description and focus instead on the skills and abilities you’re looking for in an employee instead.
Think about the kinds of work experience you would like your new hire to have. In addition to education and training, many skills are learned on the job. For example, a top sales professional may never have graduated from college, or a graphic designer, web developer, or line cook may be completely self-taught. Instead, think of the experience and skills you prefer they possess.
Here are some examples of the kind of experience statements you might want to include in your job description:
- Two years of customer service experience in a fast-paced retail environment
- Five years of diesel mechanic experience or two years of experience if ASE certified
- 10 years of multirestaurant management or former general manager managing $100,000 each month
- Three years of transportation dispatch experience with temperature-controlled carriers
- One year of solar installation or supervisory experience in any construction trade
It’s worth mentioning that a poorly written job description may be used against you by a prospective employee. For example, let’s say that the job description states that you’re “looking a strong man” to load trucks. That’s discriminatory. federal labor laws enforced by the Equal Opportunity Employment Commission (EEOC) ensure fair labor practices, including job advertising, interviewing, hiring, and more.
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. However, 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 (VA) company 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.
Zenefits is an HR service provider that can help you get set up for your first hire or your 100th. It offers labor law compliant 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. Get a free demo of Zenefits to see how they can take the stress and paperwork out of hiring and managing employees.
3. Consider What Pay & Benefits Will Attract Applicants
While a job description is key, 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.
Determine What Pay Rate Makes Sense for the Job
Pay rates vary so much across geographic regions and industries that 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, such as weekly or every other week.
Decide What Kind of Benefits You Want to Provide
Employee benefits go far beyond health insurance and may include paid time off. 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 number one benefit employees want. Here are helpful questions that you may want to ask yourself before offering health insurance.
Consider How to Hire Employees by Offering Perks They Want
Small businesses that can’t compete with larger firms in terms of benefits may want to consider other perks employees want―flexible work schedules, casual dress, in-store discounts, or the ability to bring their pet to work. What employee perks might your business be able to offer to entice job seekers to apply? How will these perks help you do a better job hiring employees?
4. Get the Word Out by Advertising Your Job
Once you’ve done all the prep work, it’s time to post 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 but adds marketing details and a call to action (CTA) 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.
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 online job boards 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 an applicant tracking system to keep track of 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. If you’re not already using Indeed, you should be―it costs nothing. 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.
Ask Employees for Referrals
Employees are a great 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 coworker.
Here are some tips on making the most of employee referrals:
- Be a company that people enjoy working at: That’ll make your existing team members more likely to recommend jobs to people within their network.
- Communicate your enthusiasm when talking about open roles: Your enthusiasm will transfer when they encourage their friends to apply.
- Focus on the opportunity: Emphasize what a great opportunity the role is and the importance of the position to the company.
- Reward employees: When you hire an employee referred to you by an existing team member, consider offering your team member a referral bonus.
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 like 30% to 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.
5. Evaluate Job Applicants
Once you begin receiving job applications, the critical, albeit 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.
Read Through Resumes
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 a percentage of job seekers blast out resumes with no regard for whether their skills match the job description. It’s easiest to set those aside into a “no” or “not qualified” pile.
In fact, sorting your resumes into three groupings is a great way to get a handle on which candidates you may want to follow up with. Your end goal is to have a short stack of three to five individuals to interview.
Once you’re done sorting, it’s time to schedule interviews. 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 while others may not be as good a fit as they appear to be on paper.
A phone interview is brief. You contact the candidate, thank them for applying and ask if they’d 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 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 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.
Lazlo Block, Google’s former senior vice president of people operations, did extensive research on Google’s hiring process and recommends structured interviews.
“Assess candidates objectively. Include subordinates and peers in the interviews, make sure interviewers write good notes, and have an unbiased group of people make the actual hiring decision. Periodically return to those notes and compare them to how the new employee is doing, to refine your assessment capability.”
—Lazlo Block, Founder of Humu and former senior vice president of people operations, Google
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, such as those around criminal background, salary history, and sexual orientation. In addition, new antidiscrimination 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.
Choose 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 firm. 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 the job seekers LinkedIn profile to be sure it matches their resume. In some roles, like finance or childcare, it’s also important to conduct a background check once you choose which person to hire.
6. Write a Job Offer
It’s best to put your job offer in writing so that 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.
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 to make the job offer contingent upon a successful background check, required physicals, drug tests or any other prehire criteria you plan to do. You can use our job offer template as a starting point.
Don’t be surprised if your job candidate doesn’t accept your first job offer. Be willing to negotiate unless you can’t pay a penny more. Many new hires are open to receiving off-site training, getting a few more days of paid time off (PTO), or working remotely in exchange for a lower-than-desired salary.
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, nameplate, or a copy of the employee handbook. You may want to celebrate their arrival with a welcome breakfast on-site.
Prior to First Day
Prior to the employee’s first day, it’s a good idea to stay in touch. Let them know where to show up, what time, where to park, and what to bring. For example, paperwork is often the priority on their first day to ensure they’re set up in your HR software and can receive direct deposit on payday. They’ll need to bring ID and perhaps a voided check showing their bank routing and account number.
Keep in mind that many states have unique employment laws. For example, some states won’t let you mandate direct deposit. A nondisclosure (NDA) won’t hold up in California or New Jersey. About a dozen states—like 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.
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 coworkers. Offering to take the new hire to lunch on day one is also a nice touch,
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.
How Hiring Employees Works
The way hiring works is that you the business owner find a person that is willing to work for you, you agree on terms, and you pay them for the work they do. U.S. labor and employment laws dictate the terms of employment, such as how much you need to pay employees—minimum wage and overtime—and they also specify fair employment practices, such as antidiscrimination against protected classes like older workers, the disabled, or pregnant women to name a few hiring laws.
In most states, there’s a concept referred to as at-will employment that allows either you or the employee 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.
Hire Slow, Fire Without Surprises
In a study of more than 5,000 hiring managers, Leadership IQ found that nearly half of new hires fail within the first 18 months. The U.S. Department of Labor estimates that the average cost of a bad hire is 30 percent of the employee’s first-year salary. The intangible costs, such as lost management focus and hits to morale, mean a bad hire is even more expensive than that.
Here are a few tips to avoid costly bad hires.
While there is pressure to fill an open position quickly, the cost of a bad hire is usually worse than the cost of waiting. A useful strategy is not to wait for an immediate need to look for candidates. Always be on the lookout for good candidates to add to your recruitment pipeline so that you can hire faster. If you’re in a pinch, consider hiring a temporary employee through a staffing firm. If they work out, you can hire them full-time. If not, there’s no harm done.
Fire Fast (With Documentation)
It’s a common saying to “hire slow, fire fast.” While it is important to terminate a bad employee soon after you determine that things aren’t working out, you also don’t want the termination to come as a surprise. That can tarnish your business reputation or result in a costly wrongful termination lawsuit. It’s best to document steps taken to improve an employee’s performance before you let them go.
Here are some tips on giving employees a chance to improve their performance:
- Ensure no surprises: As a general rule, a firing should never be done on a whim. It’s best to coach and provide feedback to troubled employees and document that you did so. Consider using a progressive discipline approach.
- Create a performance improvement plan: Work with your employee to identify areas that need improvement, detailed steps to be taken, and the time frame for doing so.
- Provide resources: If employees are having personal or family problems, an employee assistance program (EAP) can help.
If all else fails, terminate the employee in writing once it is apparent that the employee is no longer suitable for the job. Also, consider conducting an exit interview to understand how you might improve your hiring process, onboarding, or management going forward. You may also want to offer a severance agreement to give the employee a little financial relief and ensure their exit is amicable.
Employer Branding Helps Your Business When Hiring Employees
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 & Career 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:
Upgrade Your Benefits Package With Perks Your Employees Want
According to a study Harvard Business Review and Fractl, the top four benefits workers seek are health benefits, flexible hours, vacation time, and work-from-home options. Make sure you communicate your benefits package on your job description, job ad, or on the careers page of your website.
Here’s an example of how Facebook lets job seekers know about its employee benefits:
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.
Give Employees Frequent 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.
Make Sure They’re Well Trained
Employees value relevant, high-quality training. It increases their chances for success and shows that you care about their professional growth. Some training requirements are mandated at the state level, such as antidiscrimination training in New York and Delaware. It’s a great practice to let a seasoned employee help train your new hire as both will benefit from the experience. 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 an explicit 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. Here’s a template for conducting an employee engagement survey.
Frequently Asked Questions (FAQs) About Hiring Employees
While hiring employees seems simple enough, the employment laws are many and may leave you with questions. We’ve answered the most common below and invite you to post your own questions to our forum, which we monitor daily.
How can I hire employees with no money?
Often when you start a business, you’re in a tight cash position. It’s possible to hire employees on a commission-only basis, as a volunteer, intern, or business partner offering them a percentage of earnings. Also, in many states, you can pay much lower than minimum wage for individuals that earn tips. Many small businesses start out with friends and family members as their first workers—compensating them once revenue begins rolling in.
Can an LLC hire employees?
Yes, an LLC can hire employees. It can also hire independent contract workers. Any business, regardless of its legal tax status, can hire employees. In fact, you can hire employees to work for you even if you don’t have a business, such as hiring a home health worker to care for an aging family member.
When should I hire my first employee?
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.
Getting clear on what you want an employee to do is the first step to great hiring. After that, it’s all about recruiting, selecting, and onboarding your new worker. Take your time to find the person most likely to be successful in the job based on their application, interviews, and references. Finding and retaining great employees to grow your business and promote your brand is the foundation of your company’s success.