Help Wanted

February 6, 2014

Steps to take when hiring new employees

When you first started out, you were excited to take on lots of work. When you got home at night, you would catch up with the paperwork and see whether you were still on track with the business plan you wrote on a napkin at the diner that one night. Remember the plan? The one where you have a successful business and more free time? Now things are a little different: You are consumed by your business and spending long days trying to keep up with the work.

People like you and appreciate your personal touch and the fact that you really care about their water, but that personal touch is keeping you away from your loved ones. You are working more for your business than it is working for you. If this sounds familiar, then it is definitely time to make a change. 

The thought of hiring help is intimidating to many entrepreneurs, because it means allowing someone else insider access to your business and trusting this person to interact with your clients. This should not be a scary subject, however, especially when approached pragmatically.

When I coach dealers on situations like this, we start with three important questions to help us decide whether to outsource a project or hire an employee:

  1. 1. Why do I need help?
  2. 2. What help is needed?
  3. 3. How long do I need the help for?

In today’s economy, outsourcing makes sense; you are able to bring in an expert for a defined amount of time without a long-term commitment to salary and benefits, which delivers operational efficiency while saving money. Outsourcing is not the answer for everything, however. The biggest negative of outsourcing it that the person you contract with has other clients as well, and you sometimes will have to wait your turn before things get done. Outsourcing is common for the following tasks:

  • Telephone answering; 
  • Bookkeeping;
  • Marketing;
  • Web design;
  • Online presence monitoring and promotion; and
  • Plumbing and installation.

If the help you need requires complete schedule control, and is not realistic to outsource (such as a service technician), then it is time to take the plunge and hire an employee. 

Do not fall into the trap of “scope-creep,” where the employee eventually becomes a “gofer” for his or her disorganized employer. To prevent this problem, look at what you do in your business right now, and what you expect yourself to be doing once your new employee is hired. More importantly, limit yourself to where you are truly the most effective and do not micromanage, to empower the new employee to succeed. Write down what the job will entail, including:

  • Compensation;
  • Time commitment (for the employer and employee); and
  • Responsibilities and skillset required.

Advertising the Position

If you want good candidates, you have to sell them on investing their time and labor in your organization. Just as you get some of your best sales leads from referrals, look inward to your network of friends, family, associates, mentors, industry peers and existing employees for recommendations. After looking inward, advertise the position in trade journals and online.

Interviews & References

When you interview a candidate, remember that it is a two-sided affair: Do not be surprised or offended if the candidate has as many questions for you as you do for him or her. Checking into your potential new hire’s background is normal, and it is acceptable to verify education and prior employment history. Be careful, however, not to ask questions about age, race, religion, disabilities (unless they have a bearing on the candidate’s ability to do the job and require special accommodations), national origin, religion or marital status, as they are considered possible forms of employment discrimination. Pre-employment drug screening is appropriate, but a discussion about the candidate’s use of legal pharmaceuticals is not.

Recordkeeping

Three important things are required for recordkeeping when it comes to employees.

First is federal income tax withholding. Every employee must provide an employer with a signed Form W-4 (Withholding Allowance Certificate) on or before the date of employment. This form is used internally by the employer and does not need to be submitted to the Internal Revenue Service, but must be retained for at least four years.

Second is the Federal Wage and Tax Statement. Each year, employers must report wages paid and taxes withheld for each employee to the federal government. This report is filed using Form W-2 (Wage and Tax Statement). Employers must complete a W-2 form for each employee to whom they pay a salary, wage or other compensation. Remember to send Copy A of all W-2 forms to the Social Security Administration by the last day of February to report the wages and taxes of employees for the previous calendar year. In addition, send copies of W-2 forms to employees by Jan. 31 of the year following the reporting period.

The final item is state taxes. Depending on the state in which your business and employees are located, you may be required to withhold certain state income taxes.

Additional Requirements

Federal law requires employers to verify an employee’s eligibility to work. Within three days of hire, employers must complete Form I-9 (Employment Eligibility Verification) to confirm the employee’s citizenship or eligibility to work legally in the U.S. You can only use the documentation specified on the I-9 form to verify eligibility. You do not need to submit the form, but should keep it on file for three years after the date of hire or one year after the date of termination, whichever is later. 

You also need to register with your state’s new hire reporting program. All employers are required to report newly hired and rehired employees to a state directory within 20 days of their hire or rehire date.

All businesses with employees are required to carry workers’ compensation insurance coverage through a commercial carrier, on a self-insured basis or through their state’s workers’ compensation insurance program.

Employers also are required to display certain posters in the workplace that inform employees of their rights and employer responsibilities under labor laws. 

Grow That Business

Hiring an employee means an increase in monthly expenses, but it also will free up some of your valuable time, allowing you to dedicate more of it to strategizing, marketing and executing your business plans. Get out there and grow your business! 

Greg Reyneke is managing partner for Red Fox Advisors and an adviser to the ProFlow Dealer Network, a Pentair Platinum Partner. Reyneke can be reached at gregreyneke@redfoxadvisors.com.

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