Hiring employees for a small business is a big step. Creating and maintaining a successful small business requires careful hiring decisions. With the right team, your business will be able to reach its goals and objectives.
This guide is about small business hiring, including the steps you need to take to ensure you’re hiring the right people for your business. Learn about legal requirements, job posting, effective interviewing, and onboarding new hires. You will be able to confidently navigate the process of finding and hiring the best people for your business.
How to Hire in 2023
Whatever your hiring goals, there are a variety of options worth considering. It’s important to note, the structure of the labor market has changed in recent years.
The volume of freelance, part-time, and flexible work has grown as more employers are looking at new options to fulfill their hiring needs. Working with freelancers offers many benefits, though there are still benefits associated with traditional employment.
types of employment
If your hiring goals are
- Ease of hiring
Consider hiring freelancer workers.
The ability to bring people on and stop working with them quickly, all the while avoiding overhead costs like employee benefits and training, will serve your business.
If your hiring goals are
- Long term growth
- Someone who can tackle a variety of problems
- Improving quality of work
Consider bringing someone on either part or full time.
An employee who grows to understand your business and is loyal to your company will serve you well.
Benefits of freelancers
Hiring freelance workers can cost less, you can hire specialists, and can set it up so you only pay for results. In traditional employment, companies are expected to provide benefits such as health insurance, paid time off, and professional development opportunities.
The ease of hiring and releasing freelance workers helps mitigate risk. Traditional employment can be risky because so much time and resources are required to train employees. If the employee turns out to be a bad fit, sunk costs could be high.
Benefits of traditional employment
Of course, bringing on traditional full-time or part-time employees has advantages as well. While the flexibility that comes with freelancers can be a benefit, it can also be a detriment.
If you have a successful relationship with a freelancer, they can stop working with you abruptly, at the conclusion of any project or when someone else is willing to pay more for their services. While this can also happen with a full-time employee, the likelihood is much less.
The scope of what traditional employees can accomplish also tends to be broader than that of freelancers. Traditional employees know your business, and are more invested in it.
This means they are more able to tackle a wider variety of problems, and understand how to complete projects in a way which will specifically benefit your business. They are able to learn the style in which you want projects done, and your preferences for work. Freelancers, comparatively, are only able to utilize their specific skill in a vacuum.
Prepare Your Listing
Not a listing, an ad
To succeed in the job market, you need to offer attractive compensation and benefits. However, merely offering these benefits isn’t enough, you need to make them explicit in your listing.
It may seem simple, but many companies post vague, disorganized job listings which fail to make a compelling argument why someone should apply.
How are you supposed to stand out? Advertising strong benefits definitely cuts through the noise.
Aside from advertising your position, your listing must make clear the qualifications and requirements of your job. Doing this will deter unqualified applicants, meaning you spend time reviewing more serious candidates.
Your job listing should both communicate the necessary information about your job and convince the reader why you are a great business to work for.
Hybrid Or Remote Work
If possible, offer hybrid or completely remote positions. While there may be benefits to having employees come into the office, the economy is trending strongly towards remote work.
Jump started by the pandemic, remote workers now make up 26 percent of the workforce. It is viewed favorably by many employees, and dramatically increases the number of people who can apply to your position.
Before you post
It’s important to make sure your job listing is properly written and includes all the necessary information. Make sure to include details about the job, the responsibilities, and the qualifications, as well as the salary amount or range.
- Be specific in your listing
- Advertise compelling benefits
- Be concise
Best Places to Post
Indeed is the largest job board with millions of posts from around the world. It is a great resource to explore potential hires and post job openings.
Upwork is a freelance platform that connects businesses with independent professionals from around the world. It is an excellent resource for businesses looking to find specialized talent for short-term projects.
Handshake helps employers post jobs to reach a wider pool of applicants, as well as connect with college career centers. It also provides access to a vast database of student profiles, as well as resume and experience data.
LinkedIn is the largest professional network and their job board can help you find candidates with specific skills and experience.
Glassdoor is an excellent job board to find quality candidates. It also has a large database of reviews, making it useful to research potential hires if they’ve posted before.
Craigslist is normally used to find both permanent and temporary workers. It is free and easy to use, making it a popular choice.
ZipRecruiter is an online job board specifically designed for small businesses. It has a wide selection of options and allows you to quickly post jobs and connect with potential hires.
Post on Job Boards and…
Depending on the role, posting your listing on a job board may not be the only way to reach potential employees. Try utilizing your existing business network to find talent. Ask trusted colleagues or associates if they know anyone who would do well in the role.
Advertising your listing through connections in your industry can greatly increase the density of talented people who are aware of your job opening.
Select the Right Candidate
You’ve posted your listing, and the applications are flowing in. Now you need to narrow the possibilities to the people you’re willing to interview.
A good first step is to screen the resumes to eliminate candidates who aren’t qualified. After this, you likely will still have too many candidates to interview. Here are some steps to narrow the list.
Checking a candidate’s references is a necessary step in vetting them, but keep in mind that they put their references down for a reason. No one puts down the name of someone who they think will give them a bad reference.
This means simply asking if the candidate was a good employee will not cut it. Instead, ask specific questions about the candidate’s strengths and weaknesses. If possible, ask if they displayed skills which are relevant to your position.
Determining if a candidate will be a good fit can be impossible by looking at a resume alone. Most positions ask for some other materials to be provided in the application.
If you can ask for a work sample that is relevant to your listing or administer some sort of skills test, certainly do. This is the best way to eliminate candidates who won’t be capable of doing the job. If this isn’t sensible for your role, consider asking for some sort of writing samplen or project from a past job.
In order to fully understand a candidate, you must go beyond simply reading their resume. For instance, look up the GPA distribution at the school they attended. GPA averages vary wildly from school to school, so this will allow you to understand how they stacked up compared to their peers.
Look up their former places of employment, what is required to do their former roles, and how difficult they are to get. This will give you a more comprehensive understanding of their capabilities, as well as let you gauge their professional success.
A background check is a critical step in the hiring process for any company. It helps gain insight into an applicants past and can help protect the company from potential liability.
When performing a background check, use an accredited online service or a professional background checking agency. They’ll provide detailed reports that reveal relevant information about your potential hire. They also make it very easy, so don’t skip this step.
Ensure that the background check is compliant with the Fair Credit Reporting Act, which sets standards for how employers can use the information they receive. Lastly, make sure you only use the information you get from a background check for its intended purpose.
You’ve selected the candidates, now you have to conduct the interviews. The interview can be the most important part of the job application process, yet the vast majority of interviews fall into a similar rut of “what’re your strengths and weaknesses”, “where do you want to be in 5 years,” some polite small talk, and “do you have any questions for me?”
While these are not bad interview questions, all reasonable candidates will be prepared for them, usually with similar answers. This makes differentiating between candidates especially difficult. Here are some questions we recommend to make your interview distinct and useful.
How would your boss describe you?
This question not only allows you to gauge a candidate’s relationship with their boss, but how self aware they are. This is because when you checked their references you heard how their boss described them, so you’ll be able to see if their answer lines up with their bosses.
One fact not on LinkedIn or resume?
This question lets candidates open up about their lives, and share something compelling about themselves. While it’s critically important to hire someone who can do the job, it’s almost equally important to hire someone you’ll get along with.
This question can spark a conversation about something the candidate is passionate about, making it a good barometer for if you’ll want to talk to them on a daily basis. This also should be a question the candidate enjoys answering, making the interview a more positive experience.
One time your boss was wrong?
This question allows you to see how engaged the candidate was with their previous job. It also lends itself to the follow up, “what did you do about it?”
This allows you to see if the candidate is able to advocate for what is right and stand up for their opinions, while still being professional and respectful.
Why are you leaving your job?
While this question gives you a sense of what the candidate aspires to, it also gives you the chance about how your job is superior to their previous one. Remember, you’re always advertising your position and company!
- What could your current company do to be more successful?
- Tell me about a time you convinced someone of something?
- What do you find interesting about our business?
- What’s the most important quality in a companies culture?
After you finish with your questions, it is good interview practice to ask, “do you have any questions for me?”
Serious candidates should have some questions to ask you, so it’s important to be prepared for the common types of questions which arise.
- What advancement opportunities does this role have?
- What does success in this role look like?
- What does failure in this role look like?
- What’s one thing you wish you could change about your company?
It’s also important to be aware of your business’s reputation on employer information sites such as Glassdoor. If Glassdoor conveys working at your business in a particular way, this may come up in the interview. It is important to be prepared to effectively address it.
Make the Offer
Finally, you know which candidate is the best suited for the job. Now, you need to make an exciting job offer and bring them on board.
Time is your enemy when it comes to hiring. Not only do you want to fill the position as quickly as possible, you want to make your offer before the candidate accepts another. As soon as you’ve made the decision, begin the process of making the offer.
Begin by calling the candidate. Not only is a phone call a more meaningful form of communication than an email, it allows you to convey how excited you are about bringing them into your business. Be emotive, and be sure to compliment the candidate.
Follow Up in Writing
After your call, send them a written job offer. Make sure the written offer makes explicit their position, job structure, and most importantly their pay and benefits.
Your written offer should showcase your attractive benefits and compensation, and should again convey how excited you are to bring them into your business.
A fundamental truth of hiring is that no one you bring on is going to care about your business as much as you do. While you are always incentivized to make your business successful, your employees are often incentivized to do the work necessary to collect their wage while expending the minimal effort possible.
You can combat this by structuring a job which aligns your employees incentives with yours. For instance, if you operate a retail location and are looking to hire someone to help with sales, consider a commission-based payment structure.
10 Employee Incentive Structures
- Commission-Based: Offer a commission on sales or revenue goals achieved.
- Bonus-Based: Give a bonus to employees who meet or exceed certain goals.
- Time-Off : Reward employees with extra paid time off for meeting performance goals.
- Recognition Awards: Acknowledge and reward employees for exceptional performance or contributions.
- Gift Card: Give employees gift cards for meeting individual or team goals.
- Monetary: Offer employees cash bonuses for achieving goals or completing tasks.
- Stock Options: Give employees the opportunity to purchase company stock at a discounted rate.
- Public Recognition: Acknowledge employees’ successes publicly.
- Profit Sharing: Share profits with employees based on performance goals.
- Education Incentives: Provide educational resources or reimburse costs associated with furthering employee education.
Verify Authorization to Work
In order to hire someone, you are required by law to verify that they are who they say they are — and that they are legally authorized to work in the United States.
All US employers must properly complete an I-9 form for each individual they hire for employment in the United States. This includes citizens and noncitizens.
There are two options to go about this depending on the type of documentation your new hire has. Be sure to make copies of the documents for your records and to submit to the USCIS.
These documents establish both identity and employment authorization, so only one is needed.
Eligibility to Work in US
- US passport or passport card (unexpired)
- Permanent resident card
- Alien registration receipt card
- Unexpired foreign passport with an I-551 stamp
- An unexpired employment authorization card
- Unexpired employment authorization document with a photograph
- Unexpired foreign passport with Form I-94 containing endorsement of non-immigrant status
If they cannot present you with one of the documents above from Option 1, they must present two documents. One to verify identification, and another to verify their work authorization.
Document 1: Identification
- Current driver’s license with photograph or physical description
- Local, state, or federal ID card with photograph
- Voter registration card
- School ID card with photograph
- Military card or draft record
- Military dependent’s ID
- Native American tribal document
- US Coast Guard merchant mariner card
Document 2: Work Authorization
- Social Security card
- Birth certificate
- US citizen ID card
- Resident citizen ID card
- Unexpired employment authorization documents issued by Department of Homeland Security
- Native American tribal document
Employer Identification Number
Once you verify ID and authorization, to employ them you must have an Employer Identification Number (EIN).
An EIN allows the IRS to keep track of your business similarly to how they use SSN for individuals. To obtain one, your business must be located in the United States and you must have a valid Taxpayer Identification Number (SSN, ITIN).
You must get your employees social security number. If your employee does not have their social Security Card, the SSA offers a verification service.
You must also have a W-4 form on file for all your employees. When you hire someone make sure that they fill out a W-4, which will indicate if they want to withhold taxes from their income. If they claim they are exempt from income tax withholding, you must get a new W-4 from them each year.
Consider Outsourcing HR
In order to manage the challenges of hiring employees, many small businesses are now outsourcing many aspects of human resources including legal, benefits, and compliance.
Human Resources Responsibilities
- Recruiting and onboarding new employees
- Payroll and benefits administration
- Employee training programs
- Compliance with regulations
- Employee engagement initiatives
- Employee performance reviews
- Strategic HR plans
- Employee recognition programs
- Employee relations
- Conflict resolution
HR companies Can Help
HR outsourcing companies provide support to small business owners, helping them reduce costs, improve efficiency, and ensure compliance with local laws and regulations. These firms offer services such as recruitment, onboarding, performance reviews, payroll processing, and employee benefits administration.
By outsourcing HR functions, you can free up resources to focus on your core business activities.
Top Picks for HR Outsourcing
Bambee is an affordable HR outsourcing company that provides simple, streamlined HR solutions for small businesses. They provide you with a dedicated HR manager who will help you manage your employees and develop HR policies.
Bambee also helps you create job descriptions and gives you access to fundamental HR policies you can implement. Their pricing structure depends on the size of your business.
What we like best about Bambee
- Affordable pricing that scales with your business
- Designating an HR professional specifically for each client
Justworks offers a broad range of user-friendly services, including all the critical HR tools. They can manage payroll, onboard and terminate employees, and ensure you are compliant with all necessary laws. Justworks can also manage your tax and insurance filings.
Justworks is a Professional Employment Organization (PEO). This means they can use group buying power to allow you to provide your employees with benefits, including health insurance, at more affordable rates.
Justworks offers 24/7 support and pricing dependent on your needs.
What we like best about Justworks
- Excellent customer service / support
- Affordable access to important benefits
Related: 7 Best HR Outsourcing Companies
Closing Thoughts on Hiring
Hiring, especially in the current economy, is not easy. Considering what capacity you want to bring people in, how you can incentivize them to perform at their best, and what you can do to excite them about your business will lead to hiring talented people and successfully expanding your business.
For some small businesses, it may make sense to utilize an HR outsourcing company to streamline the onboarding of employees and manage your benefits. Bambee and Justworks are services we vetted and are happy to recommend for small businesses.
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