How to Hire Employees (in 7 Simple Steps)

  • Brandon Boushy by Brandon Boushy
  • 7 days ago
  • Blog
  • 0
People waiting for a job interview

Are you struggling with the hiring process? We have been building our team at UpFlip, and we wanted to know how to hire employees better.

We talked to Jessica Miller-Merrell, the founder of Workology to learn more about hiring and human resources. She started Workology in 2005 as an HR resource destination for small business owners.

Workology has been named Forbes Magazine’s top recruitment resource twice and helped major companies like Whole Foods, Home Depot, and AT&T optimize their talent acquisition and management processes.

You’ll learn:

  1. How to prepare to hire people
  2. How to create a job description
  3. How to screen applicants
  4. How to conduct an interview (and what not to do)
  5. How to provide a job offer
  6. How to onboard employees
  7. How to improve your employee retention

Step 1. How to prepare for the hiring process

Man working in front of computer

The first step in the hiring process is getting your business ready to hire. Preparing to hire employees will include the following process:

  1. Establish what positions you need to hire.
  2. Get an employer identification number (if you don’t already have one).
  3. Create an employee handbook.
  4. Establish employee benefits.
  5. Implement a payroll system.
  6. Purchase workers’ compensation insurance.
  7. Get workplace posters.

Establish what positions you need to hire

The first step of the hiring process is establishing your needs. Jessica told us:

The best way to establish what positions you need to hire for is to break your days into 30-minute windows and keep track of what you do each day.

Check out our interview with Jessica below:

Once you have an accurate portrayal of what you spend time doing, you have a basis for the desired skills you need. During this time, you might also want to consider questions like:

  • Should you hire hourly vs salary employees?
  • Can you hire independent contractors or freelancers?
  • Is it reasonable to expect one person to have all the specialized skills you need?
  • What software are you consistently using?
  • What is your company culture like? What type of person will fit well in it?
  • Does the employee need to be on-premises, or can you hire remote employees?
  • What is your company culture like? What type of person will fit well in it?

Jessica suggested reading Never Split the Difference by Chris Voss. She told us it changed how she interacts with her family, friends, employees, and clients.

She also warned that you should consider what industry the position is in.

Each industry has different challenges

Jessica told us:

Tech is still going strong.

She also mentioned that seasonal hiring for positions like customer service are still going strong.

Unfortunately, many other industries are finding it hard to hire employees quickly. Jessica specifically said that the following fields are having difficulty finding qualified candidates:

  • Logistical 
  • Healthcare
  • Education

If you are hiring employees in these fields, make sure to make the hiring process as quick as possible, and give job candidates the best you can give them.

Get an employer identification number (EIN)

Screenshot of IRS website

You’ll need an EIN if you don’t already have one. It is what you’ll use for paying employees’ social security and income taxes. You have to apply for your EIN on the Internal Revenue Service website during normal business hours.

Create an employee handbook

When you hire employees, you’ll want to provide an employee handbook to help them better navigate the onboarding process, company culture, and work environment.

An employee handbook can be physical, electronic, or even video. Jessica suggests using a video before the first employee interview to help applicants learn about the company. She also told us if we are completely honest about the workplace culture and the job descriptions, some applicants will eliminate themselves and make finding the right candidates much easier.

What to include in a handbook

A good employee handbook will include:

  • Mission statement, company culture, and values
  • Information required by an HR professional and legal professional
  • Paid time off, benefits, and non-discrimination policies
  • Obligations and rights of employees
  • The company’s expectations of employees
  • Commitments the company makes to employees
  • Link to the full company policies (I once had to review thousands of pages for an employer regarding complex legal requirements. Major corporations and franchises have a policy for almost everything. If you have contacts within major corporations, ask their HR and legal departments how they handle it.)

Workology has five blogs about items every company should have in their new employee handbook. Go check them out for a deep dive into this part of the hiring process.

Establish employee benefits

Screenshot of SHRM website

You can’t ignore your benefits package when attracting a new hire. The Society of Human Resource Management has an excellent resource about the benefits that companies offer. The best candidates are likely to expect:

  • Healthcare
  • Paid time off
  • Remote work options
  • Paid leave to care for kids and aging parents

Do you offer all these? You might struggle to attract a new hire if you don’t. Which job offer would you accept:

  1. Great insurance and 20 days of PTO per year
  2. No benefits

Unless you pay employees obscenely, they probably will go for the first one.

Implement a payroll system

Hiring your first employee means you need a payroll service. Jessica suggested looking into the following providers:

  • ADP
  • Gusto

Many of the systems offer more than just payroll. Choosing one that works seamlessly will help you during the interview process, reviewing new hire paperwork, paying employees, and documenting reviews. You can learn more about payroll providers in our blog about the 15 best HR companies.

Purchase workers’ compensation insurance

You’ll definitely need workers’ compensation before you hire new employees. This protects you if they get hurt on the job. Check with your business insurance provider; they should offer workers’ compensation.

Get workplace posters

Screenshot of webapps website

Every employer is required to display workplace posters at every location. Use the FirstStep Poster Advisor to find which posters you need before you hire workers.

Step 2. How to create a job description

Another key step in hiring someone is writing job descriptions. You’ll want to include the following aspects in a job description:

  • Company Information: Tell people about your company. It helps you find the right candidates.
  • Job Title: Include the official title the new employee will have.
  • Salary: Many job boards will autofill this information if you don’t include it.
  • Job Description: Be clear about the activities the new employee will perform.
  • Essential Abilities: What skills and software should qualified candidates know before starting?
  • Preferred Qualifications: Give examples of experiences that an ideal candidate would have but aren’t essential candidate’s skills.
  • Metrics: How you will measure the performance of the new hire.
  • Why Choose You: The right candidate will make your company better than it currently is. Work to convince them that what they get from the deal is worth it; otherwise, you get deadbeats who just want to do a job and leave when they clock out.
  • Locations: Where is the job located? If you want job seekers from a specific location, include it in the description.

Jessica recommended several important considerations when writing the job description. She suggested:

  1. Be transparent. You don’t want to waste your time or anyone else’s. Build it based on search engine optimization best practices.
  2. Write your job descriptions using Search Engine Optimization best practices.
  3. When comparing employee and business desires, employees want to work from home at a rate three times higher than business owners want to allow. If you can, allow remote work. Jessica specifically said:

I’d rather work from the beach than drive to the office, and so would everyone else.

Step 3. How to find employees to hire

Searching-for-an-employee-illustration

We can’t discuss how to hire employees without discussing where to find them. Some of the most popular ways of finding new employees include:

  • New hire referral programs
  • Social media
  • Job sites
  • Recruiters

Try referral programs

Hiring for a small business will normally start by asking employees for referrals. In fact, when an employee refers new hires, the candidates are:

  • Four times more likely to be offered the job.
  • Five percent more likely to accept the job offer.
  • Nearly twice as likely to stay for over four years.

Best of all, the hiring costs are normally $1,000 less than other recruitment methods.

Jessica told us she normally encourages offering a $400 bonus to the employee who refers a new hire. Half is given upon completing the employee onboarding process, and the rest after they complete the probationary period. She warned about problems with referral programs.

These do not create good diversity, but they stick around longer, that’s called retention.

Alumni programs work similarly and can be helpful because any former employee that would refer someone to a company thinks highly of the company.

Post on social media

Jessica pointed out that hiring remote employees is easy on social media. She suggests:

Ask where your employees spend their time and consider posting there.

TikTok is one platform that doesn’t have a ton of competition looking for new hires. She also says your marketing team will love the opportunity to post jobs because it’s something different.

Check out Chili Piper’s TikTok videos:

Screenshot of tiktok website

TikTok employees are remote, and it doesn’t cost anything to create the videos they use for job postings.

Jessica also suggested asking 10 people to share your social media posts to help them gain traction as you hire new employees.

Don’t forget to post on all the standard job boards

Job boards like Indeed, the state employment agency, and other sites are great places to seek job applications. These platforms can also help you with other tasks while hiring a new employee.

For instance, Indeed’s skill tests are written by industry professionals. They get a team of people who have managerial experience or three years of field experience to write the questions and then have other professionals review them.

They even have people without experience in the industry take the tests to get a baseline of what a reasonable score will be when you guess. I’ve participated in all the different roles used to develop surveys because of my diverse job history and educational background. These surveys really will help you find the right person.

Work with recruiters

Recruiting staff can be challenging, but recruiters know how to hire employees for a small business. They do it every day. Jessica told us;

I like to have a roster of passive job hunters so that when I need to hire someone, I know that I have qualified candidates.

Recruiters are normally for higher paying jobs, but if they operate as a staffing agency, they may handle other roles like:

  • Performing a background check
  • Reporting to each state’s labor department
  • Withholding taxes
  • Workers’ compensation
  • Paying the Social Security Administration

Don’t write off this option when you hire a new employee just because it’s more expensive.

Step 4. How to screen applicants

Screenshot of selectsoftwarereviews website

Screening candidate applications is a matter of matching their skill sets to the job description. In my experience, it’s a mix of art and science. An ideal candidate will be a mixture of personality, skills, and reliability.

Jessica didn’t discuss how to screen applicants before inviting them to an interview, but she suggested some ways to eliminate people from the new hire applicant pool, including:

Pay attention to when they arrive and how quickly they respond to text messages.

Have people watch a transparent video before an interview. If you can scare off undesirable applicants, it makes your job easier.

You can use software to match applicants’ resumes to keywords in your company’s mission and job responsibilities. Select Software Reviews ranks their favorite applicant tracking systems.

Be careful with these because companies recommend copying the job’s responsibilities, changing them to 1-point white font (to be invisible to the naked eye), and attaching them in the footer to be able to get high matches with these systems.

Next, we’ll discuss interview questions hiring managers should and should not ask.

Step 5. How to conduct an interview (and what not to do)

Man having an interview meeting

As a small business owner, you will probably perform the steps in the hiring process until you grow enough to need a hiring manager. You’ll conduct interviews, and you need to know how to hire an employee without breaking labor laws.

We’ll cover:

  • Starting the interview
  • Good questions to ask
  • Illegal questions to ask
  • Resources

Nothing I say here should be considered legal advice for employers. I am not a licensed HR professional or an attorney.

Starting the interview

Congratulations! You found some people you want to interview. Make sure someone is available to greet people. Hire a temporary worker if necessary, so someone is there to lighten the mood while they wait. Make sure you note when they arrive because it tells you whether they normally:

  1. Arrive early: 15–30 minutes early likely means they believe if you’re not early, you are late.
  2. Arrive on time: 15 minutes early to two minutes late means they believe in being on time.
  3. Arrive late: If you are waiting on them, they likely have a diva mindset. They might view their time as more important than yours. I’d thank them for coming out, but I don’t appreciate the “fashionably late” mentality.

I’m not saying everyone should follow this rule, but it’s easy to rule out people. If someone is always early and views timeliness as respect, do you want to hire them if you’re always late? Probably not. It will cause unnecessary conflict.

Don’t intentionally stress people out with a long wait. You might lose your best candidate because you were disrespectful.

I’ll leave if someone does not acknowledge I’m there within 15 minutes because I have seen every corporation in the world use this strategy. You aren’t that busy. You know you are interviewing people, and you are setting the tone for the entire relationship.

Ask good questions

Jessica told us:

I like to ask ‘tell me about a time…’ questions.

Personally, this type of question frustrates me.  We all know that when we respect and have fun with our coworkers, businesses perform better. Skills can be taught so I’d prefer to connect and have a real conversation during interviews. Let’s talk about:

  • Our weekends.
  • Where the industry is going.
  • Our interests.
  • Where the company is going.
  • How we can create a mutually beneficial scenario.

Ask open-ended questions, but make them meaningful

Jessica also told us:

Don’t ask questions like, ‘What word would you use to describe yourself?

Basically, she is suggesting open-ended questions because the goal is to:

Help them get comfortable. I had one top candidate tell me they believe it is against their constitutional rights to wear a seat belt. That immediately disqualified him from the driving position.

You have to be careful; otherwise, you’ll fall into the next category.

Congratulations! You get to deal with the Labor Board!

Screenshot of eooc.gov website

Have you heard the term equal opportunity employer? It means you do not discriminate “because of race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information” when you hire.

New employee questions should avoid asking about:

  • Race
  • Age
  • Marital status
  • Sexual orientation
  • Transportation (except for a reliable way to get to work)
  • Health conditions

Personally, I would like to see these removed from all applications.  It’s an easy way to reduce employment discrimination. Currently, some applications still have workarounds that can lead to discrimination, like this one below that asks for when you graduated high school. Asking for the date of high school graduation can help you establish that anyone who graduated before 1980 is most likely a protected class. If you don’t have that question, you are less likely to discriminate based on age.

Employment job application form

Thoroughly read the Equal Employment Opportunity Commission’s prohibited practices before interviewing people so your first hire doesn’t turn into a lawsuit.

Step 6. How to hire the right employees

When you are ready to make an offer, it’s normally best to do it in writing. You’ll want to include:

  • Title: You should have this match the title on the job description.
  • Start Date: The first day of work is when the employee starts the job.
  • Pay: Specify the amount and payment frequency. Make sure it is over minimum wage.
  • Type of employment: Specify whether the offer is hourly, full-time, part-time, contract and duration, or for an independent contractor.
  • Benefits: List any additional compensation like PTO, health care, etc.
  • Intellectual property (IP) guidelines: Specify how intellectual property is used. Who owns it, how can previous IP can be used in the company services? These are mostly in tech-related concepts.
  • Non-compete agreement (if applicable): Use these sparingly. Unless the employee has enough information to destroy your company by selling it to a competitor, you probably don’t need these. Here’s a non-compete template.
  • Non-disclosure agreement (if applicable): Use a Form to prevent sharing insider information. Disclosing this information could be a violation of security laws. It also can harm the company. These are fairly standard practice.

Step 7. What to do after hiring employees

Legal forms on top of table

Once the employee accepts the offer, you’ll need to perform background checks, collect tax forms, and get their banking information. You’ll need these essentials:

  • W-4 form: Employee fills this out to specify how to withhold taxes. A W-9 is for tax purposes for independent contractors. These are necessary to calculate payroll taxes and income tax and send employment taxes to the federal government.
  • I-9 form: Submit to the federal government to prove employment eligibility.
    • E-Verify system: Verify employee eligibility in the U.S. without any paper.
  • State tax withholding form: If your state has an income tax, you’ll need to provide employees your state’s tax agency form.
  • Direct deposit form: You’ll need to provide a direct deposit form to know how to pay an employee.
  • E-Verify system: This is not a form but a way to verify employee eligibility in the U.S.

Bonus Step: How to improve your employee retention

If you’re having problems retaining employees, look at your business to see where you can improve. You may want to:

  • Improve your benefits package.
  • Pay more.
  • Recruit staff.
  • Add transparency to the steps of the hiring process.
  • Perform exit surveys.

Jessica suggested:

If you are hiring lots of people, you may want to implement hiring automation software, but that is only beneficial if you need to hire five or more people consistently.

She also said she specifically looks for restaurant management experience because restaurant managers are quick on their feet and have to deal with problems on the fly.

Friendly Reminder About Hiring

Small businesses hire employees that help make their business better. You give employees a paycheck, while they give you the majority of their waking life. I promise you we cannot pay employees enough to thank them for that. Help them believe they are part of something bigger.

At this point, you know how to hire employees for small business operations. There are numerous legal considerations and tax advice considerations that only professionals in the employment field can answer. Make sure to consult the proper profession.

If you have questions about other types of employment arrangements, we’ll answer some frequently asked questions next.

Frequently Asked Questions About Hiring

How to hire 1099 employees

1099 employees are more commonly referred to as independent contractors or subcontractors. Companies will try to skirt costs by considering all employees 1099 workers, but there are hefty fines if the federal or state labor agency establishes you were skirting tax laws. You’ll want to follow the steps in this blog including:

  1. Prepare to hire people. (You won’t need to do tax deductions.)
  2. Create a job description.
  3. Find applicants.
  4. Screen job hunters.
  5. Interview potential candidates.
  6. Offer the best candidate a job.
  7. Onboard employee. (You’ll use a W-9 instead of a W-4.)

Check out our interview with Bernard who runs Busy B’s Barber Shop. He rents chairs to other barbers to increase revenue and doesn’t need employees because each chair is its own business.

How to hire your first employees

Before you hire your first employee, you’ll need to focus on Step 1 of this blog, which includes:

  1. Establish what you need to hire employees to do.
  2. Get an EIN if you don’t already have one.
  3. Create an employee handbook.
  4. Establish a benefits package.
  5. Get a payroll provider. 
  6. Purchase workers’ compensation.
  7. Get workplace posters.
  8. Follow the rest of our guide.

How to hire employees for a startup

Hiring startup employees can be more challenging because they may need to fill a variety of roles. You’ll want to follow the same basic process with considerations on:

  1. Prepare to hire people. (Consult a lawyer about alternative forms of payment.)
  2. Create a job description. (Make sure to include information about the alternative payments.)
  3. Find applicants with diverse backgrounds.
  4. Screen job hunters.
  5. Interview potential candidates and make sure they understand the pay. Have a lawyer advise you regarding communications if you plan to offer pay in stock (because you can’t ask about their finances).
  6. Offer the best candidate a job.
  7. Onboard the employee.

How to hire diverse employees

It can be difficult to hire diverse employees because people tend to refer employees who are like them. Try some of these tips to hire a more diverse workforce.

  • Go to college job fairs.
  • Use TikTok to find employees.
  • Ask minority influencers to help you find candidates.

How to hire part-time employees

If you can, I’d suggest looking at the 1099 employees and selecting freelancers for all positions that you can have work part-time and remotely. If they cannot work remotely, you’ll follow the process in this blog. Just make sure to take the following considerations into place:

  1. People spend time getting ready for work, going to the location, and going home. Let them choose how they want to get their hours. They might prefer six 4-hour days or three 8-hour days, and with a little creativity, you can work with that either way.
  2. Make sure to keep their shifts consistent. Unless you are paying them $5K per month for part time work, they need a second job.
  3. The quality of employees is equal to the quality of treatment. They know you are hiring part time to avoid benefits. Be nice. Seriously. Low-paying jobs tend to be customer-facing. That means they deal with rude people all day long. Treat them well. Otherwise, they’ll run away like an ostrich.

Ostrich-on-highway-running-away

Then they quit, and you are in a worse position.

How to hire temporary employees

Seasonal or temporary employees are commonly hired in retail, tax services, and other seasonal companies. There’s nothing wrong with hiring people temporarily, but be disclosive about how it will work. Before you start temporary hiring, check the state unemployment laws. Each state has different thresholds for when unemployment insurance starts. 

When you hire large groups of staff, you want to time it where you don’t pay months of unemployment insurance to all the temporary hires. While paying unemployment is less than paying their full wages, it’s better to have the temporary job stay below the minimum time or monetary conditions. 

How to hire good employees

Hiring good employees is simple: Give them a good place to work. What qualifies as a good place to work?

  1. Industry-leading pay: Just disclosing your pay for each position improves your success. In Colorado, job postings dropped by 8.2% while the participation rate increased by 1.5%. If you really want to lead your industry in pay, the average 1-bedroom is $1,326 per month and people have to make three times that ($3,978 or $24.86 per hour). I know that sounds crazy, but at those wages, you’ll be getting much better candidates. Even $2 over the median pay will normally lead to better employees.
  2. Generous time off: People have lives. They have stuff come up. We all know we don’t own our employees, but sometimes we get so focused on our own problems we forget to be compassionate about others. If you fall into this category, it’s your responsibility to train yourself to be more compassionate. It’s hard. I struggle with it every day, but we have to try to be good to those around us. Don’t make them beg for time off.
  3. Remote work when possible: Many positions don’t require people to be in the same space. If they can work from home, let them. You just need systems that make it easy to do so. The additional costs should be made up by better efficiency.
  4. Don’t skimp on benefits: Let people choose the benefits that are right for them. With medical insurance, don’t offer minimum wage employees plans with $10K deductibles. They are unusable.

How to hire international employees

Screenshot of travel.state.gov website

If you are hiring international employees, they will need a work visa. You are allowed to ask if they are legally allowed to work in the United States, but not if they have a work visa, which requires a sponsor. If they require sponsorship, you’ll have to choose the proper sponsorship amongst 11 options. The most common are the H1B1, H2A, and H2B. You can find out more on travel.state.gov.

How to hire remote employees

Hiring remote employees is easy. There are a ton of platforms including:

  • Upwork
  • Freelancer
  • Fiverr
  • Toptal

Upwork has a list of more than 20 freelancing sites. You can hire freelancers for short-term and long-term and fixed-price or hourly contracts. This gives you access to a global pool of talented job candidates that have been ranked by other professionals.

What Part of the Hiring Process Do You Find Most Challenging?

Now you know how to hire employees. Is there a specific part of the process you find challenging? What aspect of hiring would you like us to write more about?

Join The Discussion

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