Your small business is growing, and it’s time to start hiring employees. Congratulations! This is an exciting milestone and a sign of your success. However, figuring out where to start and who to hire can be overwhelming. In this post, we’re outlining a step-by-step guide to small business hiring so you can fill your team with great people and continue your forward progress.
16 Steps to Hire Employees for a Small Business
1. Identify your needs
If you’re thinking about hiring, you’ve probably already identified some of the gaps that are keeping your business from growing as quickly as it could. Whether you require more labor to keep up with rising demand or you need to offload specialized tasks so you can focus more on generating new business, identifying growth bottlenecks is a great starting point for defining your hiring needs.
Additionally, consider your future goals and what needs will arise as you work toward them. If, for example, you know that you’re planning on hiring three new salespeople pretty soon, you’ll also need a manager to lead your growing sales department. Similarly, if you’re growing beyond a handful of employees, you’ll likely want to hire dedicated team members to tackle specific aspects of the business, like accounting and HR.
2. Decide what kind of employees to hire
Do you need to hire a full-time employee, or can your needs be fulfilled with a part-time or contract worker? Full-time employees may be more productive and engaged with the job, but they also come with a higher threshold of employer costs, like taxes and benefits.
Part-time employees can be great for adding additional coverage to your existing schedule, while contractors can help you access technical skills like marketing or bookkeeping at an affordable price. Considering all types of labor will help you balance your operational needs and your budget.
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3. Get set up with a payroll service
Payroll is something you really, really do not want to tackle on your own as you add team members to your small business. Getting set up with a payroll service provider early in your hiring journey will save you a mountain of stress and hassle in the long run, not to mention ensuring you’re in compliance with the pertinent tax and labor laws.
A payroll provider facilitates the process of paying employees, calculates and deducts the correct tax and benefit amounts from their paycheck and your bank account, and files the required reports with the proper agencies. There are dozens of payroll services out there to fit your size and budget; Gusto, Paychex, and Quickbooks are a few popular examples.
4. Set your hiring budget
Consider what you’re able to pay a new employee. Remember that while a more experienced worker will require a higher salary, they may be able to handle more diverse tasks and serve as a leader to subsequent hires while requiring less training than a recruit with less experience. You’ll need to weigh the costs and benefits of hiring various experience levels.
As you establish a budget, remember to account for back-end costs. If you plan to pay an employee $4,000 a month, the actual cost may be closer to $5,000 a month once you factor in all of the required taxes and benefits (more on this in a moment). You’ll also need to account for hiring-related costs like advertising fees and any recruitment marketing materials you produce.
Related: Tips for Managing Your Recruiting Budget
5. Know what you’re required to cover
It’s important to understand the business costs associated with hiring and employing workers. These will vary by location, but here’s a general overview of what businesses are required to pay.
- Social Security tax. The employer’s share is currently set at 6.2% of wages.
- Medicare tax. Employers are responsible for contributing a portion of the tax equal to 1.45% of wages plus an additional amount for salaries over a certain threshold.
- Unemployment insurance. All U.S. states require employers to purchase unemployment insurance at some level, but the minimum requirements vary by state.
- Worker’s compensation insurance. Texas is the only U.S. state that does not require employers to purchase this.
- Disability insurance. Required in California, Hawaii, New Jersey, New York, and Rhode Island.
- Health insurance. Most companies with 50 or more employees are required to provide affordable health insurance coverage.
Consider using an insurance and benefits broker to help you navigate the requirements in your location.
6. Outline desirable traits
While skills-based hiring is the best way to ensure you hire someone technically equipped to do the job, personality matters a lot when building a strong, cohesive culture. This is especially important for small businesses, as your initial hires will set the tone for your organization’s culture as it grows.
Before you start taking applications, think about the culture you want to create and the types of people that will contribute to it. Consider personality, values, motivations, and work style. Include your list of desired characteristics in your assessment criteria for candidates.
7. Create your job listings
Accurate job descriptions are key in attracting the right candidates and retaining employees long-term. Write concise, descriptive job listings that clearly communicate the duties your new hire will be expected to perform.
Outline the attributes that make your company unique and highlight what candidates must gain from joining your team. For example, working for a small business can be attractive to candidates because job duties are often more flexible than being a cog in a wheel performing very rigid tasks at a large corporation.
Related: How to Write a Job Description
8. Use the right recruitment channels
As a small business, you might not have people beating down your door to apply for jobs. As a result, your first instinct might be to post your openings far and wide to attract as many candidates as possible. However, this isn’t always the best strategy. While public job boards will help get the word out, they also tend to attract a lot of unqualified applicants, which can create more work for you.
Instead of (or in addition to) job boards, consider recruitment channels that are more specific to the type of candidates you’re looking for: LinkedIn for skilled professionals, portfolio sites for creatives, events for people in your local area, and so on. Prioritize referrals from people within your network, as referrals consistently produce some of the most successful hires.
9. Create a shortlist
This is a list of the qualified applicants you want to interview. To create a candidate shortlist, begin by filtering out the applicants who don’t meet your minimum requirements. From there, identify the candidates whose qualifications, experience, and credentials most closely align with your needs. Contact these applicants to let them know you’re interested and to schedule interviews.
10. Determine how you’ll assess shortlisted candidates
Rather than just going with your gut (which is a common hiring mistake), identify the correct traits and capabilities by establishing a concrete set of assessment criteria. Develop interview questions that are tied to the requirements you outlined in the job description. Use interview scoring sheets to help you keep track of and compare candidates. Determine how many rounds of interviews you’ll conduct and who will be responsible for each round.
11. Conduct interviews
This is notoriously the longest step in the hiring process because so many people are involved. You not only have the back and forth between the hiring manager and candidates to find a mutually agreeable time, but you also have multiple candidates at play. If it takes a while to nail down an interview for one of your top applicants, the others are left hanging in the breeze and may drop out of the running in the meantime.
This is why scheduling and conducting interviews as promptly as possible is important. Use technology to automate the scheduling process, and consider alternative formats like one-way interviews that candidates can complete at their convenience.
12. Compile feedback
Assemble the input from everyone participating in the hiring process. Use your interview notes and scoring sheets to compare candidates. Contact references to learn more about candidates’ performance, attitude, and personality. Based on this information, you should strongly know who you’d like to join your team.
13. Make an offer
As soon as you’ve made a decision, call your top finalist and offer them the job. Follow up with a written offer letter that includes all the details, like salary, start date, and benefits.
Be prepared to negotiate. Great candidates are likely interviewing with multiple companies, and you may need to pull out all the stops to get an accepted offer.
Related: How to Extend a Job Offer (With Template)
14. Complete new hire paperwork
Send your new hire the necessary paperwork, like form I-9, which verifies a new hire’s identity, and form W-4, which tells you how much tax you must withhold from the employee’s paycheck. If possible, complete this step before their start date so their first day of work can be spent on more job-related tasks and less admin.
This is another aspect of hiring small business employees where a payroll service proves its worth. Many services manage the full scope of new hire paperwork so you can check all the required boxes without missing anything.
Related: New Hire Checklist
15. Plan for onboarding and training
New hire onboarding shouldn’t be an afterthought; even for small teams, it’s an important step in creating a positive candidate experience and setting new employees up for success.
Share a plan for each day during the new hire’s first week with them. To integrate your employees, use a mix of formal training, engaging materials like videos, team activities, and one-on-one shadowing.
16. Consider the candidate experience
An important thing to consider throughout all the steps above is the candidate experience: what does your hiring process feel like from the applicant’s point of view? This not only influences whether they’ll remain in the process and accept a job offer if they receive one; it also defines your employer brand and can help or hinder future hiring efforts.
Here are some of the things that impact the candidate experience:
- The user-friendliness of your application
- The messages you send to candidates during each phase of hiring
- How fast you respond to candidate inquiries
- Whether you provide regular updates
- Your transparency about the status of the opening
Even if you’re only hiring a handful of employees right now, focusing on a great candidate experience at this early stage of your growth will help you build a stellar reputation that makes it easier and faster to hire down the road.
There are many great things about working for a small business. Using these selling points to your advantage while focusing on the skills and qualities you’re looking for will help you make accurate, high-performing hires for long-term success.
