There comes a point for many business owners when they can’t manage to do everything themselves and they need to employ staff.
Taking on someone to deal with day-to-day tasks is a common reason for making your first hire.
It’s the initial step in building a workforce and a key element in growing a business.
As your business grows, hiring the right staff with specialist skills can help you generate more customers and operate in new markets.
Recruiting people into your business has many positives, but growing a team isn’t without its challenges.
Finding the right individuals, complying with employment law and working out how much you can pay are among the issues you need to tackle.
Learn more about the role of a manager in our free Managing and managing people course. As part of our Learn with Start Up Loans partnership with the Open University, our online course is free to join, delivered by experts and includes a free statement of participation on completion.
Who do you need to hire?
Before hiring someone, you must work out why your business needs them.
Recognising the weaknesses and gaps that you and your business have is key to ensuring that you find good staff.
If you’re employing someone to handle basic admin such as email, answering phone calls and managing meetings, does it, for example, need to be a full-time or part-time role?
If you’ve identified a need for more specialist skills such as sales, marketing and IT, think about the exact requirements you’re looking for in your ideal employee.
The right person should not necessarily be the most qualified person who applies.
They need to be the person who adds additional skills or capacity to your team.
You don’t want someone who compliments you, you want someone who compliments your skills.
If you are all about broad-strokes and bigger pictures, then employing a data-driven perfectionist may provide the perfect balance.
When employing staff for small businesses consider “soft skills”
Soft skills are communication skills, emotional intelligence (EQ) and interpersonal skills.
These kinds of social intelligence matter even if you are not hiring a new employee for a customer-facing role.
A sparkling CV won’t tell you about punctuality and flexibility – factors that matter just as much as a strong academic background.
Judging soft skills is not easy, but a good interview process can help identify the candidates with the best soft employability skills.
Working out what to pay employees
Money and salary undoubtedly have a role to play in the employment process.
Paying your employees a good wage can ensure you attract the best talent but you must then make sure you have enough money to pay them.
Consider different scenarios, such as full-time, part-time and fixed contract staff, and calculate how much you need to pay, factoring in National Insurance and pension contributions as well as National Minimum Wage/National Living Wage requirements and any training costs.
Work out how much additional revenue your company will generate with the extra resource the new employee provides.
As a start-up, you may not be able to match the salaries of bigger competitors.
But consider what other benefits you can offer to attract employees.
That might include days off on their birthday, social events, access to technology or equity in your business.
Recent studies have shown that motivation, increased responsibility and building a workplace that inspires employees can be just as powerful a tool in attracting new employees.
How to find potential recruits
You have several options for finding employees, including using professional agencies or handling the process yourself.
Whether you are using social media, local newspapers or online sites, these channels are all likely to have a narrow audience.
Expand your search and include your job description in multiple channels to make sure the right person hears about the role.
For high-skilled roles, LinkedIn can be useful for establishing past experience prior to interview.
However, online job boards are still rated by employers as offering the highest-quality candidate for entry level positions.
- Recruitment agencies – Using a recruitment agency can be effective as it saves time and effort. However, it will be more expensive than doing it yourself, which can be an issue for start-ups with limited budgets.
- In-house recruitment – If you decide to handle recruitment yourself, a cost-effective method uses the professional online network LinkedIn. You can connect with potential recruits using a free profile and post vacancies in the website’s jobs section. You can also advertise roles on other online jobs boards and post on Twitter and Facebook using relevant hashtags. Many people are keen to work with innovative start-ups so use social media content to communicate your company culture. Link to an eye-catching, search engine optimised page on your website that communicates why your business is one worth joining.
Encourage existing staff, family, friends and other contacts to share your social media posts with their connections.
You could offer a referral fee if someone introduces you to a candidate who you end up employing.
Other ways to find staff include placing adverts in local newspapers, attending business networking events and exhibiting at university and college jobs fairs.
How to interview candidates
Once you’ve drawn up a shortlist of potential employees from the candidates who’ve applied, you’ll then need to interview them.
An initial phone or video call could help to narrow down your shortlist. Face-to-face interviews should take place somewhere quiet. If you don’t have your own office, meeting in a co-working space or a cafe are among your options. But make sure it’s a place where you or the candidate won’t be distracted by the surroundings.
Prepare for the interview by thoroughly reading the candidate’s CV or application. Draw up a list of standard questions that you’ll ask everyone, and score each answer – such as rating previous experience or aptitude for the role – so you can fairly and consistently compare interviews across candidates.
Ask open-ended questions that give you an insight into the candidate’s skills and experience and how suitable they are for the position in your business. Try not to lead the candidate – be sure to listen carefully to their answers and don’t interrupt.
It’s a good idea to have someone else with you during the interview so they can take notes and you can focus on listening to the candidate. If that’s not possible, take notes yourself.
After an interview, you may want to conduct second interviews for shortlisted candidates or ask them to complete a test.
Be clear how soon you’ll get back to the candidate with a decision. Remember that they’re likely to be applying for other jobs, and your business may miss out on a good employee if you seem disorganised and uncommunicative.
Hiring with diversity and inclusion in mind
Having a diverse and inclusive workforce benefits your business in many ways. Employing people from different backgrounds and with varied experiences helps to foster creativity and innovation, as well as boosting productivity and morale. Staff are more likely to feel happy in a business where inclusivity is a priority.
Communicating your focus on diversity and having it in mind at the recruitment stage is beneficial, too, as it widens the talent pool open to you.
You must also remember your legal obligations. Under UK law, employers must not discriminate against anyone because of ‘protected characteristics’ including:
- gender reassignment
- being married or in a civil partnership
- being pregnant or on maternity leave
- race including colour, nationality, ethnic or national origin
- religion or belief
- sexual orientation
The above list isn’t exhaustive when it comes to how to treat people when recruiting them to your business. You can find more information at the Advisory, Conciliation and Arbitration Service (ACAS) website, including:
- guidance on direct and indirect discrimination
- ensuring fair treatment if someone is a member of a trade union
- viewing social media profiles of people applying for employment
Job adverts and applications
In your job advertising, you must not do anything that discriminates, such as saying your business doesn’t cater for people with disabilities. You can only advertise for people of a specific gender if it’s essential to the role, such as in single-sex hospitals or a women’s refuge.
You should only use words such as ‘recent graduate’ and ‘mature’ if they are actual requirements of the job, otherwise you could be accused of discriminating against younger or older people. Words such as ‘waitress’, ‘salesman’, ‘handyman’ and ‘manageress’ may also be considered discriminatory.
You can only ask a candidate’s date of birth in an application if they must be a certain age to do the job, such as people working in a bar serving alcohol.
You should not limit where you advertise your job by, for example, only putting it in men’s magazines.
What not to ask in interviews
It is recommended that you draw up a list of standard questions that you ask everyone during job interviews. This will help you avoid bias that might occur if you ask different questions of each candidate that makes assumptions about their circumstances and background.
During interviews, you can’t ask questions about whether a candidate:
- is married or in a civil partnership
- has children or intends to have children
There are certain circumstances when you can favour someone with a protected characteristic. This is known as ‘positive action’. If you settle on two candidates who can do the job, but one has a protected characteristic and one doesn’t, you can decide to employ the former if you believe the characteristic means they are:
- underrepresented in the workforce, profession or industry
- suffering a disadvantage connected to that characteristic
You cannot employ a less suitable candidate just because they’re underrepresented or suffering a disadvantage. You must make decisions on a case-by-case basis and not because of a certain policy.
Complying with employment law is essential for employers recruiting staff. Fail to follow the regulations, and you risk damage to your reputation and costly legal action.
As mentioned in the previous section, you must make sure you don’t discriminate against anyone in your job adverts and interviews. It is against the law to discriminate against anyone because of ‘protected characteristics’.
You need to register with HM Revenue & Customs when you start employing staff. You must do it before your business’ first payday. It can take up to five working days to get your employer PAYE reference number.
Before you employ someone, you must check they have a legal right to work for you, and the salary you’re offering must comply with current National Minimum Wage and National Living Wage rates.
You also need to make employer’s National Insurance contributions, and provide a workplace pension scheme. Certain staff must be automatically enrolled into the scheme, and you need to make contributions. The Pensions Regulator has a guide on automatic enrolment.
Once you’ve employed someone, there are other rules you need to follow, including those covering:
- employment contracts
- employers’ liability insurance
- maternity, paternity, shared parental and adoption leave and pay
- working hours and holiday entitlement
- rest breaks at work
- disciplinary action, dismissing staff and redundancy
Recruiting new staff is about representing your brand as well as finding the best employee
Don’t forget that during the recruitment process your business is on show.
How you treat applicants in interviews, rejection letters and all other communications will reflect on your brand.
In the short term it’s off-putting to candidates if you aren’t prepared for interviews or do not update candidates on their progress.
This can mean missing out on great candidates who don’t want to work for an unprofessional-looking, small business.
In the long term, word can get out and you may struggle to even find applicants for roles.
Want to discover more about being a leader and managing employees? Check out our free online courses in partnership with the Open University on developing effective entrepreneurial skills. Our free Learn with Start Up Loans courses include:
Plus free courses on finance and accounting, marketing, project management and business sustainability.
Disclaimer: While we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.