Hiring employees? Do it the right way.
You can’t build an empire all by yourself. You know that. You know you can’t wear all the hats because you’d drive yourself crazy trying to grow your business. So chances are, you’re hiring employees.
Here are 4 things to put on your must-do list when hiring employees:
1. Create an Employee Handbook.
I am not an employment attorney and I am not the caped crusader, or Carnac from the Johnny Carson show. But I do know that an employee handbook can protect you because it outlines employee duties, your expectations and basically makes things really clear between you and your employee. Handbooks can cost anywhere between $1000-$2500 if an attorney creates it. I’m sure your uncle could do it for $300.
2. Create a process for hiring employees.
Ask yourself what type of person you are trying to hire. Are you looking for a creative type or a details person? Do you want someone who is right brain oriented? Or are you trying to hire a systems person?
One way to cut through all this is to have potential employees take the Kolbe Index A. It may be the best $50 you spend, besides a chopped salad at La Scala in Bev Hills. The test screens for 4 qualities, 3 of which are really important ones: fact finder, follow through and quick start. Hire the right person the first time rather than spending time training the wrong person, letting them go, and doing it all over again. Oy vey.
3. When hiring employees, include the cost of contributing to the employee’s company retirement account.
If your employees will be full time and you have a retirement plan like a 401k, SEP IRA or Profit Sharing Plan, you will have to contribute some dough into their retirement account. For example, if you contribute $20,000 to your own 401k, you may have to contribute $6,000 to your employee’s 401k as well. (These are totally made up numbers. Just trying to give you an example.)
Don’t just look at the numbers. Look at the bigger picture because this is a good thing for you. It will help you recruit, retain, and reward your employees.
4. Workers compensation insurance
If your employee gets hurt on the job, this type of insurance pays for medical expenses and part of their lost wages. The state of California, along with many other states, makes this a mandatory requirement for employers when hiring employees. This insurance is just a cost of doing business. You have to foot the bill. The nature of your business will determine what the premium will be.© Copyright 2012 Justin Krane, CFP