Young candidates sitting and waiting for a job interview. The business owner is talking to one of the candidates. Concept: how to hire employees.
Betsy Wise
By: betsy_wise
Read in 15 minutes

How to Hire Employees for Your Small Business

Employees are the lifeline for any business and entrepreneur. More than likely as a small business owner, you’re also the human resources manager. In this step-by-step guide about how to hire employees, you’ll learn how to find talented team players and comply with legal hiring regulations.

15 Steps to Hire Employees for Your Business

1. Determine the Greatest Need. If existing employees are assigned work beyond their scope and expertise just to keep pace with business growth, their performance suffers. Employees and customers may start complaining, overtime-hours spike, and missed deadlines become commonplace occurrences. To keep employee morale high, hiring one or more additional employees for specialized duties picks up the slack and improves efficiency.

In most situations before employers bring on new staff, they may need to get a business loan before interviewing candidates. Most business owners need extra cash on hand to organize interviews, run background checks, train new employees, and cover salaries until more revenue is generated.

2. Write a Job Description. Before you place an ad, write out in detail what you want the new employee to do. Describe what type of business you own and the employee’s role as a staff member. A candidate will know at a glance the required responsibilities and duties. A job description also provides a checklist for you when it’s time to conduct annual employee reviews. List tools and equipment an employee will use as well as skills, experience, and education needed to perform the job. Make sure it’s clear if you’re looking for a full or part-time employee or just seasonal help. Lastly, the job description should state that you are an Equal Opportunity Employer.

3. Publish a Job Posting. Share your job posting in the right places. As a small business owner, it may be a good idea to turn to your network, but have in mind this could involve a pool of very similar candidates. It’s always advisable to look for diversity in your team.

A job search-engines like Indeed may be a better choice. This online recruiter has millions of candidate profiles so employers have a wide range of diverse potential employees from which to choose. You can post a job for free and add specific questions you want candidates to answer. Alternatively, you can use Indeed Resume, that gives you the ability to reach out to job seekers. Once you have found resumes that fit your company’s needs, you can contact the candidates of your choice. Their resume will be locked for 30 days to allow them time to evaluate and respond to your message. If you receive a response from the candidate, you will have access to view the full contact information.

4. Review Resumes and CVs. This step is one of the most important when learning how to hire employees. You can view a candidate’s job history noting skills that match your job description, gaps in employment, and whether their information contains obvious grammar and spelling errors. An online CV (curriculum vitae) is normally longer than resumes and contains information about published books and papers, original scientific research, affiliations and life experiences that may be helpful to fill your prospective position.

5. Conduct a Phone Interview. Before conducting an in-person interview, you can set up a 15-minute phone pre-screen conference to see if the candidate is a good fit for your company. Ask questions about their qualifications and why they want to work for you. Review information they’ve included on their resumes/CVs and make sure they’ve reviewed the job description and understand the requirements. You can use this easy-to-follow template to record and evaluate your candidate’s answers. This brief conversation may help you find out their strengths and weaknesses, and their professional achievements.

6. Narrow Down Your Candidates. After phone interviews, select a reduced number of individuals you’d like to meet for a more formal interview, preferably at your workplace. You can ask for one or more managers to sit in while conducting the interview so they’re an integral part of the hiring process. It’s important whether conducting a phone or in-person interview that everyone takes notes you can resource later. You conduct up to 3 interviews for each candidate. For each, set up a grading system (1-10 or A-F) that represents objective observations of each candidate’s suitability for the job.

  1. One interview should be a complete walkthrough of the resume (qualifications). You should set also clear goals and expectations here.
  2. Then conduct an interview with behavioral questions that evaluate the person’s skills for the specific job (find out how he/she would interact with their team or with clients: how would they act in certain situations? Do they work well under pressure? How would they handle a client’s complaint?). This template can provide you guidance on what to ask and how to evaluate your candidate’s answers. Have in mind this is a template used by Camino Financial for the specific position on a Business Loan Specialist – you’ll have to tweak and adapt your questions to the position you are interviewing for.
  3. The last one should be a cultural fit interview typically conducted by a senior person.

7. Ask the Right Questions. Employers prefer a mix of personal and business references to verify employment history, skills, character, and any other information listed on resumes and CVs. Sometimes employers ask for a work portfolio when hiring professionals like architects, designers or writers. After each interview, allow time for the candidate to ask you any questions. Be also mindful of what not to ask: it’s unlawful to ask about an applicant’s age, sexual orientation, marital status, religious affiliation or race.

8. Contact References. This step usually takes longer than expected because individuals may not answer a voice mail or return your email right away. Be patient and insist if you think the reference can provide you with key information about the candidate. Appropriate questions include asking how long the reference has known or worked with the candidate and why they would make a good employee. This template contains appropriate questions to ask your references and other tips on how to conduct this type of interview.

9. Hire the Right Employee. After reviewing candidates’ skills, personalities, experiences, and references, everyone should compare notes and determine which candidate can perform the duties to help achieve your business goals.

10. Draft a Contract and Offer the Job. When drafting a contract, DocuSign is a useful platform that provides electronic signature technology and digital transaction management services. In your contract, you should list the salary, employee’s classification, benefits, the start date, and job description. Before sending an official letter and contract by mail, call the candidate and get a verbal agreement that they are interested in accepting your employment offer. Share your excitement by telling the candidate you look forward to them becoming a member of your team.

11. Notify Other Candidates of Your Decision. Candidates may be on pins and needles waiting to see if they’ve been chosen. A phone call is more personal than a rejection letter. If they ask for feedback as to why they weren’t chosen, provide honest but supportive answers and extend your heartfelt concern for their continued job search.

12. Introduce the New Employee to Staff Members. Make new employees feel appreciated from day one. Schedule a staff luncheon so everyone can meet the new employee. Give them a tour of your facilities, provide computer login information, and make sure they’re comfortable in their new workspace. A mentor can make the new employee transition easier, and a goody bag (containing, for example, a mug, some pens, and a company T-shirt) will make your employee feel welcomed and like a team member.

13. Comply with the Law. You should fulfill the following requirements:

  • In order to pay employees, you should apply for an EIN that identifies corporations and LLCs in lieu of a personal Social Security Number.
  • Have the new employee fill out an I-9 form (Employment Eligibility Verification), required by the United States Citizenship and Immigration Services. It is used to verify the identity and legal authorization to work of all paid employees in the United States.
  • As an employer, you are required to report new hires to your state reporting agency.
  • Obtain workers insurance for employees that could be injured at the workplace.
  • Employers can test an employee for illegal substances when they work around machinery, drive vehicles, and for other reasons.
  • While is not legally required to conduct a background check on your employees, it may be a good idea to run one, depending on your type of industry and the degree of responsibility involved in the position. The background check on the new employee should be conducted at some point in the hiring process always by a professional.
  • Employers are required to display a poster prepared by the Occupational Safety and Health Administration (OSHA) that informs workers of their protections and rights under the Occupational Safety and Health (OSH) Act. The poster is free and must be displayed in a conspicuous place where employees can view it. Depending on your type of industry you may need additional posters that reflect the standards, rules, and methods that employers must follow to protect their employees from hazards.

Here are more additional tips on how to comply with the law when hiring employees.

14. Keep Employee Records. The U.S. Department of Labor requires employers to keep 12 records for each member of their staff:

  1. Employee’s full name and Social Security Number
  2. Mailing address
  3. Birthdate (if the employee is younger than 19)
  4. Sex and occupation
  5. Time of day and day of the week when employee’s workweek begins, hours worked each day, and total hours worked each workweek
  6. The basis on which employee’s wages are paid (weekly, bi-monthly, or monthly)
  7. Regular hourly pay rate
  8. Total daily or weekly “straight time” earnings for each workweek
  9. Total overtime earnings for each workweek
  10. All additions to or deductions taken from employee’s wages
  11. Total wages paid each pay period
  12. Date of payment and the pay period covered by each payment

15. Choose a Payroll Method. Decide if you intend to pay by cash, check, direct deposit or pay card. Some business owners use an accountant, payroll software, a payroll service, or issue payroll payments in-house. Regardless of which method you use, you need to keep good records to issue W-2s at the end of the tax year. Likewise, the employer is responsible for making employee/employer FICA (Federal Insurance Contributions Act) deposits and pay for other employer taxes like FUTA (Federal Unemployment TaxAct). If an employer withholds health and life insurance premiums, retirement contributions, or job-related expenses, they must write checks to appropriate vendors.

The Importance of Hiring the Best Employees

When learning how to hire employees, the 15 steps above may seem like a long laundry list to complete. However, by executing each step, you’ll find the most-talented employees which in the long run may reduce your company’s turnover rate. Once your new employee is actively working, it’s important to continue to provide training and one-on-one feedback. You can help employees work on weak areas and celebrate their strengths. Furthermore, make sure to ask them for their recommendations on how to improve your company. Your overall goal in learning how to hire employees is knowing how to retain your good employees. In addition to the steps outlined above, check out these additional simple tips to ensure you hire the right people the first time. Don’t forget the importance of getting a small business loan to re-energize your cash flow when hiring new staff members. After all, you’re in charge like Dr. Seuss said, “You can steer yourself any direction you choose. You’re on your own. And you know what you know. And YOU are the one who’ll decide where to go.”


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