How to Hire the Right Employee for Your Small Business
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Going from solo entrepreneur to the boss is a big step in any business. Here’s what to consider when it comes to hiring the right person for your small business.
Why hire an employee?
Before you decide on who to hire, it is important to understand why you need to hire. Bringing on additional help is an opportunity to grow your business. A new employee/freelancer means a larger pool of talent, skills and capabilities to draw from, which could help make your business richer. It also allows you to free up time to focus on more important areas, and thus accelerate the business growth. For example, perhaps you are looking to increase sales, or free up your time to focus on product development.
Before you start hiring
Step 1: Register for a business number
Are you ready to make your first hire? If so, the first step is to register for a business number online with Canada Revenue Agency (CRA), in order to set up payroll. You can register by mail, fax or telephone 1-800-959-5525.
Step 2: Understand employment standards
It’s also important to understand the federal and provincial employment standards in Canada. Provincial standards will vary across the country, but they cover factors such as minimum wage, annual vacation, hours of work, overtime and statutory holidays. These regulations are there to ensure your employees are treated fairly, so it’s important you understand your responsibilities.
Step 3: Decide on employment type
Decide whether you’re looking for a full-time employee, part-time employee, or contractor, depending on your business needs. This decision could also have an impact on your responsibilities as an employer.
The hiring process: How to hire an employee
Step 1: Create a job description
Writing a good job description is the first step to a successful hire. The job description should outline the skills and experience required for the position, including the job title, a clear description of the duties, any soft skills or education requirements, application deadline, as well as information on how to apply. If you’re not sure where to start, there are many online resources available, such as this job template from the University of British Columbia.
Step 2: Advertise the position on job search sites
You need to let potential employees find you. If you’re a small operation, there’s no need to spend money on a classified ad. Leverage LinkedIn or advertise the position on your social media channels. Encourage people to share the posting with qualified candidates who would be the right person for the job. Other job search sites include Robert Half, CareerBuilder, Indeed, Eluta, Jobboom, Glassdoor, and Monster, etc.
Step 3: Review job applications
Next step is narrowing down your search with applications you received. There are a number of criteria you can use to evaluating a candidate:
- Does the person’s experience match the job requirements?
- What qualifications do they have?
- How long have they been in similar roles for?
- Attention to detail – is the resume and cover letter tailored to your posting? Are there grammatical errors?
Create a “yes,” “no,” or “maybe” pile as you review each application.
Step 4: The interview process
Before bringing in a candidate for a job interview, you may want to set up a pre-screening telephone chat. This gives you an opportunity to confirm their skills and qualifications match those required and gauge their level of enthusiasm for the role.
After reviewing resumes and conducting phone interviews, narrow down your top 3-4 candidates for a face-to-face interviews, either virtually or in-person. You may choose to set up interviews in a block, so schedule a day or half-day where you won’t be pulled away with other responsibilities.
No one expects you to be a Human Resources specialist, but it’s important to understand the types of questions you can and can’t ask in an interview. These include questions about someone’s age, marital status, family-life, religion, race, sexual orientation.
The questions you ask should help you to determine the best candidate for the job, and they vary depending on your requirements. Generally speaking, open-ended questions tend to give you more insight into a candidate than yes/no questions. “Tell me about yourself” is usually a great question to start with. One technique hiring managers use is to ask behavioural-based interview questions, which focus on areas such as communications, working as a team, problem solving, time management and customer care. An example would be “Tell me about a time when you didn’t meet a client’s expectations and how you resolved it.”
Either take notes during or immediately following an interview, to help you remember each candidates’ strengths or weaknesses.
Step 5: Reference check
Once you’ve found the right person for the job, the next step is to check their references. Speaking to their previous employers and/or clients will give you valuable insight into the person’s strengths and limitations in the workplace.
During the reference check, confirm the dates the potential hire said they worked at a position, their job title and responsibilities. You can also ask the people listed as a reference open ended questions, such as: “What can you tell me about Steve?” or “How do you think Danielle will perform in a marketing role?” Red flags to watch out for include references who weren’t aware you’d be calling or references who indicate they aren’t the right person to speak with.
Step 6: Make a job offer
Once you have chosen the best applicant and followed up with their references, you can formally offer them the position. Put the job offer in writing and include details such as the salary, start date, vacation days and other relevant information. You may also want to let the people who weren’t selected know you have made a decision – thank them for their time and let them know they weren’t the right fit. It’s always good to establish a good reputation for your business, and you never know when you may need to fill a different position.
Step 7: Onboarding your new employee
In small businesses, it’s common for employees to take on additional duties or pick up the slack to help build a business. Be clear in your expectations during the interview process and onboarding. On their first day, take time to tour your workspace, get them settled into their new desk, and provide all the information, tools and access they’ll need, etc. Part of the onboarding process is making them feel welcome, so you may want to arrange lunch during the first week to welcome them and as an opportunity to get to know you, perhaps other employees or business partners you work with.
Your responsibilities as an employer
Part of being an employer is the financial responsibilities that come along with it. However, if you hire someone who is considered self-employed or a freelancer, they must operate a business and be engaged with the business side of their taxes. This means it’s not your responsibility to make tax deductions or EI or CPP contributions on their behalf, or pay stat holiday or vacation pay. For more information, visit the Canada Revenue Agency.
Your responsibilities as an employer will include:
- See your employee’s Social Insurance Number (SIN) card within three days of employment and record their name and SIN number as it appears on the card.
- Have employees fill out the required tax forms, including the federal TD1 and provincial TD1 form.
- Set up payroll account through the CRA. As an employer, you are required to collect, remit and report on payroll deductions for EI, Canada Pension Plan (CPP) and personal income tax.
- Maintain tax records. Employers must keep payroll and employment records for employees for at least 36 months. Visit the Government of Canada for more information.
Okay, that helps. If someone is self-employed, then you (as an employer) don’t have responsibilities the way you do with an employee (even if that employee is a contractor). So I can include a little to explain that and how if you’re hiring someone who is self-employed, you’re not paying making tax deductions, EI or CPP contributions, paying stat holidays, vacation pay, etc.
As your business grows, there’ll be a need to hire staff, either temporarily or permanently. Finding the right talent is critical. So make sure to get the hiring process right.
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This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.