Thinking about hiring your first employee? Reaching a point in your business where you need an extra pair of hands is a milestone to celebrate. It is also a time when you recognise that in order to grow your business, adding new team members follows along naturally.
Before you start asking for resumes, there are some steps to follow first:
- Assessing if you are truly ready to hire your first employee
- Identifying the role, they will play by creating a job description
- Calculating how much it will cost you to hire an employee
- Deciding how you will manage the hiring process
- Learning about your employee’s legal rights and entitlements
- Choosing a payroll system
- Onboarding your new employee
We’ll cover each of those here today.
Are Your Ready to Hire Your First Employee?
How can you tell when the time is right to hire your very first employee? Here are some signs to look out for:
- You are so busy that you can’t do all of the work yourself
- Your business is growing and your cashflow is above what you planned for
- You are ready to grow your business but can’t do it by yourself
- Your customer service levels are dropping as you can’t provide excellent service by yourself anymore
- You need new skills to work alongside yours to grow your business
- There are new services or products you want to offer, but you don’t have the skills to do them yet
- Your free time has completely disappeared, and you’d like some of it back
It’s going to be a combination of these signs that demonstrates to you the need to considering hiring your first employee. Talk things over first with a trusted advisor if you are unsure if it’s the right step for you and your business.
Writing a Job Description for Your First Employee
When taking on a new employee, you need to have a very clear understanding of what you want them to be doing. This means nailing down the specific roles they will be performing for your business. Creating a job description will help you identify their day to day responsibilities and tasks, the skills, experience and qualifications they will need to perform the role, the hours they will work and what their salary will be. You will also need to be clear on:
- The type of employee they will be – casual, contractor, permanent, part-time, full time
- The amount of responsibility you are happy to delegate to them
- What resources you will need to have before they start, such as equipment, insurance, and wages
- The specific skills they need to be able to demonstrate they have
- What training you are prepared to offer, or if they need to be fully trained already
- The number of hours it would take to do specific tasks each week
All of this information can be put together into a comprehensive job description which can be given to prospective employees and help you create the advertisements for hire too.
How Much Will It Cost You to Hire Your First Employee?
Here we’re not only talking their wage or salary, but also holiday pay, KiwiSaver contributions, business insurance, training, new equipment, uniforms and recruitment costs. The Ministry of Business, Innovation and Employment’s website has a handy Employee Cost Calculator which is free to use and can help you identify how much it will cost.
How Will You Go About Hiring Your First Employee?
You’ll need to decide if you will manage the entire recruitment process yourself, or if you will hire a professional to help you do this. Besides your budget, there are a few things to consider if you should use a recruiter to help you or not, depending on how confident you are with:
- Writing job advertisements
- Analysing CVs
- Performing interviews
- Making an offer to an applicant
- Creating employment contracts
- Checking references
There are pros and cons for both, but for your first employee, we’d recommend getting some support when you do it.
Understanding an Employee’s Rights & Responsibilities
Employment legislation is present for a purpose: to avoid employees being used and ripped off. Neither of you can opt-out of these entitlements, and they are valid regardless of any signed contract. To understand fully the minimum rights of employees, we recommend taking a read of the Employment New Zealand website’s employment rights guide. Generally speaking, an employee’s rights include:
- Pay at or above the minimum wage
- Paid time off and public holiday entitlements
- Sick and bereavement leave
- Maternity leave
- Overtime pay
- Leave for jury service
- A safe working environment free from discrimination
Once again, a recruitment or human resource professional will be able to assist you further with these, helping identify specific ones in your unique situation too.
Choosing a Business Payroll System
It may not be too much of a biggie with just one employee, but what if your business continues to grow to five or twenty employees? A payroll is a list of your employees and contains information about the money you pay them, including tax deductions. You can run your payroll by:
- Good old traditional pen and paper spreadsheets
- Outsource to a payroll professional such as ourselves
- Use a DIY software which can work out things for you, but you need to make payments
- Full-service software which does everything including making payments on your behalf
Doing the payroll means you’ll have to do things such as calculate gross pay, pre-tax deductions including KiwiSaver, PAYE, taxes on benefits, student loan repayments, pay the wages, file and pay taxes and deductions, plus keep all of these things on record for at least seven years!
One of the things we’re here to do is to help you decide which payroll system suits you best, and even assist you with the running of it if required too.
Onboarding Your New Employee
The contract is signed, sealed and delivered. It’s time for your new employee to start work. This means you’ve already organised the equipment they will be needing to use, gotten all of the digital systems ready such as IT logins and let your insurer know they need to adapt your coverage. You’ll also have to start an employee file, where you keep information about them and their role, plus all of the specific onboarding requirements:
- Health and safety policies
- Dress codes
- Hours of work
- Detailed training required
- Access to the workplace and other tools
- Organise holidays and leave
- Introducing to customers
- How reviews will be done
Many businesses spend time creating a written onboarding process to make things easier for the first and subsequent employees.
Here at MBP, we like to think of ourselves as our client’s right-hand helper (not man, cause we’re all equals here). From accounting to bookkeeping services, business development and planning, we do it all. Get in touch with us today or check out our business packages to learn more about how we can help you grow your business.