Hiring your first employee is an exciting step for the small business owner. It is a sign of success and growth, but if it’s not handled properly, if you do not make sure that you are in compliance with all of the rules and regulations required by both state and federal government, your new employees can bring more headaches than they cure.
The Mercer County Regional Chamber of Commerce will offer “Payroll, Human Resources, and The Small Business: What You Need to Know if You Pay Employees or Independent Contractors” on Tuesday, November 22, at 10 a.m. at Villa Manino restaurant in Bordentown. Cost: $10. Register at www.mercerchamber.org.
The four-part presentation will include time for questions and answers from the audience. Doug Duncan, president of Your HR Solutions; Lisa Goff, payroll tax specialist at Primepoint LLC; Christine Schaefer, president of CEM HR Strategies; and Sandy Spadaro, senior HR director at Allies of New Jersey, will discuss payroll tax basics (1099 vs. W2), interviewing and hiring dos and don’ts, labor law compliance, and attracting and retaining the right people.
Schaefer opened her human resources consulting practice in Maple Shade 14 years ago. “Human resources found me,” she says, explaining how she became an HR expert.
Schaefer began her career as an office manager before receiving her college degrees. “As the business got bigger I took on more and more HR responsibilities,” she says. She earned an associate’s degree from Burlington County Community College and then a bachelor’s degree in business administration from Thomas Edison State College.
After being laid off from several different companies, Schaefer decided to strike out on her own. “I’m great at HR, but I knew I didn’t know anything about selling,” she says. She found a business coaching program to assist her, which she credits with making her business a success.
New regulation affects every employer. A new federal regulation from the National Labor Relations Board will go into effect on January 31, and applies to all business owners, even the smallest. “A new mandatory poster must be posted where all employees can see it explaining that every employee has the right to organize.”
Even the one-employee, home-based business must comply with the regulation, although the way in which the information is disseminated can differ. “No, the NLRB doesn’t really expect you to hang the poster in your living room,” Schaefer says. But the information should be given in person to the employee or it should sent via E-mail. See www.dol.gov.
Set up right the first time. The biggest mistake new employers make, says Schaefer, is to not take the time or spend the money to set things up right from the very first. “A lot of my business involves helping employers to undo the things they haven’t done properly the first time,” she says.
One common problem is employers who just “borrow” the text from an employee handbook of a former employer, and think that they are covered. “Not all employee handbooks are created equal,” says Schaefer.
The size of the company, the type of industry, and dozens of other factors — including the possibility that the former employer’s handbook was incorrect or outdated, make it almost certain that this type of borrowing will lead to errors and problems.
Another big problem for employers is getting forms filled out correctly, particularly the I-9, the Employment Eligibility Verification Form required by the Immigration and Naturalization Service. “The most frequent mistake that I see is forgetting to sign the form,” says Schaefer. Two signatures are needed: the employee’s and the employer’s. If the form is completed incorrectly there can be a $1,000 fine per incident. That can quickly add up to a very costly mistake for a very easily corrected problem.
Hiring the right person. Many new employers have trouble finding the right person to hire. “Before you hire you should look at your overall business plan. What are your objectives? What kind of people do you need to help you achieve your goals?” asks Schaefer.
Finding the person with the right skill set is only half the battle. “Finding someone with emotional intelligence is just as important,” she adds. Does the person have a good work ethic? Will he arrive on time, dress appropriately, greet clients politely and cheerfully? These traits are just as important to the success of a business as technical skills.
Schaefer recalls one of her own experiences as an employee working with a woman who “was great at her job but had no ability to get along with people. While she was there the whole tone of the office changed.
“Once she left it was a much more pleasant place to work,” she says. Making sure that your employees can work together and have the ability to resolve differences in a mature manner can make a huge difference in retaining your employees.
Hiring the right person is the first step to retaining an employee, while “hiring the wrong person can cost the employer a year’s salary,” says Schaefer.
You have to consider the cost of three to six months of training for the original employee and for the replacement. There is the time lost in dealing with the termination and in hiring a replacement, and there is also the cost of unemployment.
While many small business owners are afraid that hiring an HR consultant will be too costly, Schaefer points out that not hiring one can cost even more.
Without the right information, it is easy to be out of compliance with any number of government regulations — and “I didn’t know about that” is not an excuse the government will accept.