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6 Employment tips for Startups

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Guest post by Alex Tanglao, Legal Analyst, LawPath  

As a startup, hiring your first employees in an exciting milestone for any founder. It is the cornerstone to growth and development.

Taking on new employees is a very stressful and tentative time for any founder. After all, the first few employees on board will contribute to a major portion of the startups’ culture, product and overall direction.

It is essential to seek out a talented, unified and driven team to ensure your startup is advancing in the right path.

Not sure how to approach areas of employment? look no further, here are 6 tips to assist you with both practical and legal requirements when hiring employees.

1. Assess situational needs

When hiring employees, one must consider the current and future situation that may present itself. Once you the employer have dealt with the many potential avenues of direction for the business, you are then able to delve into the contingencies of employment.

For example, a temporary job may arise, the employer is then required to assess his position - financially, timely and culturally - and come to a decision with whether they should subcontract the job, hire a new employee or perhaps allocate resources to training an existing employee in the particular field of study required.

2. What’s right for you? Employee vs. Independent Contractor

In the startup community, hiring a contractor isn’t uncommon, whether that be for web design or any other area of business. The roles and recognition of an employee and a contractor can sometimes be blurred, especially for jobs that require greater efforts.

To recognise the distinction between a contractor and an employee, you should consider their behaviour - not only the title they have been given.

  • When is a worker considered an Employee?

A worker could be classified as  an employee if:

  • The worker works for you and only you
  • The worker works a number of hours that you set.
  • The worker uses your equipment to do the job
  • The worker gives orders or supervises any of your employees
  • When is a worker considered a Contractor?

A worker could be classified as a contractor if:

  • The worker has his/her own tools to do the job
  • The worker has his own office or place of business
  • The worker does work for several other clients as well
  • The workers does the work on his/her own time and sets the hours

In general an employee is hired by an employer for personal services in return for a wage or fixed payment. The employer-employee relationship is often defined as a “contract of service”, where the employee provides exclusive services to an employer and at the discretion of the employer.

In contrast an “independent contractor” and the principal-contractor relationship is often referred to as a “contract for service”, as the contractor is part of an independent business with an obligation to provide goods and/or services for a price.

In the end though, it’s a tradeoff between additional cost and headaches versus control. You have to make the call.

  • Hiring an Intern

Cheap labour, who could refuse? The idea of hiring low-paid or unpaid interns is quite a compelling prospect for financially restricted startup founders. A team of talented, productive interns can allow startups to remain focused on and strategically allocate resource to their SMART (specific, measureable, attainable, realistic, timely) objectives, while the others do the busywork. Internships are a great way to impart valuable skills and knowledge to university students or graduates looking to get a start in the industry.

The key thing to remember is that the better the experience you provide to your interns, the more value you will obtain from them in return.

All interns should have some form of written Internship Agreement - it can be simple or detailed depending on the needs of your business.

  • Hire people that can challenge you

In order for startups to excel in their respective market, it is pivotal that specialists are taken on in order to diversify the nature of the business and potentially challenge the existing processes and methods of the startup, as they can offer fresh perspectives.

Once specialists are acquired, it is viable to assume that they will attract further talent to your startup as they add a level of professionalism to the business that generates a reputable status in the business world.

3. The hiring process

If you decided on hiring an employee, the next step is to promote the position through a position/job description. A position description or ‘PD’ provides prospective candidates with an overview of the role and its responsibilities and can include a selection criteria and information about remuneration. You can also create a Employee Application Form to easily request and collate vital information about prospective applicants. The information from this form will help you to compare and contrast each applicant to make a more informed decision.
Additionally, once you’ve chosen the applicant, you won’t need to chase after their personal and professional information.

4. Employment Agreement  

All employees should have some form of written employment agreement - it can be simple or detailed depending on the needs of your business. What works for you depends on the nature of the startup, the number of staff you employ and the frequency with which staff join and leave you. All employees should be given a formal written employment agreement that clearly states their rights and duties as well as your rights and duties as the employee.

Although all employees are considered to have an employment contract with their employer, it is recommend that a formal written employment agreement is used to avoid disagreements in the future.

5. Smooth transitions

Once you have chosen an employee or an intern, it is quintessential that they ‘buy into’ the culture that you’ve created, as chances are you’ll be working side by side for a considerable time. You can expose them to and transition them into the culture by introducing them to the team and involving them in the process. Additionally, you can kick off the employment with an organised orientation and welcome lunch. Basically do whatever you can to make the candidate feel most comfortable with this volatile startup.

6. Don’t be afraid to say no

At the end of the day, an employer must be able to make that separation between their personal and professional views of employment. There must be an element of realism in the employment process, for example; if you’re interviewing the world’s best developer, but if you  can’t imagine working with them every day then it’s viable to assume that you should search elsewhere.

Remember to be patient - there’s no point hiring somebody that you don’t see aligning their views and drive with the vision of the startup, being around for the long run or just not being fit for the position.

Need assistance hiring employees? LawPath has a range of employee agreements and workplace policies to ensure your business is covered. Sign up to a free LawPath account today for all your employment needs.