So you think the time has come to employ your first ever employee, this can be an exciting time, and provide a range of challenges whilst employing staff.
Although, congratulations are in order to a business who has grown their business sufficiently to employ more staff and more importantly to recognize the fact you need help in your business and would rather employ someone, than engage in a contractor service.
However, employing staff needs to be planned, and needs to be considered within your Business plan, and budgeted for.
Recently, I was helping a client by pre reading their Business Plan, the plan included almost everything you could think of in the plan, including the part about 18 months into the business they wanted to be employing staff. However, after reading the 2 year budget which was part of their 2 year plan, there was financial commitment to the employee entitlements in the budget, e.g. nowhere in the 2 year budget did it mention they were going to be paying wages, super, work cover costs for the staff, no increase in desk space cost for the office worker.
There were no plans for the writing of the policy, procedures well at least no mention of when this was going to be completed by, although through talking to the client, I could sense they would have to pay to have this done, and this cost was not included in the budget at any point.
When I discuss with clients about starting their business, and about future plans of hiring staff, I always suggest the employing your first employee should be a 4-6 month plan before you start to employ your first employee.
Some of the steps to consider,
Roles– what role do I want my employee to undertake for me? What will their job be? Maybe to find this out I need to work out where my weaknesses are, and then I can build on them to ensure they become strength of the business.
Once we know what role they will be playing, we can then write the job and person specification for that role, so this will be already prepared as part of the advertising process for the position.
Knowing what role they will undertake, we can then consider what award they will be under- assuming your first employing will be employed under the federal Award and not a workplace agreement. Once we know the award, we can then learn and understand the cost in the hiring of the employee, e.g. hourly or weekly rate of pay, which can then be included in our budget.
Process– we can consider what will the process be of employing the employee? Will we do the recruitment ourselves or consider an outside recruitment agency. If we do it ourselves we may want to design documentation, so we can make notes on the individual applicant, who can help us make the decision in interviewing the right selection of applicants. Most times a job is advertised you can expect to receive upwards of 60+ applications for the position, unless it is a specific position which requires degrees, qualifications etc.
Policy and Procedures – this need to be written prior to any employee beginning work with you, this way they can understand how you work, and how you like everything done. Policy and Procedures can also protect your company, during the operation of your business. There is always a chance during your time of employing staff you may need to terminate an employee’s from the business and accurate policy and Procedures can assist you in this area and protect you from Fair Work Australia becoming involved.
The Business Victoria web site, has a great template which you can use, or you can contact a HR consultant who can assist you in this area.
Budget- Setting a budget for employing staff is important, wages, super, work cover etc need to be included in your budget, so you can understand the income you need to earn each month to cover costs. By including this in your budget and understanding your financials, you can also understand if your prices are sufficient for employing staff, or whether you need to increase the costs of your products, and or services to ensure you can cover costs.
Always ensure if your business operates with 7 day accounts, monthly accounts etc, that you have 4-6 months’ worth of savings in the Bank Account to cover the cost of wages and associated costs, to ensure you can cover the employee’s entitlements should you have a couple of quiet weeks/ months, If you are a strictly cash business, then 2-3 months can be beneficial to the company.
Think it is important, that businesses don’t just employ staff, without considering all the associated costs, and documentation which should be in place prior to employing staff, another thing to consider is your workplace OH&S ready and suitable to employing staff.
I understand at times, some industries e.g. café’s etc, may need staff immediately when they open. However even this should be part of the initial business planning for the Business and should ensure you have the available funds. Whether in cash, overdrafts etc in order to being able to pay the employee entitlements when they are due- speak with your Accountant or Financial Adviser to learn more about this and understand the best way for your individual circumstances if you find yourself in this position.
As I said in the early stages, employing staff can be exciting and challenging all at the same time, whilst it is exciting as people are showing trust in your business and the way you operate the business. Alternatively, trust in your product/ services. However, it can be stressful to ensure you have the sufficient funds each month to be able to pay the employee for their work and dedication to your business. This is why your employee should be considered an Asset to the business, rather than a risk or expense, and encouraged to market your business for you at any opportunity.
Always remember as the owner/ manager of the Business you are not expected to know everything, or be an expert in every aspect, there are always consultants, advisers, mentors, coaches who can assist you, to ensure your business is as exciting and easy to operate as possible, however it all needs planning, and then the plans to be executed successfully.