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Hiring your first employee

by Intuit Australia

3 min read

Are you considering hiring your first employee? Here’s some expert advice.

Step 1: Outsource or insource?

Tracy Martin is Director and Coach at Future Change Pty Ltd, a human resources management consultancy. She says that for a business owner recognising that they need to hire staff, the first question to ask is: “Do I need a full-time employee, or is a better model for me to contract someone on a casual basis?”

Being able to contract services from someone else is useful, says Martin, “because then it just becomes, ‘I need you to do three days work this week, can you do it yes or no?’. It’s not an ongoing commitment, so it’s not a big risk.”

But if you do take on an employee, then you have to realise that you are essentially going to be paying their mortgage. “So, you need to consider what the cost of that employee is the next year or beyond,” says Martin, “because that’s a cost you need to build into your business, whether you are making a profit or not.”

Step 2: Define the role

What are the things you want to be able to hold your employees accountable for? Martin suggests creating a job description. It does not need to be extremely detailed but might address elements such as:

– This is why I need this work done.
– What will happen in the business if the work isn’t done?
– Four or five key things that I really need someone in this role to do.

She adds: “You also need to plan for add-on costs associated with employees, such as tax liabilities, superannuation, insurance, holiday costs, work locations and necessary tools. Will they need a computer, a mobile phone or a car? What size office or workshop space do you need to accommodate them?”

Step 3: Employment contract

It is important to consider how you are going to employ new staff. Will it be an ongoing employment arrangement or is it a defined contract?

Martin says that inevitably with many new businesses, requirements may change in the first 12 months. “So it’s probably a good idea to offer a 12-month contract and say ‘then we’ll have to talk about it.’ If you don’t do that and you take someone on as an employee and then the business needs change, you may well have to consider retrenchment provisions that are part of an award.”

Employers have to be aware of the guidelines of the award system and what, as a business owner, you might be accountable for if you offer an employee an ongoing role.

Step 4: Training and productivity

You’ll rarely get a perfect match between what you need and the person that you hire. They’ll usually be great for some things and not for others, so you need to work out how you are going to bridge that gap.

Martin says three options to consider are formal training, on-the-job training or coaching. “As an employer, there will always be things you need to do to help a new employee get upskilled,” she says.

“You need to factor in that when they start, there’s going to be a big learning curve for them. You’ll need to spend a lot of time with them; there’ll be things that you know how to do that you now need to explain to someone else.

“You might even need to write a procedure or a checklist or actually start to document some things in order that they do things the way you want them to.”

Step 5: Expectations and feedback

“If you bring someone in to your business and you can’t tell them what’s expected of them, they are never going to be able to do their job,” says Martin.

“They need to know where they fit in the business, they need feedback, they need to do what they are good at. All those things are important, because in a small business, if your staff don’t care as much as you, then you are really placing the future of your business at risk.”

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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