What to consider when you’re hiring new employees
Employing new members of staff might seem like a straightforward matter, but there are a few things you need to have in place before you formally advertise a new position. Many employers, particularly those who have a new business, find legal obligations and insurance policies daunting but it’s important that you comply with them to provide a safe and efficient environment for your employees.
Can you afford new employees?
Hiring new employees is not only time consuming but expensive too. For that reason, you need to make sure that you can definitely afford to expand your team. Calculating the cost of a new employee isn’t just about working out how much you’re going to pay them, it involves spending money on advertising the position, a benefits package, payroll taxes, equipment and supplies and training. Once you’ve worked out these costs you need to determine if you can afford someone new and this can be done by the following:
Estimate your future sales
You should know your profits from the past few months, so take these and estimate what your projection will be for the next 12 months, at least. Take into account any income that is due to end, or any new deals that might come in during that time. A sales forecast such as this should give you a better idea of whether you can fulfil the costs of a new hire.
Project the revenue from a new hire
What is a realistic amount of revenue that a new sales rep is going to bring to your business? Will more of your product be created if you employ new workers? Could you serve more customers if you hire more front of house staff? It will take a while for your new hires to reach their full potential so you need to know that you can cover the cost of the business while they gain the required experience.
Evaluate your profit margin
If you’ve experienced losses over the past year or so then it’s unlikely that you can afford to hire new employees, but if you add the cost of a new employee to your overhead expenses and believe you’ll still turn a profit, you might be ok.
Advertising the position
As an employer, it’s likely that you’ve advertised positions before, but if the response wasn’t that great, you might not have addressed your target applicants. Although you need to make it specific, an effective job advertisement is more than a simple description. Identify the qualifications and skills that the applicant ‘must have’ and make sure that these are distinguished from those that are ‘desirable’. Include information about your company, without exaggerating, and highlight the benefits or perks that an applicant will receive if he/she is successful.
The interview process
Before you decide which candidates you are going to interview you’ll need to go through their application form and resume. This can be a tough process, but there are a number of tools you can use to sort unsuitable candidates from potential employees. It might also be a good idea to arrange a telephone call before a job interview. Your interview team should be aware of the skills, qualifications and qualities that you’re looking for in a new employee and that the questions they wish to ask will work toward determining the candidate’s suitability for the position.
Do you have the correct insurance policies in place?
Regardless of what your company sells or what service it provides, there are a number of insurance policies that you need to have in place to protect yourself, your employees and your customers.
Employer’s Liability Insurance
If you’re already an employer, you will already have employer’s liability insurance in place as this is a legal requirement. Your policy needs to cover you for up to £5 million, and you can be fined up to £2,500 if you’re not insured or £1,000 if you fail to show your EL insurance certificate.
Public Liability Insurance
If a member of the public is injured on your premises or by your business activities, public liability insurance can cover any costs that may be incurred such as hospital fees, compensation and legal costs.
Professional Indemnity Insurance
Companies that are advised to take out professional indemnity insurance include the likes of accountants, financial advisors, IT consultants and architects. This insurance policy will cover you if documents are lost or damaged, the infringement of copyright or negligence. This isn’t a legal requirement, but without it, you could be forced to pay thousands in legal fees etc.
If you use a car or van for work-related purposes, commercial (or business) vehicle insurance is another legal requirement. A standard car insurance policy won’t offer you the same type of cover as commercial vehicle insurance. You’ll be protected when you travel between different locations for work purposes, if you drive with clients or employees in the vehicle, or if you use your vehicle for any other business reason. If the new employees that you’re hiring will be required to use a car or van for work, sites such as Call Wiser offer van insurance for young drivers at a low cost.