Hiring Your First Employee

Reading Time: 26 minutes Hiring your first employee is a milestone moment for you and your business. But it can be as much daunting as it is exciting. So, in this guide, Danbro Business wants to help you prepare for this significant step, assessing the impact that becoming an employer can have on your business. We’ll hear from employers and decision-makers on the ways to identify the gaps that need filling in your business. And, our HR expert will also explain the process of employment and how you can select the right candidate for your business. We hope you find our guidance useful.

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Hiring Your First Employee

hiring-your-first-employee
Reading Time: 26 minutes

Hiring your first employee. It’s a significant step in the development of your business. Every business leader and entrepreneur the world over remembers the day they employed their first member of staff.

But, as important as this landmark moment is, administrative challenges, legal complications, and customary red tape can complicate matters. After all, you’re taking your business into uncharted territory. Not to mention the fact you’re inviting someone you’ve potentially never met into a company you’ve single-handedly built from the ground up.

Here at Danbro Business, we understand both the pressures and pleasures of employing staff for the very first time. After all, it’s a process our founders Helen & Damian Broughton have been through themselves.

What’s the best thing about starting your own business? We asked our Founders, Helen & Damian Broughton…

 

 

To help you prepare then, we’ve pulled together this free guide on hiring your first employee. We’ve gained key insights from our Managing Director, Neil Ormesher, on the impact that becoming an employer can have on your business – as well as how you can identify any gaps that need filling. And, the head of our award-winning People team, Samantha Rhodes, has also provided a crucial HR perspective on the process of interviewing – and employing – someone for the first time, as well as how to select the right person for your business.

So, let’s get started.

1. Do I need to hire someone?

How do you know if it’s the right time for you to hire your first employee? Is it something you even want or need to do anyway? These are, perhaps, the most important questions you need to ask yourself before getting into the process of employment. Plenty of businesses survive – and thrive – as single-person entities. And, there are plenty of business owners who’ll tell you that employing personnel can add to, rather than take away from, your to-do list.

Consider the cost implications versus the extra income you’ll be able to generate with another pair of hands. As well as the cost of a salary, there are also new employment costs to cover too. For instance, you might need to purchase additional equipment or even invest in your premises. This could introduce – or increase – your rent, rates, utilities and other expenses.

That said, other than franchising or outsourcing which, again, has its limits, taking on staff is the only way a business can smash through the glass ceiling of exponential growth. Whilst that might not be for everyone, if you want your business to continue expanding and to dominate your field, sooner or later you’re going to have to enter the wonderful world of recruitment.

To take you through the positives, and potential pitfalls, of hiring your first employee – and to help you figure out if it’s the right decision for your business’s future – here’s our Managing Director, Neil Ormesher.

“Firstly, you’ve got to have the demand to be able to provide regular work for your employee/s, as well as the ambition to grow your business,” says Neil. “But it’s also about your propensity to risk.”

“Hiring people isn’t for every business – or business owner. A lot of business owners, my wife included, are adamant that they don’t want to grow to the point where they need to hire staff. They’re quite happy to be chief cook and bottle washer. After all, once you take on an employee, it’s a different kettle of fish. It can completely change your business and your role within it.”

“At the end of the day, you’ve got someone else’s livelihood – perhaps their family, children, mortgage, or rent – relying on you and the wage you’re paying them. Oftentimes, particularly early on, business owners end up paying themselves last to make sure their staff and business costs get taken care of first. There’s also a lot of work, time and cost involved in hiring your first employee. From the interview process, to drawing up contracts, to training and more.”

“You also need to consider things like ‘where they’re going to work’. And I don’t mean a seating plan. If you work from home currently, you might not be keen on someone coming to work at your house. Furthermore, you may not have the equipment – or the resource – in place for them to work from their own home effectively. Does that then mean you need an office? And, therefore, health and safety protocols? In which case, you ought to think about heating and water bills too. Plus, of course, there’s the financial aspect of their wages, tax, bonuses, holiday pay, sick pay, pensions, maternity and paternity, notice periods, probation periods. The list goes on.”

“It’s a big responsibility and a big step to take – especially that first member of staff. Hence, most people’s ‘first hire’ tends to be a friend, family member, or someone they know and trust. That’s actually what happened here at Danbro many years ago. In fact, the majority of businesses take on somebody they already know when they hire their first employee.”

“Of course, there are massive positives too. If you find the right person, or people, it could help your business soar to new heights.”

“You’ll have someone buying into your company and its culture, and wanting to go that extra mile in a way that wouldn’t be possible via outsourcing. Not to mention the opportunity it gives you for growth, and the feeling of giving someone a job and an opportunity.”

“What’s more, moving forward, in terms of the considerations and decisions involved, it’s much easier going from one employee to two employees, and so on, than it is going from zero to one. That first one is the trickiest adjustment. It’s probably a similar case with children!”

2. What do I need to do before hiring my first employee?

So, you’ve weighed up the pros and cons, discounted the option of outsourcing, and are turning to the jobs market to plug the gap in your resource or skillset. But, what considerations do you need to make before you begin the process of hiring your first employee? Before we get into this, you can check out the government’s step-by-step guide to employing someone, here.

The list of considerations is lengthy, from creating a job description (more on that below) to conducting your application process. That is, of course, if you don’t already know the person you’re going to employ. But even then, appropriate documentation must be obtained. For instance, the individual must have the legal right to work in the UK. And, depending on their role, CRB and DBS checks may need carrying out too.

Here are ten of the main things you should have in place before hiring your first employee.

  1. Company and employee objectives
  2. A place of work and company health and safety protocols
  3. Notice periods, probationary periods, and terms of employment
  4. Compliance, equal opportunities, and other relevant legislation
  5. Salary and bonuses
  6. Statutory payments and workers’ rights (holiday pay, sick pay, maternity/paternity pay, etc.)
  7. Flexibility and hours of work
  8. Benefits
  9. Supervision
  10. Company handbook

To give you a Human Resources perspective on all this, here’s our HR expert and People Manager, Samantha Rhodes, with some important things to remember.

“You must have an understanding of basic employment rights,” Sammie warns. “If you get this wrong it can be extremely costly. And, there are some pretty basic things that you need to get 100% right.”

“For instance, you have to have a contract of employment in place that details the particulars of their employment. Things like holidays, notice pay periods, how they’re going to get paid, when they’re going to get paid, etc. You need to verify their right to work documents. You also need to collect new starter information, such as: bank details, personal details, emergency contact details, P45/HMRC new starter checklist.”

“It is your responsibility, as an employer, to provide your employees with that contract of employment. You’re the one who needs to draft that up, issue it, and get it signed. And, that needs doing before the employee sets foot on the premises, or on the first day.”

“Fortunately, all this information is available on ACAS, free of charge. It’s accessible by anyone, whether that’s you as a business or your employee/s. ACAS is really handy. It separates things into what you as an employer need to know and what your employees need to know. You can get a free template to help you, which will tell you everything you need to prepare. There is a paid service on there as well which gives you access to things like HR documents and other templates. As a small or start-up business owner, you can access a lot of useful information and save yourself a lot of time when hiring your first employee.”

There’s a lot to get your head around then. And, all this before you’ve even picked the person you’re going to hire. They’d better be worth their weight in brews…

3. Is it worth using a recruitment agency?

Unless you hire someone you know or source candidates via your website or social media channels – which could somewhat limit your casting net – the chances are, you’ll need to promote your vacancy more widely. One way to do this is by using a recruitment agency.

We’ve all heard of, and likely used, one or more of the industry’s big hitters at one time or another. Firms like Indeed, Reed, CV-Library, Monster, TotalJobs, and others allow vast swathes of job-seekers to find your ad and apply for the job. These sites are a cheaper, and in some cases, free solution and, thanks to the site’s candidate search metrics, they’re sophisticated in terms of ensuring you get only serious applicants. So, why choose a smaller recruitment agency instead?

Here’s Sammie to explain more: “The value of using a recruitment agency can depend on your circumstances and how niche the role is. The more niche and/or skill-specific it is, the likelier you are to need a recruitment agency. Recruitment agencies are valuable as they often specialise in recruitment for a particular sector. That can be anything from general office staff, to financial specialists, to creative workers, to engineering, IT, the list goes on. So, if you’re looking for something quite particular, it helps to go through a specialist recruiter.”

“Furthermore, the best recruitment agencies will often have already interviewed potential candidates for you. They’ll tend to only put forward candidates who really suit the role/your company.”

“The sign of a good recruitment agency is, basically, one that finds you good candidates! You want suitable CVs. It also helps if the recruitment agency has a good feel for your business. The better the relationship you have with a recruitment agency, the better the quality of candidate you’re likely to get through. Remember, it’s not only about skills and experience, as important as those things are. It’s also about whether a candidate will get on well with you, your clients, your culture, and the other people in your business. That relationship is harder to come by with the larger job advertising agencies.”

“That said, I’d still recommend trying out the big sites. They’re often free and it’s really easy to set up an account and start advertising. Sites like that have a large reach of people too. However, the flipside of that is that you do get a lot of applications that you then have to have the time to sift through. We’re fortunate to have a team that assesses applications and sorts the ones that are suitable to move forward with. But it can be in the hundreds. So, make sure you’re prepared for that.”

4. How much does it cost to use a recruitment agency?

Whilst recruitment agencies are valuable, their services come at a cost, especially with regards to higher-salary staff.

Generally speaking, the fee is around 20+% of the employee’s base annual salary. So, if you hire someone on £40,000, you’d be paying an extra £8,000 to the recruiter. Maybe even more. There are sometimes opportunities to negotiate on price to, say, 10-15%. However, that often means becoming exclusive with that agency and only using them going forward.

It’s a decision you need to take the time to weigh up. Is that additional 20/25% investment worth the ‘gamble’ if it means ending up with a higher-level candidate, a sales exec for instance, who could bring in much more than that in terms of revenue over the longer-term?

5. Hiring your first employee… how much does it cost?

The cost of hiring your first employee is something you should carefully consider before you take the plunge. When you first hire a new employee, it’s no longer just your own financial affairs at the mercy of your business’ success and failure. As well as picking the right person, you’ll need to ensure you’re up-to-date with the latest payment and National Minimum or Living Wage legislation.

By becoming an employer, you’ll also take on the added financial responsibility of Employers’ National Insurance (NI). You’ll pay this at a rate of 13.8% of your employee’s salary. You’re only obliged to pay Employer’s NI for those employees who are paid more than the ‘secondary threshold’, which currently stands at £9,100 (as per the 2023/24 tax year).

Most businesses can also claim employment allowance, potentially reducing their PAYE bill.

For those hiring younger employees, it’s worth noting that you won’t have to pay Employer’s NI for any staff under the age of 21. That’s unless their salary exceeds £50,270 (the upper secondary threshold for the 2023/24 tax year).

It’s also necessary to check whether any of your employees are eligible for auto-enrolment. In all likelihood, as a full-time employee, they will be. For those employees who are eligible, you’re legally obliged, as their employer, to contribute to a workplace pension scheme. Employees are entitled to auto-enrolment if the following stipulations apply:

Of course, there’s also the small matter of the employee’s salary and what you’ll actually be paying them. Further to this are any costs associated with recruitment. When determining the salary of a vacant position, be sure to do your market research and take the time to look at similar vacancies, as well as considering what budget availability you have. Depending on the applicants, you may need to be flexible when it comes to negotiating a final amount.

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6. Creating a job description

The all-important job description. In short, the job description is your opportunity to formally specify the type of person you’re looking to add to your enterprise as well as what it is you want them to do.

In the job description, you need to stipulate what skills, experience and qualifications, if any, the successful candidate needs to have.

Whilst you’re creating the job description, think about how you’re going to train and supervise your new employee. This is as important for yourself as it is for the new recruit. Decide how you’re going to manage them in advance. It’s reasonable to question the necessity of recruiting someone to do a job that will require a lot of your time to train and answer questions. It could be counterproductive.

As we’ve explained, quite often your first employee is someone you know and may even be related to. So, all the more reason to be explicit about what you expect them to do and what your working relationship is going to be with them.

Their salary and working arrangements are also key components of a good job description. That is:

  • Are they part-time or full-time?
  • Either way, how many hours will they be working each week?
  • Where will they be working from? I.e.: on-site, on location, in the office, remotely, etc.
  • What is their working pattern? Is it shift work, ‘9-to-5’, or on a flexible basis?
  • How much will they get paid and is it dependent on experience (DOE)? If so, specify.

Whilst your enthusiasm should, of course, shine through in the picture you paint of your company – and the description of their potential role within it – you should try not to oversell the role. It’s important to be mindful of encouraging unrealistic expectations. Let the opportunity speak for itself.

Here’s Sammie again, with some tips in a little more detail: “The first thing you need to outline in the job description is the job title. The employee’s title – and their job description more generally – should, as accurately as possible, describe what they’re going to be doing in their day-to-day work. It’s no good creating a fancy job title if it isn’t reflective of their role and responsibilities. All that does is cause issues whereby the employee doesn’t have a good enough understanding of what’s expected of them. And, if they look elsewhere or conduct market research, their salary might not match their expectations or what they see. Another potential problem.”

“If a job title elevates someone above what they’re capable of delivering, it can be detrimental to both parties. So, make sure the job title is accurate and in line with industry standards.”

“The job summary section of the advert/job description should be a snapshot. So, if someone were to look at it briefly they’d know what they’re going to be doing, plus a little bit about what the company does and how it does it.”

“It’s all too easy in a small business to get yourself involved in lots of different aspects. Office managers in small businesses, for instance, also do things like HR and marketing. They wear a lot of hats. So, you need to outline what their key responsibilities will be as well. My advice would be to keep them short and concise. The easiest way to do that is to list their main tasks. And, if you can, leave scope for the role to expand and develop in line with the business.”

“The reason for that is, if you’re a start-up or small business and you’re hiring new employees, you’re likely to have plans for growth at some point down the line. Initially, a new employee’s tasks might be admin-based, for instance. However, as the business develops over time and demand increases, you may ask them to do a broader range of things. If expansion is in your planning, be open to increasing their responsibilities and job description.”

“Qualifications and experience are also important to consider. If there’s something in particular that the candidate absolutely needs to know in order to do the role or work in your sector, then you need to make sure your job description outlines that. Otherwise, you’re going to be batting away applications from people who are never going to fit the bill. It’s a waste of both your time and there’s.”

“Finally, structure. The job advert doesn’t have to be too fancy. But it does need to be clear, concise, and have good, professional formatting.”

7. How many candidates should I interview?

Depending on who you ask, and the role you’re recruiting for, the answer to this question is likely to differ. But, whether you’re looking for a part-time admin assistant or a new CEO, it’s important that you consider – and interview – multiple candidates for any one position, particularly if you’re hiring your first employee.

As discussed, your first hire may be a relative or close friend. And, that’s fine. But, even then, it can’t hurt to at least peruse the market to see if there may be a ‘better’ alternative. Or, at least, to allow you to cross-reference with the candidate you’re likely going to hire.

If you don’t know the person you’re going to hire, it’s even more important to cast your net wider and not settle on the first person who shows an interest. As our HR expert, Sammie, suggests, “you should interview a minimum of two to three candidates for any one position.”

“You need to have something to compare each candidate to,” she says. “Furthermore, if you can’t find your ideal candidate in the first round of interviews, you should always meet more applicants. It’s so important that you don’t settle. That’s a common mistake that a lot of new businesses make, all because they need someone to fill a post swiftly. In my opinion, you’re always better waiting for the right candidate to present themselves. That can be hard, especially after a pandemic.”

“But, if you get the wrong person in, it can do far more harm than good in terms of relationships with clients and the impact on the balance and culture internally.”

Some companies also set certain tasks or challenges to complete as part of the application process. This could be anything from an aptitude test to designing, creating, or building something depending on the role. As Sammie says, “it really is role-specific.”

“A lot of companies have a multi-layered recruitment process. It might be that you have an initial application process, which could be a simple form or the sending in of a CV. That might then be followed by psychometric testing and/or job-specific, time-sensitive tasks to see how candidates get on in certain situations. For previous IT roles, for instance, we’ve asked people to develop something for us. Or, for a design role, we’ve asked candidates to design a logo or a presentation or something.”

“Whereas, for other roles, it’s been a straightforward application and interview process. It depends on the role as well as how much time you have, as an individual, to set all this up and analyse the results.”

“For me, though, fit and capability are more important factors.”

8. What are the three most important questions I should ask a candidate in an interview?

Here are, our HR guru, Sammie’s top three questions to ask a candidate at interview when you’re hiring your first employee.

 

1. ‘Tell me about yourself.’

Sammie: “I always open with this question. First impressions are key. You’re looking for someone who knows themselves really well. You’re also looking for someone who is clear and concise about what they’ve achieved in life and what they have to offer you. Look out for candidates who can keep it brief and direct. And, ask them to give examples of key achievements and skills they’ve developed.

 

2. ‘Why do you want the job?’

“With this question, listen out for an answer that indicates that they’ve really thought about the job, the company, and why they want to work in that role, for your business. It’s no longer enough for someone to say, ‘oh I’ve had a look at your website, your director is Mr or Mrs. X, and your business was founded in whenever’. It makes you think, ‘okay, we know you’ve had a quick scan of the website but why, specifically, do you want to work here?’”

“I think it’s very important for you to know if earning a wage is the candidate’s sole motivation. If you’re happy with that, that’s fine. But, you ought to know what research they’ve done and, in my opinion, eliminate those who are just looking for a paycheque.”

 

3. ‘Why should we hire you?’

“This question should always be towards the end of the interview. Make sure the interviewee is comfortable and settled as it can be quite a daunting question to answer. With this question, you’re looking out for candidates who tell you – or show you – that they’re going to add value to your business. They should also demonstrate that, not only are they capable of doing a great job but that they’ll also fit in well with the business.”

9. Choosing the right candidate

Interviewing candidates for the first time, for your own business, brings a different dimension and a different level of pressure to, say, an HR rep interviewing for a multinational conglomerate. However, the basic principles remain the same. Your task is simple: vet candidates to make sure your successful new recruit is a capable, conscientious individual who is going to fit in well with your company and, ultimately, add value. Easy, right?

Here are five key factors to consider when deciding who you’re going to hire:

  1. Skillset: Have they got the necessary talent, qualifications, and technical knowledge to do the job effectively? Do they offer certain attributes that can be developed and enhanced over time? Perhaps your business, and the job they’re applying for, could challenge them to improve and progress.
  2. Personality: Are they a team player? Are they driven, and a self-starter? Will they fit in well with, or even enhance, the company culture? That’s not to say that you should recruit someone simply because your personalities match. Depending on the position, it can be far more beneficial to find someone who challenges your methods. A ‘yes person’ won’t get you very far.
  3. Strengths: What are they good at? Can they do things you can’t? And, do their best qualities relate to the role they’ll be doing? Think about your own strengths and weaknesses too, and recruit someone to fill those gaps. You’ll be far happier doing what you’re good at. So, hire someone to do what they’re good at, someone who can add something valuable to your business.
  4. Weaknesses: Are they open about their deficiencies and can you offer them training – either internal or external – to sufficiently upskill them? Ask yourself if their best attributes outweigh the traits they may be lacking in. And, ascertain whether they’re the type of person that wants to learn and adapt, and are willing to accept constructive criticism.
  5. Experience: How accustomed are they to the environment you’re going to be bringing them into? Have they got a track record of delivering the outcomes you’re looking for? Experience isn’t everything, though. If you’re willing to invest time and effort with the right person, it can be far more beneficial to hire someone who is inexperienced but tenacious, open-minded, and happy to take feedback on board, over someone with years of experience but a set way of doing things and a closed mind when it comes to new systems and processes. Depending on your propensity for growth, the future can be a more important consideration than the present.

Make sure the candidate has the right to work in the UK. Furthermore, get any necessary references and certificates to verify what your new recruit has told you during interview.

Bear in mind, of course, that the image the candidate presents at interview is likely the best version of themselves and might somewhat mask the reality. So, don’t beat yourself up if your first hire isn’t a roaring success. Many aren’t. Trust your gut and follow the process. For more guidance on choosing the right candidate, check out these top tips from Forbes’ Human Resources Council.

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10. What do I need to do before a new employee starts?

Once the interview process has concluded, and you’re confident you’ve selected the person who’s going to take your company to historic heights, it is best practice to issue that individual with a written contract. If they work for you for over a month, you must provide them with a ‘written statement of particulars’. This will set out the conditions of employment, such as job description, working hours, rate of pay, and holiday entitlement.

To ensure you remain compliant when hiring your first employee, it’s important you keep up-to-speed with the latest information surrounding employment law. So, once you’ve found the ‘Wozniak’ to your ‘Jobs’, you’ll need to register as an employer with HMRC. The process is fairly straightforward. It should take less than two weeks and you can complete it online. And, following your registration, you’ll receive a PAYE (Pay As You Earn) reference number to begin processing your payroll. You need to inform HMRC each time you take on a new employee. You can do that here.

It’s a legal requirement for an employer to have Employers’ Liability Insurance in place. In addition to this, you must meet the necessary Health and Safety obligations. It’s also an obligation for all employers, including small employers, to operate a workplace pension scheme. Oh, and unless your newbie decides to opt-out of the Working Time Directive, they cannot work a second more than the 48-hour average. Early finish on Friday anyone?

With regards to health and safety, you’re 100% liable. As an employer, it’s your responsibility for ensuring that people are safe whilst they’re working for you. Whether that’s at home, in an office, or on commercial premises. Ideally, you’d have a policy or handbook, which would detail the specifics.

When it comes to helping your new employee settle in, one thing to remember is the importance of a good induction. It’s crucial that new employees familiarise themselves with the company, the premises, and any other co-workers, and that they feel supported right from the outset. The best inductions:

  • Introduce the new starter to the business’s key personnel.
  • Show them around the workplace; kitchen, toilets, fire exits, etc.
  • Outline what’s expected of them and how they will make a valuable contribution.
  • Train them on your health and safety procedures.
  • Cover their statutory pay, sickness and holiday protocols, and probationary period. You will want to use the probationary period to assess if the new employee is suitable for the role. Probation periods commonly last for three months and should effectively onboard your new employees.

Once your new employee has settled into company life, it’s important to build in regular checks or appraisals with them to ensure things are going as well for them as they are for you.

Thereafter, you’ll need to keep an eye on any legislative changes, such as employment law or increases in the National Minimum and Living Wages. Pension auto-enrolment is also something you’ll need to put in place. You’ll receive a letter from HMRC in due course with the precise details of what you need to do.

There’s a lot to think about as a new employer. But, fear not. All the stuff you need is available on ACAS, and on the Health and Safety Executive (HSE) website too. You can call ACAS direct, for free. And, whilst they might not be able to advise on complicated legalese and employment law specifics, they’ll refer you in the right direction.

If you’re employing staff for the first time, here are the government’s ‘seven things you need to do’.

11. How much should I pay my first employee?

Deciding how much to pay a new recruit can be a minefield. You need to evaluate the candidate’s expectations, qualifications, experience, specialist skillset and level of accountability, as well as the role’s market value, your company’s location, and how much your business can afford to pay them. Bonuses and benefits in kind are also important considerations. For a comprehensive take on how much you should pay your staff, check out this free guide from leading online resource, startups.co.uk.

For more on this though, we asked Sammie what metrics, if any, new employers should use when deciding how much they should pay an employee, particularly their first.

“Affordability is key,” she said. “If you don’t have the budget, and you don’t know whether you can afford it, it’s not fair to take on someone new.”

“In terms of a specific figure, whilst it’s not my area of expertise, you need to ensure that the job pays at least the current National Minimum/National Living Wage for that person’s age and job role. Beyond that, make sure you assess the market rate. Whilst some companies pay external organisations to do their market valuations, it’s a luxury that a lot of small businesses might not be able to afford.”

“So, on that front, I’d recommend having a look at local job advertisements. It’s another reason why the job title is really important. The more accurate and straightforward a job title is, the easier it is to compare like for like when compiling market-wide valuations. It’s about balancing what seems fair and realistic with what you’re going to be asking your employee/s to do.”

12. Paying a new employee?

If your new recruit is coming to your company from another business, you’ll need to obtain their P45. If this isn’t possible, be sure to ask them to complete HMRC’s New Starter Checklist. This will help to assign them a tax code.

All businesses must report their payroll information online, in real-time. That means you must file your payroll figures with HMRC either on or before you make a payment to your employees. HMRC will have full visibility of your PAYE liability. And, as you might expect, there are penalties for lateness!

The most common form of paying employees is ‘time-related pay’, or annual salary. This is where staff get paid based on the number of hours they work across the year. Their annual salary gets divided into equal payments for each pay period, be it monthly or weekly.

As you’d imagine, there’s a lot to unpack when it comes to paying your staff. Here’s the government’s guide to running payroll. But, if all this seems a tad overwhelming, don’t worry; help is always at hand…

13. The ‘managed payroll’ solution

As the size and scale of your operation increases, so too do your financial responsibilities. What’s more, the amount of time and resource that you’d once been able to dedicate solely to the growth of your business may reduce as a consequence of training, managing and paying your new staff.

Now, you can, of course, operate your own payroll using free or off-the-shelf software packages. The capability of these solutions, however, depends on the amount you can afford to outlay. If you have limited experience in the field of finance, though, and who can blame you, it might be more viable to seek professional, affordable assistance by outsourcing your payroll function to an accountant or specialist provider. Managed payroll removes the burden and stress of administering your own payroll. What’s more, the costs associated with engaging the services of a professional are inconsequential compared to the cost of getting it wrong.

By allowing qualified professionals to look after your company’s finances, you can rest assured that your payroll gets administered on time, in full, and completely compliantly. Thus giving you more time to do what you do best: take care of business.

On the subject of outsourcing more generally, here’s our MD, Neil, again: “Employment is a great option. But, it’s also important to ask yourself whether you can solve the skills gap in your company by outsourcing, or through automation. Hiring your first employee is one solution, but there are plenty of others worth considering too.”

“I agree. Outsource the work that you can,” adds Lara Hodkinson, our Head of Client Services. “You might be doing your own books and not have time for all your admin. Your first thought might be to bring someone else in. But, with something specific like that, outsourcing the bookkeeping could give you the time and space you need to pick up those other jobs yourself while taking advantage of specialist expertise.”

You can find out more about Danbro Business’s managed payroll solutions, here. Or, to hear first-hand how we’ve helped clients like you with their finance function, click here.

14. Does my business need an HR team?

Navigating the wonderful world of employment is not without complexity. As liberating as it can be to inject fresh ideas and new personalities into your business, you need to tread carefully when it comes to employment law and employee welfare. Do things by the book. Oversight and complacency could cost you.

So, how do you make sure you’re following all the correct procedures with regards to employment and employee welfare? And, at what point does your company need a specialist in HR? Here’s our HR expert, Sammie Rhodes, again, to explain more.

“As above, ACAS is really helpful. Failing that, I’d suggest outsourcing anything overly complicated, or anything that needs a specialist. Now, that could be an accountant or a solicitor, or a payroll administrator, for instance. But there are also companies who specialise in outsourced HR. So, when might you need to do this?”

“If you’ve got fewer than 10 employees, most of your HR tasks and challenges will tend to be smaller and less intensive. That includes administrative responsibilities, mainly relating to holidays and payroll. Therefore, in those circumstances, it’s unlikely that you’d need a dedicated HR specialist. Instead, you’d need someone to take on ad hoc tasks as part of their existing role.”

“When you have, say, between 10 and 50 employees, you probably need someone to officially take on responsibility for HR. That doesn’t necessarily need to be full-time. It depends on the type of staff you’ve got and how demanding they are in terms of needing HR. It is important to have someone who can prioritise and deal with HR issues as and when they arise.”

“So, if you’re in a challenging industry, with a higher turnover of staff, you need more HR. Whereas, if you work in a business where people stay around for longer periods of time, with lower turnover, plenty of settled staff, not much variation in pay, and regular and set holidays, then HR won’t be needed as often.”

“Finally, at businesses with 50 plus employees, there will be a number of essential HR and administrative tasks that will require a dedicated HR professional or team.”

15. HR tips for first-time employers

So, in conclusion, what key advice does Sammie have for start-up owners who may be about to hire their first employee?

Well, she says it’s crucial to ‘understand your legal obligations as an employer’. And, that getting it wrong ‘could prove costly’. Beyond that, she also has a warning for business leaders, and those in the industry more generally: “The landscape is definitely changing for HR. It’s changing all the time.”

“So, with working from home, for instance, you need to consider ‘are workers engaged?’ ‘Are they performing well from home?’ ‘Is the business doing well as a result of more people working remotely?’ The answer to those questions lies in data. And, don’t forget, it’s currently combined with a pretty seismic economic downturn post-pandemic. So, it is difficult to judge.”

“There seems to be a lot of assumptions in business at the moment. My sense is that businesses are thinking that a reduction in performance is due to people working from home. That’s down to less cross-sharing of information and reduced team morale – with people working independently from one another. And, whilst there will be data published on this soon, it’s not available yet. Hence why we’re dealing with assumptions at the moment.”

“So, if in doubt, ask someone!”

 

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