Invest In My Idea

Traditionally, when business owners thought of expansion, their first thought was usually to hire an employee. It was intended that the employee would help with the workload, but hiring an employee also adds a broad new range of responsibilities for the busy owner. Perhaps the most worrisome of these responsibilities is the owner’s liability for harmful activities of employees while in the course of their employment. Because of these new responsibilities, it is critical to carefully consider the initial decision to hire an employee and, even more importantly, the selection of the best person for the job.

Part of the selection process involves the preparation of a job description that outlines the work to be performed by the employee and the qualifications necessary to do this work. The job description also serves as a checklist to ensure that candidates possess the qualifications necessary for the job.

Unfortunately, not all hiring decisions work out well for new employers. Government standards specify the notice period for terminating employees if it turns out that new employees are not suitable or long-term employees are no longer suitable for the job.

Before You Hire

When business owners think about expansion, they generally look to hire employees. But many aspects need to be considered before taking such a large step. The changes associated with acquiring some new computer equipment pale in comparison to the impact of hiring your first employee.

Entrepreneur Beware

You as employer are liable for what your employees do during the course of their employment. This means that you are liable for the damages arising from any harm that your employee causes while performing work for you. If, for example, while performing work for you, your employee physically attacks or sexually assaults someone, you are legally responsible for whatever harm your employee may cause.

When you become an employer for the first time, you trigger a series of new relationships, each with its own set of responsibilities. The effect of your new employer-employee relationship will be felt internally by changes in the way you normally do things. For starters, you will be required to train and supervise your new employee. These are skills that you have probably not used in running your business. You must also be prepared to delegate work; again something that you might not have done before. Instead of working alone, you will have to learn to work with someone, something that is not always easy for independent-minded small business owners to do. And, of course, once you have hired an employee you will have the obligation to continue to pay your employee on an ongoing basis, even when there is no cash flowing into your business.

There are also external implications of hiring help. Your employee can make binding commitments to people such as suppliers and customers on your behalf. It is your responsibility to limit the commitments that your employee can make and ensure that these limitations are respected.

You are also subjected to a wide range of government-imposed responsibilities. All levels of government have enacted provisions that regulate the workplace and employers’ relationships with their employees.

Clearly, having an employee involves more than simply paying an individual for work done. It means a whole new set of responsibilities.

The first step in hiring an employee is determining if you have what it takes to become an employer. The following questions will help you decide this issue.

Do you have the skills to train and supervise staff?

If not, how will you develop them? Or who will do your training and supervision? Can you delegate work that you have done in the past?

Can you cooperate with someone else in getting work done?

Is there enough work to keep your employee busy?

Do you have the space and equipment to accommodate an employee? Do you have the cash flow to support the costs of the employee?

If you have answered “Yes” to most of these questions, you can probably handle the responsibilities of hiring an employee. If, however, you have answered “No” to most of them, you might be better off referring and subcontracting work, each of which will be less disruptive to your business.

What Will the Employee Do?

Once you are satisfied that hiring an employee will be more helpful than disruptive, the next step is to determine what the employee will do. The following questions can help you with this process.

What work are you willing to let someone else do?

Which decisions will you be comfortable leaving to someone else to make? Are you going to let the employee order supplies? Handle cash? What other responsibilities are you prepared to give your new employee?

What level of authority do you want your employee to have in performing his or her work?

Once you have determined what your employee will do, the next step is to identify what qualifications the employee needs to do the job. There are two major components of qualifications: experience and education.

There are two kinds of experience that will qualify individuals to do the work you want done. One is actual experience doing the specific work that you will want done. If, for example, you would like someone to provide word-processing functions in the job, your employee should have experience actually doing word-processing work.

The other kind of experience is comparable experience. In this case, the skills that were used to do comparable work can probably be used to perform your work. If you are looking for someone to do market research, a candidate with research experience but not necessarily market research experience could probably do the work.

Hot Tip

Instead of defining experience narrowly, it is better to use a broader definition. A narrow range of experience will probably limit the choice of candidates to those who have experience with the specific work you specify. Identifying a broader range of experience would allow otherwise-qualified candidates who could also do the work.

This will yield a larger number of qualified people.

Specify the education required. Education is likely to demonstrate an individual’s ability to think and work hard. But just because an individual has attained a specific level of education, it does not mean that the person can provide the actual skills that you require. There is, however, some work for which educational institutions provide job-specific training. If you require someone to perform a specific function such as administrative assistance or technical writing, you can specify the appropriate minimal educational level required to perform that type of work.

Sample Job Description

Responsibilities:

• Provide administrative support requiring confidentiality, skills, and knowledge of policies and procedures.

• Prepare correspondence, memos, reports, and spreadsheets, and maintain databases.

• Answer incoming calls and determine appropriate and timely action.

• Organize and maintain both paper and electronic files, and update systems as required.

• Sort, distribute, and proactively determine action on incoming mail and faxes.

• Perform general office duties as required; e.g., faxing, photocopying, and maintaining supplies.

• Make travel arrangements and schedule meetings, including booking rooms and arranging conference calls.

• Work on special projects as required.

Qualifications:

• 3 years’ administrative experience or equivalent education and experience.

• Postsecondary education in secretarial studies or a business-related discipline or equivalent preferred.

• Proficient in Microsoft Word, Excel, and PowerPoint.

• Excellent organizational abilities, and verbal and written communication skills.

• Demonstrated problem-solving skills.

• Proven ability to work in a fast-paced environment under moderate supervision to meet tight deadlines.

• Flexible and dependable.

Once you have identified what your employee will do and what qualifications are necessary to do this work, you can combine this information into a job description. A written job description will serve two purposes. First, it will outline the work to be done so that prospective applicants can asses their interest and qualifications in the job. Second, it will become a checklist for you to follow when screening applications and interviewing applicants. A sample job description is shown on the previous page.

Recruiting the Best Employee

Unless you have kept any unsolicited résumés that you received when you were not hiring, you will have to locate people who might be interested in the new position that you are trying to fill. There are three main approaches you can take in identifying potential employees. You can call on your personal contacts for referrals; you can publicly advertise for candidates; and you can go through an employment agency to find candidates.

One of my personal contacts routinely fills new, or empty, positions by asking contacts for referrals. His contacts can promote his business to prospective candidates, encouraging them to apply. Since his contacts know a little about the work that he does and how he does it, they can also help screen the candidates, referring only the most suitable.

If asking for referrals does not generate any potential candidates, the next step would be to advertise for candidates. There is a broad variety of places where you can advertise: newspapers, school bulletin boards, Human Resources Development Canada listings, and Internet postings. Use as few words as you can to describe the position and corresponding qualifications. Unless you want to spend a lot of time answering the phone, specify that applications should be made by written résumé only. Résumés can be mailed, faxed, or e-mailed.

Hot Tip

Your personal contacts can be one of your best and least-expensive approaches to recruiting suitable employees. Simply let your contacts know that you are looking for a new employee and tell them a little about what kind of work the new employee will be performing.

If they show interest and would like more information, you can provide them with a copy of the job description.

Another approach would be to ask an employment agency to send you several candidates. The advantage to this approach is that the agency will pre-screen candidates and send you only those whose qualifications match your requirements. The disadvantage is that unless you are seeking highly skilled individuals, agencies are not likely to be able to access candidates who are any more qualified than those you can locate through referrals and advertising. You can expect to pay the agency a commission, which will be a percentage of the employee’s expected income, if—and only if—you hire a candidate referred by the agency.

Using your written job description as a checklist, select the three or four candidates whose qualifications, at least on paper, most closely match your requirements. Once you have selected this shortlist, you can arrange to interview these candidates.

The job interview has three purposes. One is to clarify any questions that you might have arising from the résumé. You might want some clarification about how and where the candidate gained some specific skill or experience. Or if the candidate has held several positions in a relatively short period of time, you might want an explanation.

The second purpose of the interview is to assess how well you think you and the candidate will work with each other. On paper, a particular candidate may have excellent qualifications. However, if the two of you are not likely to work well together, the qualifications will mean nothing.

And the third purpose of the interview is to allow the candidate to ask questions about the work and the position. In preparing for the interviews, you will want to note the information that you need, and you’ll also want to have on hand available information that they might request: compensation, working hours, vacation, and specific features of the work to be done. It is always prudent to check references and, if possible, past employers of the successful candidates.

As well as checking references, make sure that all new employees are subject to a three-month probationary period. This will allow you and the employee an escape plan if the relationship does not work out well.

Responsibilities as an Employer

Even though the successful candidate will arrive with the skills and experience needed to perform specific work, you will still be required to train your new employee in your procedures. The purpose of this training is to help your employee adapt to the way you do things. Without this training, you will find yourself adapting to the way your employee does things.

Your employee will also require ongoing training as your business continues to grow. As the nature of the work changes, make sure that your employee develops the skills to continue to perform the work effectively and efficiently.

One area in which owners of small businesses often neglect to provide adequate employee training is customer service. It is truly amazing how many employees are on their own when learning how to treat customers.

Employees who are supported, encouraged, and respected, treat your customers the same way. Not surprisingly, employees who are not treated this way are frustrated in their work and often take their frustration out on the customers. More likely sooner than later, customers who are poorly treated will leave. If you would like to chase your customers away, treat your employees poorly. It works every time.

You can also ask new employees to read Chapters 13 and 15 of this book as part of their orientation to your business.

The federal government requires employers to deduct income tax, Canada Pension Plan, and Unemployment Insurance premiums from their employees’ compensation and to remit these funds to the Canada Customs and Revenue Agency on a regular basis. To learn more about making these remittances, contact their offices. The phone number is listed in the federal government section of your local telephone directory.

At the provincial or territorial level, there are also health insurance and workers’ compensation levies to be paid. To learn more about making these remittances, contact the appropriate Business Service Centre listed in Appendix B.

Hot Tip

It is not difficult to encourage your employees to treat customers well. Treat your employees well. In practice, this means treating them the way you would like to be treated.

Building Block

Supervising employees does not mean bossing them around. While it does mean telling employees what they must do, it also involves ensuring that they have the resources they need to perform their work. They will need appropriate training, tools, equipment, facilities, and sup-plies. They also need your support, encouragement, and respect. You support them by helping them to feel good about themselves and the work that they do. You encourage them by helping them to learn new things and make improvements in their work. You respect them by acknowledging their strengths and accepting their weaknesses.

Provincial and territorial governments also regulate employment and workplace standards. A list of these standards and contact information is also included in Appendix B.

Entrepreneur Beware

If you think that you have just cause to dismiss an employee, you might be right. But if you’re wrong, the termination might be very expensive. Check with your lawyer to be sure. The costs of defending a wrongful dismissal lawsuit will be far more expensive than getting proper legal advice in the first place.

Sorry, It Just Didn’t Work Out

Not all hiring decisions are the right ones. We all make mistakes. Also, employees who were right for the job at one time might no longer be suitable. When an employee does not fit in with your business, for whatever reason, the employee must be terminated—usually, the sooner the better for all concerned.

Termination Without Notice

In all Canadian jurisdictions, you can terminate employees without notice, provided that you have just cause. Just cause is one of those slippery legal terms that is difficult to define in a meaningful way. Generally speaking, it refers to employees’ actions that jeopardize the health or well being of other people or of the business itself. Typical examples of just cause include drinking alcohol while on the job, deliberately endangering the health or well being of others, and stealing from the employer.

Hot Tip

When terminating employees with notice, it is not always necessary to deal with your lawyers. Provincial and territorial labour departments can often provide excellent no-cost advice on termination of employees with notice. Don’t automatically assume that your lawyer’s office is the only place to get this advice.

Termination with Notice

Provincial and territorial jurisdictions have legislation that determines the period of notice required to terminate employees. These periods apply if there is no collective agreement in place between the employer and the employees. It is also possible to give an employee severance pay instead of giving notice. The severance pay is the amount of compensation the employee would have received had notice been given and the employee had stayed at the job until that time.

Experienced employers have found that it is usually better to terminate an employee with severance pay than to give notice. There is no end to the mischief that a disgruntled employee can cause. Better to pay the employee and be done with it than to risk sabotage of the business operation.

Appendix B contains a listing of the termination notice required in each jurisdiction.

The Least You Need to Know

Hiring your first employee will change the way you do things and create additional responsibilities.

Before hiring your first employee carefully consider if this is the best approach for you. If you decide to proceed, identify the work that you would like to have performed and select the candidate who is best qualified to do this work.

Check with your lawyer before terminating an employee without notice. When terminating with notice, make sure you comply with the relevant legislation.