What do I need to know about hiring employees?

Takeaway: Start your planning early, develop a process, use a similar criteria for everyone to determine compensation, and have everyone sign PIIAs before they start working.

As a startup founder, hiring employees is an important step in growing your business. However, it can be a complex and time-consuming process. Here are some things that startup founders need to know about hiring employees.

Develop a hiring plan

Before you start hiring, develop a hiring plan that outlines your needs and goals. This can help you identify the skills and qualifications you are looking for in a candidate and ensure that you are hiring for the right positions. Be sure to budget out equity compensation for your employees through your next expected financing. This plan does not have to be perfect, but keep in mind that equity can be very valuable early on and dilutive over the long term. For example, issuing $1,000 of shares to an early employee at $0.03 per share is 33,333 shares; issuing $1,000 of shares at a later stage at $0.50 per share is 2,000 shares. If the company ultimately sells for $10 per share, the first employee receives $333,330 in proceeds and the second gets $20,000.

Create job descriptions

Create clear and concise job descriptions for each position you are hiring for. Job descriptions should outline the responsibilities, qualifications, and skills required for the position.

Develop a hiring process

Develop a hiring process that includes job postings, resume screening, interviews, and reference checks. This can help you identify the best candidates for the job and ensure that you are hiring the right people for your team.

Offer competitive compensation and benefits

In order to attract and retain top talent, it’s important to offer competitive compensation and benefits packages. Research industry standards and consider offering benefits such as health insurance, retirement plans, and paid time off.

Onboard new employees

Once you’ve hired a new employee, it’s important to provide them with a comprehensive onboarding process. This should include an introduction to company culture, training on job responsibilities, and an overview of company policies and procedures.

Protect your business

Protect your business by having employees sign employment agreements and proprietary information and inventions agreements (PIIAs). These agreements help protect your company’s ownership of its intellectual property and prevent employees from sharing your company’s confidential information.

Understand employment laws

As an employer, you are responsible for complying with federal, state, and local employment laws. This includes minimum wage and overtime requirements, anti-discrimination laws, and workplace safety regulations. Make sure you understand the laws that apply to your business and take steps to ensure compliance. Your lawyer will serve as a critical advisor here and this is an area where working with a large firm that has experienced employment specialists can be a significant asset.

Conclusion

Hiring employees is an important step in growing your startup, but it requires careful planning and attention to detail. By developing a hiring plan and process, offering competitive compensation and benefits, onboarding new employees, protecting your business, and understanding employment laws, startup founders can build a strong and talented team that can help take their business to the next level.