Payroll Blog

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How to Hire an Employee

(This is the fifth step in my 5-step hiring process series.)



how to hire an employeeIf I find The Right Person, I make a verbal job offer, followed by a written job offer that confirms the details (e.g., salary, title, start date).
Determine salary. I intentionally pay employees on the high end of the “going rate.” It makes for good morale and less turnover. And it is the right thing to do. While learning how to set salaries for employees, I check the internet for information on average wages paid for industries, job titles, locations, etc. (e.g., blog articles, Bureau of Labor Statistics).

Drug test, background checks, references. Usually the reference checks, drug tests and background checks are done after the job offer is made. The offer is made contingent upon the test results.

The job offer. When I find The Right Person, I want them to accept my job offer. So I make the job offer as soon as I can by calling the applicant. The offer includes starting pay rate, brief explanation of benefits, any perks, and lots of enthusiasm! The applicant may have questions about benefits, etc., and I take the time to answer all questions. When the job offer is accepted, I go over the next steps (e.g., drug test, background check, start date), which are repeated in the job offer letter.

If I might have found The Right Person, I can offer a paid tryout without adding the applicant to my payroll.
Try before I buy. This is a great option to have in your back pocket. By definition, try-before-you-buy means bringing in a new hire on a trial basis so you can assess their on-the-job skills before you commit to hiring the applicant.

For example, perhaps I am unsure about hiring an applicant because s/he has not had any job experience; however, the applicant’s resume shows that s/he does have the required training to do the job. I can use a contract staffing service provider, making them the employer of record. Top Echelon Contracting processes payroll, provides any benefits, etc., for the applicant during the trial period until I have enough experience with the applicant to make a final determination.

Full Disclosure. Top Echelon’s Contract Staffing Services is one of the small business services I own.

Since I am using background check information when I make my hiring decision, I always follow the Fair Credit Reporting Act (FCRA).
The Federal Trade Commission’s Bureau of Consumer Protections Business Center has very clear instructions on how to legally comply with the FCRA when you request a background check or need to “take adverse action.” The FCRA says the job applicant must be given a copy of the consumer report that prompted my decision to reject the candidate and a copy of their rights under the FCRA. This gives the applicant the opportunity to respond to the agency if the information is not correct.

If I am rejecting an applicant for another reason (e.g., a better qualified applicant is chosen), the FCRA does not apply. However, I am equally careful to use non-discriminatory language in all letters of rejection. In some cases, I may want to consider an impressive applicant for future openings, so I word the rejection word appropriately.

If none of the applicants meet my needs, I hire an outside recruiter.
Recruiters charge 25% to 30% of the job seeker’s first-year annual salary. We use to find a recruiter by geography or speciality. “Time is money” is a cliche’, but sometimes my time is better spent moving my business forward rather than spent reading resumes of unqualified applicants.

If I have an urgent need to fill a position, and I am willing to hire an applicant on a contract-type assignment, I go to The recruiters listed on this site specialize in contract placements.

Full Disclosure. and are websites that are owned by two of my companies, Top Echelon Network and Top Echelon Contracting.

Ask the Small Business Expert

Mike Kappel, Serial Entrepreneur
Mike KappelQuestion: After you hire The Right Person, how do get them off to a good start?

Mike says: There are several things I do in an effort to successfully onboard a new employee. In the long run, a solid start saves me money because the new hire becomes productive sooner, and I reduce turnover. After all, the new hire wants to excel, so I want to do what I can do to make that happen.

  • Job description. A thorough job description that clearly defines the expectations for the job helps make the new hire’s onboarding smooth and effective.
  • Before the new hire arrives on Day 1…
    • Before they even start, I ask the new hire to prepare a paragraph or two about themselves for our in-house newsletter, and they may have online paperwork to complete. That connects them to us during the gap between hiring and starting.
    • I use this checklist for hiring your first employee to make sure their work area is set up with a computer, phone extension is assigned, benefits documents are prepared, etc.
    • We plan the new hire’s training and/or mentor.
    • There may be a printed training schedule with a list of “downtime” tasks that will keep the new hire moving forward.
  • Day 1. The Day 1 activities will vary depending on the job.
    • The new hire is introduced to the rest of the staff.
    • Lunch is either with their manager or I bring in pizza for a relaxed introduction to the rest of the department.
    • Human Resources paperwork for benefits, etc., is well-organized and done as painlessly as possible. The new hire gets an information sheet with details about passwords, forms to be returned, etc. And all of our policies and benefits are available 24/7 to employees in our online employee portal software (My Patriot).
    • Full Disclosure. My Patriot is one of Patriot’s software products.
  • Identify resources. The new hire needs to know where to go to with questions, and I provide a list if needed. Since I have five companies under one roof, a diagram of who’s who also helps a new hire become acclimated and productive.
  • Feedback. I try to set aside some time for the new hire so they can get feedback on how they are doing and get their questions answered.
  • Real work. It is important that the new hire do “real work” their first day and make a contribution. I may not put a new salesperson on the phone on Day 1, but s/he might post the notes for an observed sales call.
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