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How to Hire the First Employee for Your Startup

As a startup founder, your first hire is a huge step. It means that you have the financial stability to pay a salary and the first sign of real growth. Hiring the right person will have a huge effect on your company. It is imperative to cover every aspect before making a commitment. But, how to be sure? Many founders make the mistake of hiring the first person that they like, without further research. They let their emotions guide the process instead of the facts, and some of them deeply regret it.

If you find yourself on the position of hiring your first employee, here are some things to cover:

The Hiring Process

The first thing you want to clearly address is what will your new employee be doing. What is the job description? What are your expectations? Will they handle money or sensitive information? Try to be thorough when answering these questions. Also, be clear on what you offer. Early-stage startups always represent some risk, so fully disclose this fact on your job description. Some things to talk about during the first interviews are:

  • Salary
  • Payment schedule
  • Payment period
  • Benefits
  • Do you offer a stake in the company?

As much as possible, stay on the safe side by choosing personal referrals. Job boards such as LinkedIn or Angellist are also secure spots, but you will need to be thorough on your pre-employment screening system. From reference checks to background checks, establish a system that will allow you to trust your potential candidates.

Design a hiring process that fits your needs. Larger companies may allow themselves the luxury of a long process that includes several interviews, on-site visits and performance tests. Define what you can afford in terms of resources and time and try to stick to it. Even when you need to be thorough, a very long hiring process can have a negative impact on an early-stage startup. However, the basic steps to cover are:

  1. Legal considerations: From non-disclosure and non-compete agreements to the type of contract (exempt or non-exempt) there are many legal aspects to cover as part of the hiring process. Ideally, get advice from a lawyer
  2. Find your best option for worker’s compensation insurance
  3. If you decide to offer a stake in the company, clearly define how will this take place
  4. As much as possible, try to define your company culture. While the company culture will shift as you hire more employees, having clear values and expectations is the best starting point.
  5. Clearly define employee policies
  6. Identify if you are in the position to hire someone for potential. While this means that you may be hiring a less experienced person, try to see how they will grow with your company
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A good idea may be to hire the services of a freelance accountant in order to comply with employment regulations. Failing to comply may result in fines or even lawsuits. If you don’t feel prepared to fill out all the forms and keep with all the records, budget for accounting services as part of your hiring process.

Onboarding

Another common mistake that startups make with their first hire is to overlook the onboarding process. While you may have time constraints and need for your new hire to jump into their role right away, a good onboarding process will ensure that they fully understand what they need to do. Here are some important aspects to keep in mind:

  • Design an orientation process and create an agenda for the first few days. Clearly explain what’s expected at the beginning
  • Co-create a 30 and 90-day plan with clear goals. Design a plan to meet those goals together.
  • Make sure your new hire has all the supplies and equipment they need
  • Design a feedback process and establish one on one meetings for feedback

Establishing a contractual probation period is also a way to avoid being stuck with someone who in the end does not meet your needs. Remember that everything needs to be in writing and try not to leave anything to chance. While there’s a learning curve when it comes to hiring employees, early-stage startups sometimes overlook the importance of creating human resources policies from the beginning.

A startup’s first hires are the ones who shape what the company culture will be in the future, so don’t settle. Do not hire someone you are not sure of because you are in a hurry.  If you need to postpone, you may opt for freelance services for a while and take the time to make an informed and more permanent decision.

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