Hiring Employees for Your Startup – 5 major considerations
Ramping up hiring to scale the business is an exciting time for a startup. It’s not uncommon to double or triple the workforce year after year once this process starts, particularly for venture-backed companies. In order to avoid a “runaway train” effect when hiring employees your startup, here are some things to be thinking about as the hiring process begins.
1. Employee Handbook
Setting up a uniform company-wide code of conduct is crucial. There should be clear guidelines on how employees should act in the workplace. It sounds like no fun, but in reality creating this handbook will help shape the company culture and clarify what qualifies a good candidate for forthcoming positions.
The first step towards defining your culture is drafting and implementing the company’s official employee handbook. There are plenty of free resources out there that make this task easier. Here’s an example just for reference.
Generally, an employee handbook opens with some background and the company’s mission statement. The rules of the workplace follow, including office hours, dress code (or not…), vacation days, salary, benefits, grounds for termination, etc. The handbook should also state the company’s willing compliance with all of the laws related to employment practices: Title VII, the ADA, the ADEA (for examples). These laws are concerned with the following:
- Employment at Will
- Sexual and Other Workplace Harassment
- Equal Employment Opportunity
- Disabled Employees and Reasonable Accommodations
- Procedures for Reporting, Investigating and Resolving Employee Complaints
It’s also helpful to include an Information Security and Social Media Policy, outlining the “dos” and “don’ts” of employee behavior on social media. This will help limit liability on the E&O, Cyber, and Media liability front.
2. Hiring Policies
It’s crucial to have a definitive hiring policy in place. Again, there are plenty of resources out there to help with this (here’s a decent example). The goal with this policy is to set definitive guidelines for prospecting, qualifying, and on-boarding new employees. You want this document to contain clear guidelines for the whole process from the moment a prospect is put in to the queue through their first day of work. Here are some things to consider:
- Prerequisites to be considered for hiring
- Manner in which job openings are posted / advertised
- Interviewing process (from screening through each round of interviews)
- Any required background checks
- Authorization to present a job offer
- Any paperwork required post-offer and pre-orientation
3. Firing Policies
Wrongful termination is a big risk exposure no matter the size of the company. A situation as tense as being fired tends to bring out the crazy in people.
Therefore, it’s imperative that companies have definitive procedures in this area: when termination is appropriate, what lines had to be crossed to reach that point (warnings, violations, etc…), and the manner in which the termination is carried out. For example, it’s important to have strict access revocation procedures in place so that a fired employee can’t pull an office space and wreck your company from the inside out.
Keep in mind that procedures will differ for termination for cause and without cause. Here’s a good place to get started with your termination policies.
4. Employment Practices Liability Insurance
Employment practices liability insurance is exactly what it sounds like: insurance that protects the company when it runs afoul of proper employment practices. EPL Insurance kicks in for a number of claim scenarios, including but not limited to wrongful termination, discriminatory hiring/firing practices, sexual harassment, alleged violations of employment statutes, and more. As startups cross the 10+ employee threshold, EPL insurance should definitely be in place to provide a backstop.
It’s important for startups to define their own culture and control the hiring process. However, the clerical tasks associated with running payroll and managing employees can be a huge time-suck. Startups should also consider outsourcing some of the HR work when ramping up hiring. There are plenty of platforms and service providers (zenpayroll, tenacity, trinet…) out there that help automate running payroll and onboarding new employees.
This short list of best practices for ramping up hiring is a great starting point for most startups. Companies that implement these few things early will be in good shape to scale rapidly and with confidence.
Got any questions about how to reduce your EPLI liability? Got any questions at all? Looking to go ahead and get a quote? We’ve got you covered! Call us up at (646)-854-1058 or shoot us an email at email@example.com. Either way we’ll be happy to talk insurance with you!