Your First Employee: Managing HR for Your Start-Up

Your First New Hire: A Milestone for any Business

If you are self-employed, hiring and developing employees might appear to be unnecessary. If you intend to grow or expand your business, however, you should include HR management in your business plan. Depending on your type of business, the demands of your market, and your skill set, you might find that you simply cannot do everything on your own.

An Investment in Your Business

Human resources (HR) are a substantial investment for most companies. Having the right numbers of employees with the right mix of skills, abilities, and drive, is critical to the success of any company.

Hiring employees can add significantly to your overhead. Moreover, the strategic addition of the right human resources might not show an immediate financial return, but must be cost-effective for eventual financial success. Unless your need for additional resources is real, you may find yourself facing an uncomfortable downsizing or layoff situation.

Human resources can also represent a significant potential liability to your company. Labour laws have become increasingly stringent, and employers frequently find themselves restricted when it comes to hiring, promoting, disciplining, and terminating employees.

Evaluating Your HR Needs

Hiring permanent employees is one way to fulfill your HR needs. You can also meet your HR requirements by:

• Reviewing your work processes (do you need to do it all?)
• Working with contract freelancers for temporary and/or skill-specific projects
• Hiring temporary worker(s)

It's important to determine whether the person assisting you is an employee or a self-employed individual. Your worker's employment status will determine how you apply Source Deducations such as Canada Pension Plan (CPP), Employment Insurance (EI), and income tax withholdings. Refer to Canada Revenue Agency's website for guidance on how to determine if someone is an employee or an independent contractor. 

If you determine that a permanent employee is the right decision for your business, you’ll need to:

1. Determine who you need. The better you understand the position for which you'll be interviewing, the better you'll be able to evaluate applications and choose the best candidates.
2. Create job descriptions and expectations. Not only will these two tools help you evaluate potential candidates, potential hires will have the information they need to make informed employment decisions. It’s important that both the employer and candidates clearly understand the position and expectations. Otherwise, you might be faced with having hired an employee who isn’t suitable to your position.