Book Review of Hiring Your First Employee

Hiring Your First Employee

A Step-by-Step Guide

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Review of Hiring Your First Employee, by Attorney Fred S. Steingold (Hardcover, 2008)

(You can print this review in landscape mode, if you want a hardcopy)

Reviewer: Mark Lamendola, author of over 6,000 articles.

This is another excellent book by Nolo. It's part of Nolo's Small Business Essentials series, and if you're operating a small business this book is essential reading. That's the case whether you are planning to hire or not. This book explains why.

On the cover, there are three bullet points:

Get the help you need
Avoid complications with the IRS
Complete and file the paperwork

This book covers far more than that. But, it's not a step-by-step guide as the cover says. The book isn't a complete guide to hiring. It provides excellent coverage of the legal side of hiring someone. That's probably because an attorney wrote it. But, it leaves out some key areas of information. And that's probably also because an attorney wrote it.

For example, the book just barely touches the topic of ensuring the person is a fit for the position and for your company. For the book to be billed as it is, this topic must be addressed in a step-by-step fashion. Or at least the book should explain how to obtain the competency to do this.

I think the book should also have explained (not just mentioned in passing) other forms of hiring. An example is the hybrid form composed of hiring a contractor and directly hiring your own employee. The hybrid means you hire through an agency, and the agency is actually the employer. There are huge advantages to do this, and the book doesn't detail this.

Granted, the book is about hiring YOUR first employee. But doing that is no longer an option for most small businesses due to the sheer weight of federal regulations that businesses must deal with. These regulations are the main reason large companies close entire factories and move production across the border into Canada or Mexico, or even farther offshore. A small business simply can't amortize the huge compliance costs across its far smaller payroll. The reality is a small business owner probably should not handle the HR and payroll tasks involved in hiring someone.

Establishing the inhouse competency and capacity to manage your own workforce (while staying in compliance with the various obligations incurred therein) means one of two things:

1. Your first employee is going to be an HR person and your second is going to be an accounting person. You won't be able to afford to hire the employee you originally wanted to hire for production work or whatever, because you had to hire these other two people so you could manage the employment process. This can be softened somewhat by having a contractor accountant handle the payroll.

2. You do all of that yourself and thus become even further overloaded than before you hired this person and thus defeat the purpose of hiring to begin with. This is why so many small businesses use contractors for so long rather than hiring.

The hybrid option is becoming increasingly popular. Outsource the whole process, and you get the benefits of hiring without the attendant time drain. Or the risk of attracting some blood-smelling bureaucrat who is looking to pad his/her next performance appraisal and is relying on your inexperience in these matters to help achieve that goal.

What you do is hire through an agency that handles all of the administrative functions. A good agency will not only handle all of this administration work for you, but it will help you write the job description and find the right employee in the first place. The person you hire is actually the employee of the agency. You pay the agency, and they pay the employee. The agency is worth every dime spent on their services.

A side benefit is this. If the employee isn't workout out, you contact the agency and explain the problem. Solutions will range from replacing that person (without your having to fire anyone) to training that person. The agency wants to retain your business and will work with you on solving any issues that arise. If it's merely a mismatch, the employee is happy to go back for a different assignment rather than "hang on while looking for a job before being canned."

If you have a staff of several outsourced employees and want to bring that function inhouse, the agency can help you with that as well. Discuss growth plans with the agency, early on.

I've just given a thumbnail of what the author should have either devoted a chapter to, or thumbnailed in a sidebar that provides a listing of resources for exploring this. I don't think this book can be correctly billed as a "step-by-step" guide without fully addressing this hybrid option either by reference to other resources or by explanation within its own pages. I went into a bit longer detail than a thumbnail required, because I wanted to illustrate what an information hole this was in the book.

Still, this book does cover a great deal of ground and it does so very well.

This book does not contain any political opinions and I did not find any errors of fact. The book proceeded in a logical fashion and was well-organized. Finding any one of these characteristics in a "non-fiction" work today is a minor miracle. The author and the publisher clearly had the needs of the reader in mind (another minor miracle).

This book consists of 13 chapters. The first one explores the issues surrounding whether to hire someone in the first place. The second one goes into legal issues, including such things as making promises to attract or induce a potential employee. The next two chapters discuss pay and benefits. The two chapters after that provide guidance on the actual hiring process.

Chapter Seven talks about government forms and other items to cover on the employee's first day. The assumption here is you do things in dead tree format. There is nothing about how a modern, paperless office (or anything close to it) should proceed. Paper processes are the bane of productivity, which is why bureaucracies tend to do everything in paper. A small business owner needs to be productive, so the problem of dealing with the obvious conflict here should have been addressed. It wasn't.

Chapter Eight, "Maintaining Employee Files" again goes with the paper process model. This may have been fine up to about 1995, but today it all seems grossly outdated. Modern filing methods should have been covered, and they weren't. On average, a small business in the USA spends 520 hours a year just preparing and filing taxes. Additional paper-shuffling and filing activities need to be minimized as much as possible. Of course, that 520 figure would drop dramatically with the passage of the Fair Tax, but that would require CONgress to actually do something right so it's probably not going to happen any time soon. In the meantime, help in dealing with the bureaucracy rather than falling into the federal counterproductivity trap seems to be a mandatory part of a book like this and it wasn't provided.

Chapter Nine basically addresses OSHA compliance. The next three chapters cover payroll issues, and the fact this took three chapters out of a total of 13 seems to make a prima facie case for outsourcing the employment process as mentioned earlier.

The final chapter is Chapter 13, which is also a legal condition individual owners of small businesses could find themselves in if they aren't careful about hiring. That fact makes this book especially essential. This chapter is titled "Motivating Your Employee" and it's basically an overview of manager training that is better left to other resources written by people with the proper credentials in that area.

Over all, it's a good book. But it doesn't quite deliver what it promises. In this review, I've addressed what it would take to make the promise and the delivery align. Now, we also have to consider where this book is positioned price-wise. For the cost of this book, you are getting a great value. So, make it part of your small collection on how to build your business by adding staff. And keep it around for reference. It's chock-full of information that will remain relevant and useful for many years to come.