To run a business, you always have to go through a fair amount of risks. Entrepreneurship is the risk-taking ability of an individual who uses the other factors of production to generate profits. However, when we talk about startups, the risk increases a lot due to the many uncertainties in various business aspects. One such risk is hiring the wrong employees.
Employees are considered your key resources to maintain a balance in your daily business operations. If this resource fails, it eventually leads towards a shutdown. However, by establishing the following precautions, you can reduce the risk of bringing new people into your startup business.
Avoid Bad Hires
If you are hiring a fresh candidate, who doesn’t have any work experience, then you are taking a significant risk. For a startup, you should reconsider your decision. However, if your candidate has any prior experience, then it’s better to do your homework and conduct reference and background checks. These checks will help you get a better picture of how this particular person has performed over the years, especially, if you plan on hiring them to manage your startup’s finances.
Reference checks are conducted to find out what ex-employers and colleagues have to say about a particular candidate. All employers should ask for at least 2-3 references before hiring someone. All you have to do is make a call to each of these references and ask them a few questions related to the candidate’s performance, behavior and attitude towards work. Also, one question that I believe should always get asked is, “Would you ever re-employ this person in the future?” The answer to this question should pretty much sum it up.
However, you need to be very careful about fake references. Many people provide false references as they believe you’ll either never take out the time to contact them, or the reference will cover for them with another lie. Before making a call, check their LinkedIn profiles and consider calling them on the company’s landline number where they used to work.
Technically speaking, merely making calls to the provided references is also considered a background check. However, this investigation can go a bit further by trying to look for credit checks, criminal records and even verification of their educational certifications. Though this process starts with the candidate’s consent, many companies still go with it to play safe.
For startups, this is a cost-friendly and easy process. Most of the time you’ll only need to go online and check their social profiles. You’ll probably find most of their personal information from there.
Comply With Employment Law
It’s essential for companies to comply with all employment laws. Failure to do so can not only force you to pay hefty fines but can also shut your business down. These laws pertain to the quality of employee lifelike working conditions, compensations, and anti-discrimination practices.
It’s pretty standard for startups to avoid taking a look at the employment laws. Therefore, our useful advice for all business owners is to consult a lawyer or attend training sessions that teach how employers should comply with all employment laws. You can even purchase handbooks that have all the codes listed for you to follow.
One habit that all new business owners should adopt is to issue an employee handbook. This handbook will highlight all the rules and regulations, and safety measures that need to be followed by all individuals employed in the organization. This method can save you from getting into trouble as you’ve already made it clear to your employees what they’re going to face during their tenure.
Institute Fair Practices From the Start
Startups and small businesses are commonly known to adopt a family culture within their organization. This type of culture considers a few employees more important than others. Even if the recruit has no family relationship with the owner if you are the first one to get hired you may gain access to extra privileges. This may sound pleasing for that first employee, but it’s utterly unfair for the rest.
To avoid paying this unfair game and reduce risk, you can opt to produce sound policies that benefit your whole workforce as a whole. These policies can be made for working hours, code of conduct, use of company equipment, working conditions, etc. Yes, some employees may have more privileges than others, but this should only be the case when you are following a hierarchy that has everyone from a senior manager to a machine operator.
Fair practices are healthy by keeping your rate of employee turnover low and also creates a robust and efficient atmosphere in which to work. If a business owner fails to follow fair practices, they may even get hit with a lawsuit. On the other hand, unfair practices also lead to employees going on strikes or asking for help from powerful pressure groups.
For a startup, the last things you would want is to get involved in tackling lawsuits and coming to work with your workers standing outside holding big signs in protest against you.
Startups are pretty hard to run as they require double the amount of time and effort that a healthy, thriving business needs. Frequently, many business owners lose dedication and end up closing down their business due to heavy losses. However, that’s just part of the risk that every entrepreneur needs to take.
One thing that you should focus on first to reduce risk is to manage your workforce and make sure you appoint the right ones. Employees are what can turn your small into a successful company. However, they can also turn the tables for you and take your business to the bottom-line if you fail to recruit the right people or fail to manage them properly. With our tips, you can build a healthy work environment and also reduce the risk of startup employees.