Read Start Your Own Business Online
Authors: Inc The Staff of Entrepreneur Media
Start Your Own Business (60 page)
Because a growing number of entrepreneurs purposely use temporary workers part time to get a feel for whether they should hire them full time, many temporary help companies have begun offering an option: temporary-to-full-time programs, which allow the prospective employer and employee to evaluate each other. Temporary-to-full-time programs match a temporary worker who has expressed an interest in full-time work with an employer who has like interests. The client is encouraged to make a job offer to the employee within a predetermined time period, should the match seem like a good one. According to the American Staffing Association, 74 percent of temporary workers decide to become temporary employees because it’s a way to get a full-time job.
Last, but not least, before contracting with a temporary help company, make sure it is a member of a trade association such as the American Staffing Association. This means: 1) The company has agreed to abide by a code of ethics and good practices, 2) it is in the business for the long haul—meaning it has invested in its industry by becoming a member of its trade association, and 3) it has access to up-to-date information on trends that impact its business.
Part-Time PersonnelAnother way to cut overhead costs and benefits costs while gaining flexibility is by hiring part-time workers. Under current law, you are not required to provide part-timers with medical benefits.
What are the other benefits to you? By using permanent part-timers, you can get more commitment than you’d get from a temp but more flexibility than you can expect from a nine-to-fiver. In some industries, such as fast food, retail and other businesses that are open long hours, part-timers are essential to fill the odd hours during which workers are needed.
A traditional source of part-time employees is students. They typically are flexible, willing to work odd hours and do not require high wages. High school and college kids like employers who let them fit their work schedule to the changing demands of school.
Although students are ideal for many situations, there are potential drawbacks to be aware of. For one thing, a student’s academic or social demands may impinge on your scheduling needs. Some students feel that a manicure or a tennis game is reason enough to change their work schedules. You’ll need to be firm and set some standards for what is and is not acceptable.
Students are not the only part-timers in town, however. One often-overlooked source of employees is retired people. Often, seniors are looking for a way to earn some extra money or fill their days. Many of these people have years of valuable business experience that could be a boon to your company.
THE INTERN ALTERNATIVES
ome colleges encourage students to work, for a small stipend or even for free, through internship programs. Student interns trade their time and talents in exchange for learning marketable job skills. Every year, colleges match thousands of students with businesses of all sizes and types. Since they have an eye on future career prospects, the students are usually highly motivated.Does your tiny one-person office have anything to offer an intern? Actually, small companies offer better learning experiences for interns since they typically involve a greater variety of job tasks and offer a chance to work more closely with senior employees.Routine secretarial or “gofer” work won’t get you an intern in most cases. Colleges expect their interns to learn specialized professional skills. Hold up your end of the bargain by providing meaningful work. Can you delegate a direct-mail campaign? Have an intern help on photo shoots? Ask her to put together a client presentation?Check with your local college or university to find out about internship programs. Usually, the school will send you an application, asking you to describe the job’s responsibilities and your needs in terms of skill level and other qualifications. Then the school will send you resumes of students it thinks could work for you.The best part of hiring interns? If you’re lucky, you’ll find a gem who’ll stay with your company after the internship is over.
AHA!Like the idea of part-time workers but got a full-time slot to fill? Try job sharing—a strategy in which two part-timers share the same job. Susan works Mondays, Tuesdays and Wednesday mornings; Pam takes over Wednesday afternoons, Thursdays and Fridays. To make it work, hire people who are compatible in skills and abilities, and keep lines of communication open.
Seniors offer many of the advantages of other part-time employees without the flakiness that sometimes characterizes younger workers. They typically have an excellent work ethic and can add a note of stability to your organization. If a lot of your customers are seniors, they may prefer dealing with employees their own age.
Parents of young children, too, offer a qualified pool of potential part-time workers. Many stay-at-home moms and dads would welcome the chance to get out of the house for a few hours a day. Often, these workers are highly skilled and experienced.
Finally, one employee pool many employers swear by is people with disabilities. Workers from a local shelter or nonprofit organization can excel at assembling products or packaging goods. In most cases, the charity group will work with you to oversee and provide a job coach for the employees. To find disabled workers in your area, contact the local Association of Retarded Citizens office or the Easter Seals Society.
Outsourcing OptionsOne buzzword you are increasingly likely to hear is “outsourcing.” Simply put, this refers to sending certain job functions outside a company instead of handling them in-house. For instance, instead of hiring an in-house bookkeeper, you might outsource the job to an independent accountant who comes in once a month or does all the work off-site.
More and more companies large and small are turning to outsourcing as a way to cut payroll and overhead costs. Done right, outsourcing can mean you never need to hire an employee at all!
How to make it work? Make sure the company or individual you use can do the job. That means getting (and checking) references. Ask former or current clients about their satisfaction. Find out what industries and what type of workload the firm or individual is used to handling. Can you expect your deadlines to be met, or will your small business’s projects get pushed aside if a bigger client has an emergency?
Make sure you feel comfortable with who will be doing the work and that you can discuss your concerns and needs openly. Ask to see samples of work if appropriate (for example, if you’re using a graphic design firm).
If your outsourcing needs are handled by an individual, you’re dealing with an independent contractor. The IRS has stringent rules regulating exactly who is and is not considered an independent contractor. The risk: If you consider a person an independent contractor and the IRS later reclassifies him or her as an employee, you could be liable for that person’s Social Security taxes and a wide range of other costs and penalties.
For more on independent contractors, see Chapter 41. If you’re still in doubt, it always pays to consult your accountant. Making a mistake in this area could cost you big.
chapter 24
PERK UP
Setting Employee Policies and Benefits
O
nce you have great employees on board, how do you keep them from jumping ship? One way is by offering a good benefits package.
nce you have great employees on board, how do you keep them from jumping ship? One way is by offering a good benefits package.
Many small-business owners mistakenly believe they cannot afford to offer benefits. But while going without benefits may boost your bottom line in the short run, that penny-wise philosophy could strangle your business’s chance for long-term prosperity. “There are certain benefits good employees feel they must have,” says Ray Silverstein, founder of PRO, President’s Resource Organization, a nationwide network of peer group forums.
Heading the list of must-have benefits is medical insurance. But many job applicants also demand a retirement plan, disability insurance and more. Tell these applicants no benefits are offered, and top-flight candidates will often head for the door.
“Take care of your
people, and they will
take care of your
customers.”—J. WILLARD MARRIOTT,
FOUNDER OF MARRIOTT
INTERNATIONAL INC.
The positive side to this coin: Offer the right benefits, and your business may just jump-start its growth. Give employees the benefits they value, and they’ll be more satisfied, miss fewer workdays, be less likely to quit, and have a higher commitment to meeting the company’s goals. Research shows that when employees feel their benefits needs are satisfied, they’re more productive.
Benefit BasicsThe law requires employers to provide employees with certain benefits. You must:
• Give employees time off to vote, serve on a jury and perform military service
• Comply with all workers’ compensation requirements (see Chapter 22)
• Withhold FICA taxes from employees’ paychecks and pay your own portion of FICA taxes, providing employees with retirement and disability benefits
• Pay state and federal unemployment taxes, thus providing benefits for unemployed workers
• Contribute to state short-term disability programs in states where such programs exist
• Comply with the federal Family and Medical Leave Act (see “Family Matters” on page 388)
You are not required to provide:
• Retirement plans
• Health plans (except in Hawaii)
• Dental or vision plans
• Life insurance plans
• Paid vacations, holidays or sick leave
In reality, however, most companies offer some or all of these benefits to stay competitive.
Most employers provide paid holidays for Christmas Day, New Year’s Day, Memorial Day, Independence Day, Labor Day and Thanksgiving Day. Many employers also either allow their employees to take time off without pay or let them use vacation days for religious holidays.
Most full-time employees will expect one to two weeks’ paid vacation time per year. In explaining your vacation policy to employees, specify how far in advance requests for vacation time should be made, and whether in writing or verbally.
There are no laws that require employers to provide funeral leave, but most allow two to four days’ leave for deaths of close family members. Companies that don’t do this generally allow employees to use some other form of paid leave, such as sick days or vacation.
Legally SpeakingComplications quickly arise as soon as a business begins offering benefits, however. That’s because key benefits such as health insurance and retirement plans fall under government scrutiny, and it is very easy to make mistakes in setting up a benefits plan.
And don’t think nobody will notice. The IRS can discover in an audit that what you are doing does not comply with regulations. So can the U.S. Department of Labor, which has been beefing up its audit activities of late. Either way, a goof can be very expensive. You can lose any tax benefits you have enjoyed, retroactively, and penalties can also be imposed.
AHA!Want a quick way to save on workers’ comp insurance premiums? Some companies offer a 5 percent discount for simply having a written policy prohibiting drugs in the workplace. It’s a cheap trick to save big. Ask your workers’ comp provider for details.
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