Are you Ready to Hire Your First Employee?

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There’s no reason to rush into an employee relationship before you’re ready, but when you can afford to hire the first new team member (or members) for your startup, this milestone will come with some significance. It will mean that (a) you’ve earned the trust of someone who chooses to become financially dependent on you and your success, and (b) you’re confident and stable enough to take on that responsibility.

When you hire someone, you take a chance on them and they take a chance on you. If either of you fumble the expectations of the other party, the results can be an expensive mess. But at the same time, if the decision works for both of you, a qualified person working eight hours a day can quickly put your business on the fast track. Having a full-time employee can take you to the next level—if you can keep up your end of the deal and find someone who will hold up their end as well. Here are a few considerations that can increase your odds of success.

Strangers and connections both come with different risks and benefits.

Risk-averse startup founders often like to hire employees who move within their social and professional networks, those who come with personal recommendations and traceable social links. People often feel more committed and accountable to each other when they’re bound by social ties, no matter how indirect. But if you choose someone in-network (instead of a total stranger) don’t let this weaken your otherwise rigorous background checks and skill tests.

Give every team member the opportunity to weigh in.

Every person on your existing team (if it’s small) should have a chance to sit with the candidate and get a feel for their personality and working style. If almost everyone likes the candidate, but you have just one holdout, find out why. Try to understand the person’s misgivings and what might happen if you overlook them.

Clarify and codify the relationship before you sign.

Will the employee have a vested equity interest in the business? Will they have a say in team decisions? Or will they simply execute orders in exchange for a paycheck? What promises, formal and informal, can you offer them regarding advancement? If the team takes off, will you take this person with you?

Hiring is a legal arrangement.

Involve your legal counsel in your hiring decision, your documentation, and your compliance with HR laws and policies. In other words, establish a clear and written contract that covers everything from how the person will be compensated, to the behaviors that could result in termination, to what will happen if the two of you decide to part ways voluntarily. Even if the new employee is a friend or the relationship is informal or part-time, don’t set yourself up for messy disputes down the road.