Employing People

Reasons to employ people As business grows, owner is unable to carry out all the tasks necessary An entrepreneur may not have all the skills required to run a business – require specialist expertise (e.g. marketing, finance) Seasonal nature of business (Christmas tree farms)

Options if expanding Outsourcing Training existing staff Hiring new staff

What type of employee? How constant is the work? How long will the work last? How many hours are required each week? What level of responsibility is required? What obligation is the business willing to take on?

Options Permanent employees (full or part time with an open-ended employment contract) Temporary or fixed-term contract employees (predetermined time or until specific task is completed) Employees on zero-hours contracts (business can have people on-call) Employment agency staff Self-employed freelancers, consultants & contractors

Permanent v. temporary Permanent tend to be more loyal & more motivated than temporary Efficiency – seasonal work requires temporary workers only Temporary useful as cover for maternity leave or long-term sickness Use agency staff to cover holidays or sickness

Full-time v. Part-time Depends on nature of job & needs of the business Also depends on individual employee Job-sharing – 2 or more people share the responsibilities, pay & benefits of a full-time job in proportion to the hours they work May retain valuable staff who want to reduce hours & might otherwise leave

Advantages of part-time workers Efficient way to keep costs down where full-time work is not necessary Builds in flexibility – respond to changes in demand more easily If part-time work suits employees, may be more motivated Less absenteeism, stress & greater productivity Availability of part-time work may create a wider pool of candidates Opportunity to work part-time may mean business is able to retain key employees

Disadvantages of part-time May involve potentially higher staffing costs Extra induction Extra training Increased administrative costs

External consultants, contractors & advisors Self-employed or employed by another company Benefit from skills without taking on responsibility of employer

Cost of employing people People’s contribution to business success is clear BUT In addition to wage or salary, business must also pay: National insurance contributions Possible pension contributions Administrative costs

Legislation Often seen as a real burden for small businesses Contracts of employment Grievance & disciplinary procedures Equal pay & equal opportunities legislation Minimum wage Working time requirements Health & safety legislation

Managing Staff Leading & managing staff effectively ensures that employees are well motivated & perform their jobs well Does an entrepreneur have the necessary skills to do this?

Employee Absence Business start-ups tend to employ few people due to their scale Absence of any one employee can have a significant negative impact on the business