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As you may already have found out the hard way, hiring friends and family is not always a good move for you – either for you personally or for your business. Before you commit to it, you should consider some very important aspects of working with family and friends.
Strong Personal Relationships Don’t Guarantee Compatible Working Relationships
Just because you get along well in your personal life does not mean that you will get along equally as well with friends and family once you work with them. Often the additional time spent together becomes a strain, even for married couples who have been together for years. There is something to be said for time apart and individual interests.
It can be very difficult for your sibling, parent, relative, friend, or spouse to respect you as a boss, and even difficult for you to feel comfortable “bossing” them, regardless of how wonderful an employer you may be.
Choosing the Right Person for the Job
And, really, how well suited or qualified your friend or family member is for the position he or she will hold? Being a nice person or a deserving person does not make someone qualified for a job – only experience and expertise can do that. And putting an under-qualified person in a position could be detrimental to your company; it could be a liability, too.
Preventing and Managing Disagreements and Difficulties
Managing disagreements starts with prevention.
If you decide to employ family and friends you will need to define roles and responsibilities as well as the structure and hierarchy of the business from the very beginning. Have clear policies and expectations, and hold each person accountable as you would any other employee. Seperate business from personal and make that a priority from the onset.
At its best, working with family and friends can be a very rewarding experience. At its worst it can be detrimental to business and personal relationships.
Those smartphones and BlackBerrys that enable work anytime, anywhere are increasingly blurring the lines between work life and personal life — and introducing the sticky issue of when overtime is owed to workers.
The always-connected worker and the pressures of the uncertain economy have led many to feel they should always be working — because they can, thanks to the growing use of smartphones. That’s allowing work to bleed into evenings, weekends and even sleep, with some people taking their phones and BlackBerrys to bed with them.
And the situation becomes tricky for hourly employees, who qualify for overtime.
“We’ve gotten into a place in our culture where the more you work, the better it is, and the more you should be proud of it,” said attorney Amanda Farahany. “And so people don’t want to assert their overtime right.”
Overtime laws are abused by companies “on a daily basis,” she said.
But in some cases, that has led to lawsuits, seeking pay for what is sometimes called “BlackBerry overtime” or “electronic overtime.”
For employers, “that’s an area of exposure and it’s coming like a freight train,” said Atlanta based attorney David Long-Daniels. By giving hourly employees BlackBerrys or access through iConnect or Citrix, “you’ve implicitly told them to work,” he said.
Long-Daniels advises companies not to allow hourly employees and others who qualify for overtime to use BlackBerrys or remote access to their work computers, unless they’re told to record time when using the devices and the company has a system in place to record the hours.
NEW YORK (CNNMoney.com) — You probably cost your boss a lot more than you think you do.
For Jim Garland, who owns a corporate aircraft cleaning and support services company, a $14 per hour worker has a true cost of $19.63 per hour, or about 40% more than base pay. This so-called “loaded rate” includes fixed expenses — federal and state taxes, health insurance, workman’s compensation, uniforms, and paid time off — along with soft costs like the time spent training a new hire.
Washington’s lawmakers are throwing a lot of ammo at reducing the jobless rate, tax breaks for hiring the unemployed. But no matter what incentives the government offers, it’s hard to convince business owners to hire until they’re absolutely certain they need to. Employees are often the most expensive investment a business makes.
“Our entire existence revolves around two numbers: revenue and payroll,” Garland said of Sharp Details, in Dulles, Va., which he launched out of his car trunk in 1991. Payroll for 60 workers accounts for around 70% of his firm’s operating costs.
Garland outsources his entire human resource department. Joe Sherrier, director of human resources for Employment Enterprises — the company that manages Garland’s HR — said that as a general rule, business owners should to expect an employee to cost an additional 25% to 30% on top of base salary each year.
Breaking down the numbers: Hilda Kernc has been running a Lebanese food production company out of her home kitchen near Chicago for a bit more than a year. Her vegetarian cooking is so popular that she works as many as 20 hours a day keeping up with demand for her hummus and other Middle Eastern fare.
Kernc is applying for a Illinois state business license and is about to start renting out a commercial kitchen part-time. Previously distributed under the name Hilda’s Homemade Appetizers, Kernc’s snacks will now be branded “Deleez Appetizers,” a combination of the word “delicious” and the Arabic word that means the same.
Kernc thinks it might be time to bring on her first employee. “My husband is helping me, and we were thinking we need to hire somebody,” she said. “It will kill me if I am going to work like this.”
To prepare, Kernc began researching the costs.
State income taxes vary significantly, but federal taxes are standard: Social Security tax is 12.4% on the first $106,800 of earnings, and Medicare taxes run another 2.9% of all wages. The employer and employee each pay half. (The self-employed pay the full cost of both taxes themselves.)
Employers also have to pay a federal unemployment insurance tax of 6.2% on the first $7,000 of each employee’s wages. Illinois adds on a state unemployment tax that’s currently 3.9% for new companies on the first $12,520 of wages. (Existing companies have their rates adjusted up or down depending on how many former workers file unemployment claims.) Part of the state unemployment tax is deductible from the federal, but that still leaves employers on the hook for a tax bite.
“I can’t afford it,” Kernc concluded. “When I saw the price to hire somebody, at this point I can’t do it.”
But Kernc she also knows she can’t put it off indefinitely if demand stays high. “I can’t work 24 hours per day,” she said.
Hidden costs: The little perks that employees come to expect, from free coffee to daycare services to group life insurance, factor into the price tag of a new worker.
“All of a sudden, by hiring a new employee, adding up all the fringe benefits, it can be costly,” said Tom Ochsenschlager, a senior manager at the American Institute of Certified Public Accountants.
Sam Meisler owns two animal hospitals and a vaccination clinic in Knoxville and Alcoa, Tenn. He’d like to hire another one or two full-time assistants to work in his My Pet’s Animal Hospital clinics. His company’s business is growing, but still, timing the staff expansion is tricky: “What we have to try to do is anticipate the recovery,” he said. “It is difficult to know when to hire.”
A new hire can actually decrease sales in the short term as they learn the job. As new assistants train on their computer system, Meisler expects occasional missed charges.
“You may even lose a client or two just from miscommunication, because of the veterinarian assistant not knowing how to talk to them on the phone,” he said. But on the flip side, extra administrative help gives the veterinarian more time to talk to each client and potentially sell additional services, such as grooming and dental cleaning.
0:00 /2:24Treat employees like family
A bad hiring decision can be a big hit to a company’s bottom line.
“The cost of hiring the wrong person becomes incrementally more expensive the shorter period of time they have been with you. The first 90 days are typically the most expensive to have them on board,” said Sherrier of Employment Enterprises. “If they stay, that is cost you can recover.”
The cost of losing an employee and hiring a replacement throws complicates the “loaded rate” calculation of what a worker costs each specific business.
Excerpted from CNN Money – By Catherine Clifford, First Published: March 26, 2010