The Nuts and Bolts of Onboarding a New Employee at a Startup
In June of 2011, Recombine hired it’s first three employees. This was a huge milestone for our company. We came up with an idea, built a prototype & validated our test (in the genetics world this is a BIG step). We raised some dinero, and we even built a working (crumy) prototype. The next logical step: get the core team together & build a proper product.
It is always scary, surprising, and very exciting to reach the next logical ‘step’ of the startup process. Every time I do, I become even more impressed with the many other great friends and founders I’ve had the pleasure of knowing in NYC. Everyone makes it look effortless.
In reality, there’s no instruction manual for your company. Moreover, each company likely deserves its OWN instruction manual. In some cases, there are some great resources. For example, hiring engineers and developers is a challenging task. Joel Spolsky provides some great advice on how to do this effectively: http://www.joelonsoftware.com/articles/GuerrillaInterviewing3.html. Chris Dixon has great general essays about everything from founder shares, vesting, to fundraising, and much more. Both are definitely great minds to follow.
This post is not about finding the best people, nor is it about convincing them to join you. Hell, I’m still learning how to do this (I have been blindly lucky to have found and be working with the team I have right now. And yes, they are the best. But it was ~80% luck on my part . However, once you decide to bring someone on, there’s actually a ton you have to do logistically, and if you’re a sole founder, or don’t have someone managing operations, then this is on you.
Below, is my attempt to outline the necessary steps to Onboard a New Employee for a Startup. This is fundamentally different than a larger company as they usually have entire departments dedicated to doing this (HR). Hopefully this helps fewer founders fumble around in the dark as I did. Developing a systematic way of doing this is great, and it helps you come off as slightly less scrappy, and slightly more professional.
- The Lawyering:
- As a founder, if you went through the incorporation process, then you are aware: We use thick legal docs. You likely signed many of the following for yourself: A Consulting Agreement, A Stock Purchase Agreement, A Proprietary Inventions & Information Agreement, A Board of Managers/Directors/Whatever Your ‘Council of Elders’ calls itself Agreement, and, if you raised money, you signed a ton more. Hopefully you worked with one of the well-known firms. They’re well-known for a reason, and they will do things right. Don’t use family or friends. Our firm is great. Let me know if anyone in NYC wants an intro.
- For your new employee, you need to send and have them sign two documents:
- The Offer Letter: This document is the main, important one. It outlines their salary, stock options, benefits (vacations, health care, etc.), noncompete, at will employment, start date, title, etc. Your firm should have a good template.
- The Proprietary Inventions & Information Agreement: Everyone who ever works for you, including founders, in any context, generally signs one. This basically says, “You will see proprietary stuff. This is a secret, always. Also, anything you create, or contribute to creating belongs to the company.”
- The Taxes & Accounting
- Your first employee pretty much signifies that, “it’s time to start being a grown up and do proper accounting.” For this, we had some incredible help from our accountant. We were introduced to a great, mid-size firm. They’re super responsive, and if anyone wants an intro, just shoot me a msg. They helped get us set up: Quickbooks Online, Online Payroll Management, Unemployment Contributions, Local and Federal Taxes. We use, and I fully recommend Quickbooks Online, and the www.managepayroll.com service (which I believe is now a part of Quickbooks Online). Everything is as automated and integrated as possible. If I can do it, you can.
- To properly onboard your employees, you must collect a bit of information – W4 and I9 forms. This is everything from their residence, citizenship information, to their SS#. They must be held on record for legal and tax reasons.
- The online payroll service (through Quickbooks/ManagePayroll), once configured properly, allows you to enter all W4 and I9 information for each employee, their salary, and even the payroll schedule so that everything is automated. You can even set up Direct Deposit if you get their Bank information (Bank Name, ABA/Routing #, and their Account #). It makes everything super-easy .
- At tax time, W2 Forms will be automatically generated, which makes life better for you and your employees.
- Operational & Information Management Systems
- The employee will show up for her first day of work, and will say, “Okay, what do I do?” (hopefully, you’ve thought VERY hard about this, and have outlined it properly in the job description). In any case, our company needed to develop systems for managing company information: Email, Files, General Knowledge, etc. Here are the things we use (fairly typical stuff, but again, getting set up is very important, and it must be done for each employee):
- Google Business Apps: This is an amazing product. Small business owners used to (and many still generally do) rely on network administrators to set up local servers, email exchange, file hosting, shared network drives, and so much more. This is expensive. Moreover, in my experience, many of these businesses experience IMMENSE DOWNTIME ISSUES. Google Business Apps is simple, has never been down for us, and we simply create a new account for each new employee. This gives them an email address, file system, access to shared docs, and allows them to be put on relevant list servs (Email Groups). Yes, you can talk about the cloud going down (Amazon Web Services went down a few months ago for a brier period) and associated dangers, but the reality is that Amazon & Google are much better. Their total downtime is far less than any local deployment. It’s just slightly more noticeable when they go down: many, many, many websites are built on them.
- Dropbox: While Google apps/drive is great (the shared document editing feature is AMAZING), Dropbox has a slightly different use-case for us, and they now allow for a shared business account. They’re still the easiest/best for sharing documents for our company, and it allows us to always know where certain marketing or product files will be. Plus, the security that we can access files from anywhere is amazing.
- MediaWiki: Information Management, not just file management, is key for a startup business. How do you teach new employees everything you’ve learned over the course of the company? MediaWiki is a great internal resource for storing accumulated knowledge. This is great. You can simply give your new employee a MediaWiki account, and they’ll be able to go and read about everything you put there: Product, Customers, Founders/Key Personnel, Competitors, Partners, Investors, Processes, etc. It’s been a great resource for storing the more malleable information that would otherwise result in a number of repetitive conversations with new employees.
- ToDoItems (Trello): For client services, we’ve developed our own internal system on the backend of our web application (I wasn’t super happy with Salesforce). However, with other types of ToDo Items, Trello is amazing (our Engineering Team currently uses Trello for feature/bug development issues). It’s lightweight, easy to learn, and allows for great notification/ownership. There’s a cool iPhone app, so if you think of something that needs to be done (wether an “Executive, Sales, Marketing, Engineering, etc. task), you can simply add it to the proper Trello board.
That’s just some of what becomes important when onboarding a new employee. Obviously there’s so much more involved, but in terms of nuts and bolts, this is the operational stuff that needs to be done for every employee. Hope other new entrepreneurs find this useful. I’ll add to it as I think of more. A complimentary post I’d hope to do is one on setting up proper mechanisms for open discourse, feedback, and performance review. However, this is still something I’d like to get better at myself. Let me know about anything I’ve left out!