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Hiring Employees

7 Factors To Determine Who Are Your Employees (And Who Aren’t)

With the rise of the gig and on-demand economies as well as remote workplaces, the question of whether an ‘independent contractor’ is in fact an employee is perhaps more significant than ever.

Kyle Torrington

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Independent Contractor Or Employee

This question has been considered in a number of countries around the world in relation to, for example, Uber drivers, where certain drivers in California have been ruled employees inspite of Uber having ‘employed’ them as independent contractors.

So what’s the significance between the two? Well, being deemed an employment relation means that the Basic Conditions of Employment Act and Labour Relations Act apply, and you would have to register for the Skills Development Levy, Unemployed Insurance Fund, Workman’s Compensation, SITE and PAYE for example, which entails continuous monetary contributions.

Related: Reality Check: You Probably Don’t Own That Work You Outsourced

Also, ending an employee’s employment is far harder than terminating an independent contractor, as the provisions of the Labour Relation Act, in so far as the procedures are concerned, such as disciplinary hearings and the like, are required to be followed in the case of dismissing an employee versus an independent contractor which normally entails issuing a simple notice of termination.

Code of Good Practice tells you who is and isn’t an employee

In South Africa, in December of 2006, the NEDLAC Code of Good Practice was released, setting out certain rules outlining when a worker will in fact be regarded as an employee.

Of particular importance in the Code is the presumption of who is an employee in terms of both the Labour Relations Act and the Basic Conditions of Employment Act.

This presumption applies to all workers if their gross earnings before any tax, pensions, medical aids and other similar payments have been deducted are below R 205 433.30 per annum.

Factors to determine who are your employees

The Code sets out seven factors to determine whether someone is in fact an employee. These factors apply regardless of the form of a contract. For example, placing a label on the relationship such as a ‘Sub-Contractor Agreement’, ‘Agency Agreement’, ‘Independent Contractor Agreement’ etc, even if recorded in the contract itself, cannot be taken as conclusive proof that that worker is an independent contractor.

In practice, if a worker can establish that one of the seven factors is present, unless the ‘employer’ can then prove otherwise, the worker is regarded as an employee.

Related: Cover All Your Bases When It Comes To Employment Agreements

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Let’s have a look at the seven factors a little closer:

1The manner in which the person works is subject to the control or direction of another person

If a worker is subject to the demands, orders or instructions of the ‘employer’ or employer’s personnel as to the manner in which the worker is required to work, this factor is generally presumed to be present.

In contrast, this factor is not present if a person is hired to perform a task or produce a particular product and is entitled to determine himself the way in which the task is to be performed.

If the head office of the company operating a ride sharing app instructs its drivers on exact directions to take for each trip, and how they should behave and dress, this factor would most likely be present.

2The person’s hours of work are subject to the control or direction of another person

If a worker’s daily working hours or total monthly work hours are set out in a contract, this factor may indeed be present.

For example, an Independent Contractor Agreement which requires the worker to work between 9am and 5pm every weekday would certainly be indicative of this factor being present.

3 The person forms part of that organisation

For example, at a manufacturing plant, if a worker is hired to operate the machinery which performs a core function of the manufacturing plant, this factor will most likely be present.

4The person has worked for an average of 40 hours per month over the last three months

This factor is self-explanatory and is predominantly present if a worker works for a full nine-hour per day work week per month for an ‘employer’.

5The person is economically dependent on the other person

This factor is generally present if the worker is dependent on the ‘employer’ as their sole or principal source of income.

With the exception of part-time employees, the Code says that this factor won’t generally be present if a person is genuinely self-employed or still has the capacity to contract with other people to provide services.

If the driver of a ride sharing app is entirely dependent on the owners of the app as a source of income, and the driver is not discernibly self-employed or does not have the time to build up relationships with other possible ‘employers’, then this factor will in all likelihood be present.

6The person is provided with the tools of trade or work equipment by the other person

In our ride sharing example, if the employer provides the driver with the vehicle to be used, whether the vehicle is provided free of charge or not, this factor will most likely be present.

7The worker only works for or renders services to one person

A writer working for a particular blog twice a week, another blog twice per week and a news outlet once per a week, would generally be regarded as an independent contractor and not an employee.

As you can see, the lines between an employment relationship and independent contractor arrangement are often blurred and require careful navigation.

Kyle Torrington is the co-founder of Legal Legends, a company that aims to revolutionise the legal industry by being Africa’s first eCommerce website for quality legal services aimed specifically at start-ups and entrepreneurs

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Hiring Employees

Why You Should (Seriously) Stop Hiring People

Employing a whole bunch of people means you have a ‘real’ company, right? Wrong. The best thing you can do for your young company is to hire slowly… very slowly.

GG van Rooyen

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When does a start-up begin to feel like a proper business? For many people it comes down to two things: Renting a fancy office and hiring a whole bunch of people. And because these two things signify success in many peoples’ minds, founders tend to rush into them, hiring a bunch of employees and installing them in a freshly-painted office. However, according to Sam Altman, the president of Y Combinator, it’s the worst thing you can do as a founder.

“One of the weird things you’ll notice as you start a company, is that everyone will ask you how many employees you have. And this is the metric people use to judge how real your start-up is and how cool you are. And if you say you have a high number of employees, they’re really impressed. And if you say you have a low number of employees, then you sound like this little joke,” says Altman.

“But actually it sucks to have a lot of employees, and you should be proud of how few employees you have. Lots of employees end up with things like a high burn rate, meaning you’re losing a lot of money every month, complexity, slow decision-making, the list goes on and it’s nothing good.”

Related: Hiring The Right Person Is Critical When Growing A Business

Growth is a good thing, of course, but the kind of growth is important to pay attention to. You want your sales to grow. You want your revenue to grow. You want your profits to grow. You don’t want your expenses to grow any more than is absolutely necessary to facilitate revenue and profit growth.

“You want to be proud of how much you can get done with a small numbers of employees. Many of the best YC companies have had a phenomenally small number of employees for their first year, sometimes none besides the founders. They really try to stay small as long as they possibly can. At the beginning, you should only hire when you desperately need to. Later, you should learn to hire fast and scale up the company, but in the early days, the goal should be not to hire,” says Altman.

“And one of the reasons this is so bad, is that the cost of getting an early hire wrong is really high. In fact, a lot of the companies that I’ve been very involved with, that have had a very bad early hire in the first three or so employees never recover, it just kills the company.

Early hires are tricky, argues Altman, because they are more like co-founders than employees. They will be entering the business when it is still young, so they need to be motivated by the same things that are motivating the founders.

If they need ‘management’ in the traditional sense, and if they care about things like working hours and number of leave days, they probably won’t work well in a start-up. So, when hiring an extra hand becomes an absolute must, you need to fight the urge to employ the first decent person you interview. Hold out for someone you could picture as your co-founder.

Related: The 5 Traits (Some Surprising) I Look For When Hiring New Workers

“Airbnb spent five months interviewing their first employee. And in their first year, they only hired two. Before they hired a single person, they wrote down a list of the culture values that they wanted any Airbnb employee to have. One of those was that you had to bleed Airbnb, and if you didn’t agree to that they just wouldn’t hire you. As an example of how intense Brian Chesky is — he’s the Airbnb CEO — he used to ask people if they would take the job if they got a medical diagnosis that they have one year left to live. Later he decided that that was a little bit too crazy and I think he relaxed it to ten years, but last I heard, he still asks that question,” says Altman.

Mark Zuckerberg

Facebook’s Mark Zuckerberg was similarly careful about hiring in the early days. “Mark Zuckerberg once said that he tries to hire people that he’d be comfortable hanging with socially and that he’d be comfortable reporting to if the roles were reversed. This strikes me as a very good framework. You don’t have to be friends with everybody, but you should at least enjoy working with them. And if you don’t have that, you should at least deeply respect them. But again, if you don’t want to spend a lot of time around people you should trust your instincts about that,” says Altman.

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Hiring Employees

3 Steps To Find And Keep Top Talent In Your Business

In just ten short years digital solutions have revolutionised the way we do business — but have they changed the way you hire and engage staff? Here’s how you can use online tech to find and retain top employees.

Jacques Du Bruyn

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The world is more connected than ever before. This has opened up endless possibilities for businesses, and allowed companies to understand their markets better, to collaborate more effectively internally and target prospective clients and talent more accurately.

Having said that, I don’t believe that human resources as a discipline has been given the necessary attention online, especially alongside other disciplines such as marketing, sales and customer relationship management. Those who work in human resources, particularly within medium to large businesses, know that there are challenges when attracting the best talent and doing so within tight deadlines.

I’d like to share with you a simple model that I’ve developed that should help you effectively consider how HR management lives within the business and operates online. The model is called the TOE: Talent, Organisation and Employees. It answers the very simple questions of: How do you attract talent; retain your best employees; and enable your employees to engage with prospective talent — all encompassed by technology?

This model demonstrates how businesses can no longer rely on B2C or B2B communications, but that the key to successful communication is H2H: Human-to-Human. This is where empowering your current employees to attract talent on your behalf becomes powerful.

Related: The 5 Traits (Some Surprising) I Look For When Hiring New Workers

I break this model down into three steps: Attract, Retain and Engage.

1Attract: How does your organisation attract talent?

Here you outline the type of talent you’re after and you draw up a persona that includes the possible online ‘watering holes’ where this talent may be found. You may want to make use of the four dimensions of audience profiling as well: Motivational (the why behind the career); Demographic (the affluence and life stage); Attitudinal (emotions, preferences or needs states); and Behavioural (what are they doing online?).

From there you evaluate the type of content that would most likely resonate with this talent group. It may be something like an eGuide within their field of interest; a How To guide similar to this one; a video interview with a big player in the industry that speaks positively about your business.

You also want to showcase your business as an employer of choice and so this content needs to showcase the inner working of the business, the culture, the people and the ‘team’. From there you would use programmatic media buying (or platform marketing) to effectively target this talent group online.

With the use of offline and online data, targeting carefully selected channels, the ability to address this talent group personally and at scale is very possible.

Channels that work for attracting talent include:

  • LinkedIn: Particularly sponsored stories and inmail
  • Programmatic third party: Especially when an effective data management platform is incorporated, such as a tool like Google Double Click as a DSP (demand side platform) and Blue Kai as a DMP (data management platform)
  • Facebook: Focusing on dynamic content that can easily be shared.

2Retain: How does your organisation retain top talent?

If there’s one thing that can be said about social media and the Internet, it’s that it has opened doors of communication in a new way. Communication between top executives and personnel is what breaks down the barriers of hierarchy and builds the sense of ‘team’.

This is where you want to enable effective communication through tools like Facebook for business, the Intranet, and smaller huddle groups that can be formed on tools like Slack. This is also where you want to find ambassadors within different business units and clusters that can be catalysts for conversation between the different layers of hierarchy.

Through this process you want to equip your employees and make them believe they’re working for the best business in the industry. That’s why sharing success stories, sharing tools for career advancement, and competitions, is important.

Channels that work for retaining involve:

  • Facebook for business: Chances are your employees are on Facebook already
  • Slack: A collaboration tool for task teams
  • Intranet: With chat and forum capabilities.

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3Engage: Are you Enabling Your Employees To Be Your Voice?

We all know that when a brand talks about itself it’s not as believable as when our peers talk about a brand. That’s the gist here. You need to develop an online policy that enables your employees to engage with prospective talent online.

Related: Hiring Tip: Ask About The Candidate, Don’t Talk About The Position

From here you want to identify certain passionate employees that you feel most embody your brand values. The next step is to encourage them to connect with and converse with their peers online, thus portraying why working for your organisation is preferable. You want to equip your ambassadors with great content to share so that they engage as thought leaders.

Great content may come in the form of thought leadership blog posts generated by your organisation that can be shared by your ambassadors online.

Channels that work for engaging involve:

  • Twitter: This is the foremost tool for easily jumping into conversations online
  • LinkedIn: LinkedIn groups which are industry-specific are the best place to get involved in conversations online and to connect with peers
  • Forums: Industry-specific forums are a great place to get connected and to share your expertise

The role of employees

Human resources is any business’s cornerstone. Even the most machine-heavy businesses need people. And that doesn’t mean only people who can do a job, but rather, people who make a difference in an organisation. That’s why attracting the best talent is not only a must, it’s imperative.

Through the above-mentioned model, I demonstrate how communicating from the organisation to the talent pool is only one piece of the pie. The most important piece is, without a doubt, the human-to-human element; the channel where your current employees become your ambassadors, and in turn start attracting talent on your behalf.

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Hiring Employees

Hiring The Right Person Is Critical When Growing A Business

But how do you find the right mix of people?

Joel Stransky

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There is no escaping the fact that human capital is often a company’s greatest asset. The right people actualise opportunities into results that boost not only business and financial growth, but inspire innovation.

By building a bigger pool of knowledgeable people, entrepreneurs can create different groups that all network and collaborate to deliver their unique skill-sets, be it strategic conceptualisation or creative support, ultimately your business’ growth will only benefit.

But how do you find the right mix of people? 

The Cost of Mr./Ms. Wrong

It can take up to 6 months to 1 year to find out that you have made a hiring mistake and the cost implication is a big one. It is believed that a bad hire costs a business 50% of the employee’s annual salary. But it also goes beyond that, there is the cost of job advertisements, time associated with screening and shortlisting, administration and placement fees which impact your bottom line.

Related: The 5 Traits (Some Surprising) I Look For When Hiring New Workers

Once they enter your business there is the time associated with mentoring and training the person to get them to be where they need to be.

Now What?

Realising you’ve made a bad hire takes time and in the months that lead up to the employees last day, your corporate culture could be severely disrupted.

Disengaged employees are likely to place strain on the rest of your workforce, while apathy and negativity may spread through your offices before the employee’s departure. But there is light at the end of the tunnel and all is not lost. It’s simply about learning how to find the right person!

Technology is Your Best Ally

technology

Traditional hiring practices have become less accurate and difficult to measure, so in the information age it seems illogical that we are still using them.

We live in a world where technological revolutions are constantly changing the way we do business, and advances in recruitment technologies are reducing the chances of making a bad hire.

Through science and technology, entrepreneurs can now make informed decisions when making new hires, based on both culture and skills.

The right kind of technology can even automate part of the workflow that comes with repetitive and high-volume tasks of the HR function, leaving your manager free from CV diving, and giving them time to focus on the people in your business that are the right fit.

Through deploying people analytics using the data and data analysis techniques you will be able to understand, improve and optimise the people side of your business, thus improving growth and profit potential.

Related: Hiring Tip: Ask About The Candidate, Don’t Talk About The Position

The logic is simple, predictive analytics to create a predictive model that determines future probabilities. Did you know that today there are algorithms that can predict potential and performance for recruitment, development and retention? Let’s not forget that machine based learning is not influenced, by emotional tags like personality, looks and familiarity. In fact, algorithm will only continue to learn from new data that is input to increase the accuracy of the solution it comes up with.

We all want the best for our business, and no venture is without risk. However, it’s also about mitigating that risk, and the simplest way is to do so is to make sure that the right people for your business keep revolving that door that creates opportunities for all.

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