Care and Feeding of Employees & Contractors

[Iwokeup]

I think that the forum needs a good "Care and Feeding of Employees and Contractors" discussion.

UPFRONT Declaration: I am NOT an expert. I do not claim to be infallible. Smack me around if this thread comes off as pompous or pedantic. I just want to share my (somewhat limited) experience and see if the real experts have any thoughts.

My background: I have one household employee (full time) and have contracted with something like 5 different independent contractors via Elance, Upwork, locally, etc. Less formally, I have pretty extensive experience in team building and getting maximal performance from team members (that I didn't hire). This spans several years in the Marine Corps as an NCO, helping my mother run her small business, and as a physician working with medical students, residents, hospital staff physicians, techs, unit clerks, and nurses and is ongoing.

"But I don't ever want or need employess, @Iwokeup!", you say. "That's not Fastlane" or "It doesn't fit in with the Four Hour Work Week." or "I'm going to be a solopreneur and outsource everything!"

I hear you! Yes indeed I do! But consider this:

• Human beings are social creatures.
• Nearly all (more on this in a moment) businesses rely on human beings to accomplish their goals
• Humans are irrational, emotional, often driven by hidden (to us, to themselves) motives and desires
• Nearly all business rely on human beings to buy their products/services (exception that comes to mind are trading "bots" that execute trades in microseconds based on pre-set rules)
  • Therefore, I propose that learning to handle employees (should you need them) will help you sell better to your customers.

This is a graph of the Normal distribution, also known colloquially as "The Bell Curve."

The TL;DR of this graph is that, under most circumstances, most everyone and everything in Nature falls within the bounds of -2 sigma to +2 sigma for what's being studied.

[Fun science note: this distribution is found throughout Nature for an incredible number of things: What's the average size of an insect population? Between -2 sigma to +2 sigma. Average batting score of Major League Baseball players in a given season? Between -2 sigma to +2 sigma. And so on.]

Given this, to the question of, "Will I ever need to deal with employees?" I would posit that, you will.
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Scenario 1: Traditional business with some brick and mortar (B&M) component. You need someone to do function X (warehouse, fill orders, phone calls, handle your schedule, build your network, engineer software, SALES). Real live human beings that you'll see often. YOU WILL NEED TO KNOW HOW TO MANAGE THEM.

Scenario 2: You run a supplement/ecomm c FBA or dropshipping and you outsource all of the work to third parties (web development/mgmt, lead gen, manufacturers/suppliers, fulfillment center, etc). Again, real live human beings who work for themselves by working for you.

In each case, you'll have to know how to effectively manage people in order to get the best performance out of them.

Discuss.

@Andy Black , @Vigilante

 

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[Iwokeup]

First thought: be legal, above board, and upfront right from the get go.

It's not worth the hassle of always wondering, "Will the IRS or some other government entity send me a letter someday stating that I owe some crazy $$ because I tried to save a little money upfront?" Peace of mind goes a long way. Pay the tax due and don't skimp or tell yourself, "They won't notice."

It's my belief that this applies to both your own in-person employees and those who contract out work for you. For us, we use a service for our household employee called Breedlove (www.myhomepay.com) and they handle EVERYTHING or nothing, as we see fit. But they are handy whenever you have a question about what is/isn't legal, what your obligations are as an employer, etc. VERY much worthwhile

For your independent contractor situations: Make sure that the contract has a clause that states that it's the contractor who is responsible for all applicable fees, taxes, etc. If hiring through Elance, Upwork, etc, I believe that it would be prudent to ensure that each site has something in its TOS or FAQ that has a similar clause. For example, Elance has the following Independent Contractor agreement.


Thoughts, comments, questions, bitches, moans, or gripes are welcome.

 

[EPerceptions]

FWIW, I think an important initial step is to understand the difference between employees and contractors.

Someone with an employee mindset generally wants or expects to be micromanaged, trusts they're entitled to specific things by law and wants to rack up steady hours. They are more concerned about/interested in the supposed security that a job brings. They may or may not care much about the quality of work they do. Some do not want any level of responsibility or culpability. Giving them too much freedom and headroom often results in frustration for all parties.

Freelancer/Contractor mindsets are more independent. They want to be paid for results, skills and knowledge - not time. They don't normally want someone breathing down their neck or trying to micromanage every move. They usually have multiple 'bosses' in the form of clients, and they often expect to be treated as an asset and/or peer. Treating them like an employee is one of the fastest ways to lose a good one. They're not always money driven.

People with employee mindsets often fail as freelancers. Clients who hire one thinking they have the other - or not understanding the difference - have incredibly frustrating experiences and more often than not: failed / incomplete projects.

 

[Iwokeup]

Great point, @EPerceptions !

I'll admit, having an employee sometimes just sucks! The time spent dealing with all the various issues can be a real drag and it's gotten me thinking that I should hire someone to actually manage personnel. But then it's another human being with associated problems..catch-22.

 

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[Iwokeup]

One of my professors used to give the following advice to students as they prepared for the third year of medical school.

• Be early
• Show up with a smile on your face
• Work hard and enthusiastically
• Be a team player
• Ask (with sincerity) if there is more that you can do to help.

It's been damn useful advice and what's more, I've noticed that folks (med students, residents, staff, employees) who exhibit these behaviors really and truly stand out.

I mean, it's completely obvious when you get one of these stand outs around. It's also completely obvious when you have just the opposite. But somehow folks think that they can slip by without being noticed?

Anyway, once we became employers, the Wife and I had a complete mind set shift. Being the employer makes it hard to put up with behavior that I would have shrugged off otherwise. I've come to hate time wasting behaviors...don't goof off while I'm paying you!

 

[OldFaithful]

As regarding employees and their care, I found the book "Drive" by Daniel Pink to be quite insightful. I highly recommend it. He spends a lot of ink explaining motivation and how to enable your employees to shift from external (typical pay for showing up) to internally motivated (integrity, autonomy & mastery). Another good take away, if I recall correctly, was that you get what you incentivize.

I have a really good example of the latter from my experience in the real world. The company I worked for had various manufacturing facilities and the plant managers were responsible for making sure that all orders were shipped by the end of the week. It was even a metric on their performance review. One of the managers was eventually found to be shipping empty boxes on Friday if orders were not complete. When the customer received the empty box, he'd call the plant and the manager would deny or make excuses, and promise to get the product sent out asap. In the mean time, the factory had completed the product and was now ready to ship. Thus he had a great performance against his metric of "NO late orders on Friday", but customers were not happy. Overall, the company was getting what it incentivized, but not what they really needed to serve their customers.