HR Terms Demystified: the Hiring Edition
Welcome back to HR Terms Demystified: the Hiring Edition!
A number of my clients have reached the exciting phase in their small business journey where they are ready to hire their first employee! And then they think, “Wait….where do I begin?!”
Like most industries, Human Resources (HR) has its own jargon, abbreviations, and initialisms to short-cut long terms and names to make things simpler to write and reference.
These shortcuts are a great time saver, but when it comes to hiring, they can make things a heck of a lot more confusing for people to understand what steps they need to take to be in compliance and find the right fit for the job.
Small business leaders are left thinking, “What the heck is ___?” I’m back to provide some clarity. Below are some of the most common HR-related terms you'll encounter when hiring your first employee.
What the heck is Unemployment, UI? Or FUTA?
Unemployment Insurance (UI) is a joint federal and state mandated benefit that employees can apply for to receive short-term income replacement if they lose their job. All employers are required to register or enroll in UI with their state and/or the state in which their employees work. Employers pay mandatory payroll taxes that fund this benefit, and they are reported to the state quarterly.
Federal Unemployment Tax Act (FUTA) is the federal act associated with UI benefits. In some cases, the federal portion of the payroll taxes collected supplements the state funds.
You’ll sometimes see these listed as “FUTA” or “SUTA” on your first payroll.
The expense is calculated as a % of the payroll wages you plan to pay, but there is typically a “new employer” set rate. These vary greatly between states, but are reassessed annually based on any claims filed.
In some cases, you can register for this alongside registration for your state and local tax IDs (for state income tax withholdings). Find the agency to register in your state here.
What the heck is Workers’ Comp?
Workers' compensation is a type of insurance that provides medical care and cash benefits to employees who become ill or are injured due to their job.
Like other types of insurance, your business insurance broker can help set this up. Alternatively, many payroll providers offer coverage that you can opt into when you sign up for their services. Similar to unemployment insurance, the rates for workers' compensation can adjust annually based on claims and number of employees.
What the heck is a job description?
Maybe you know this one (or you think you know this one), but a job description is NOT a job posting. They’re actually two different, but related things.
A job description is a document that details:
what tasks and responsibilities a role performs
what knowledge, skills, and abilities (KSAs) someone needs to be successful in the role
the specifics of the role, such as pay, schedule, and whether it's full time/part time/contract, etc.
Unlike a job posting, a job description is an internal document, so it can be written as if the person reading it already understands the inner workings of your company. The great thing about job descriptions is that they can (and often do) change over time and should be reviewed at least annually as the needs of the company evolve.
Check out this job description primer video, which gets more into the nitty gritty of job descriptions.
What the heck is implicit bias?
Implicit bias or unconscious bias is the subconscious feelings, attitudes, prejudices, and stereotypes we all have from prior influences and imprints throughout our lives. While this can be a handy tool for survival, it can be far less helpful when trying to find the person best suited to a specific role at your company.
Implicit bias can come into play when interviewing candidates or reviewing resumes. It can show up as “Oh wow, they like the same book as I do!” That’s affinity bias. Or, “They have a degree from Harvard, so they must be great.” That’s halo bias.
Be leery of making hiring decisions based on “a good feeling” without clear examples of how this person’s KSAs make them a good fit.
Interested in learning more about unconscious biases you might have? Check out these free implicit bias tests administered through Harvard. (I mean, it’s from Harvard, so it must be legit, right? ;P )
What the heck are structured interviews?
Structured interviews are a way to help address implicit bias. In this type of interviewing, all the candidates are asked the SAME questions that were prepared in advance to address real potential scenarios for the role. Those responses are then rated based on the behaviors/responses that best map to your company’s needs. Everyone is different and brings their own life experience to their work, so asking the same questions to each candidate helps you compare candidates against the best fit instead of against each other.
What the heck is an Employee Handbook?
The Employee Handbook/Manual/Policies Document is a compilation of all the required state and federally mandated policies and official posters/notices with details on what it will be like to work within your organization. Also, values alignment is crucial! A comprehensive handbook includes the core values that drive your business, the ways you support your team via benefits and structures, and the policies you implement.
What the heck is an HRIS?
An human resource information system (HRIS) is the place to store all your employee documents required for compliant record-keeping. Once you have employees, you are required to keep certain documents for certain periods of time in case someone files a claim against you or if you are audited by the IRS or another government agency.
Knowing what to materials keep and where to keep them is often a major component and selling point offered from payroll service providers. Along with processing payroll they provide secure storage to meet your record-keeping needs.
What the heck is… a PEO?
PEO stands for Professional Employment Organization. If you plan to hire in multiple states right away or want to offer employees benefits like health insurance with your first employee , on day one, a PEO can be a great option. It can save you from the hassle of making multiple accounts, since these accounts are provided as part of a relationship with a PEO).
I wrote a handy blog about PEOs and finding a good one here.
Hopefully this is a helpful rundown of things you’ll encounter on your hiring journey.
Did I miss a term that has you confused? Leave a comment below!
Have more follow up questions? Need help with hiring?
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