Recruiting USA - One column

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                                                                                      Recruiting in the U.S.


     This guide is designed to provide non-U.S. companies with an overview of the issues and steps involved when hiring U.S.
based personnel. How often have you heard the line “People are our most important asset” from a C-level executive? Although
arguably a cliché at this point, it still holds true across all sectors and all businesses. Hiring personnel familiar with the U.S.
business environment can be a tremendous asset by providing agility in a competitive marketplace. It is even more important
for a small to mid-size company as resources are limited and hiring the wrong person can be detrimental to a company in
its infancy.

   • Is the U.S. market part of your company’s long-term strategic objectives?
   • Do you have existing customers in the U.S.?
   • Do your main competitors have U.S. representation?
   • Is a member of your senior management team also your U.S. representative?
   • Is a member of your senior management team spending a considerable percentage of their time traveling to the U.S.?
   If you have answered yes to any of the above questions, then you may need to consider hiring in the U.S. If increasing
exports to the U.S. is part of your strategic goals and objectives, then you need to show commitment to that market in terms of
people resources. If you have existing customers in the U.S., then you need to have someone who can manage these accounts
locally, build these relationships and be in a position to take advantage of unforeseen opportunities which might otherwise be
missed if you had to get on a six hour flight. Importantly, if your competitors are there, then you should be there. U.S.
companies like to do business with companies that have a U.S. presence; it gives you greater credibility when bidding for the
business and gives them a greater sense of security knowing that there is someone local if anything should go wrong.

   A non-U.S. company will often look firstly at whether or not to relocate an existing employee from the head office to the
U.S.. While this can be advantageous in terms of having someone on the ground who you know and who already understands
the company and business, there are also a number of factors to be considered:
   • Relocation costs – you will be obligated to provide financial support to the employee who is relocating to cover the
     inherent costs of moving, such as shipping of personal items, airfare, and increased cost of living expenses.
   • Accommodation – you will be obligated to provide accommodation for the employee for a certain period of time in the
     beginning, be that some form of corporate housing or a hotel. This generally ranges from two to four months given the
     complexities involved in finding accommodation in the U.S. in certain areas. To obtain a lease on an apartment, the
     tenant is required to have a U.S. bank account and social security number (SSN). Obtaining a SSN can take up to eight
     weeks and typically you cannot open a bank account without a SSN.
   • Visa Requirements – U.S. work permits are a necessity for anyone who wishes to live and work in the U.S.. The U.S.
     immigration laws are highly complex, expert advice on this topic is available in the immigration section of this publication.
   • Market Knowledge – how familiar is the employee with the U.S. marketplace? With all the inherent factors in relocating
     (acclimating to a new environment, finding suitable accommodation and obtaining the appropriate visa status), coupled
     with the fact that the employee will most likely have a limited local contact list, how quickly will the employee be able to
     begin to add real value to your bottom line?
   Making the decision to hire a U.S. based person allows you to circumnavigate the obstacles outlined above given that the
person is already living in the U.S. so there will be no relocation or accommodation costs. They will most likely have a bank
account, SSN and be legally entitled to work. This information can be uncovered during the resume review and interviewing

process. Given the assumption that their previous experience has been U.S. based, they will have a network of relevant
contacts and should be able to hit the ground running almost immediately. In addition, hiring personnel with local knowledge
bypasses a steep learning curve in getting used to the way business is conducted, including legal, regulatory, medical, supply
chain and marketing practices.
Independent Contractor
   Having decided to go with a U.S. based individual, you must now decide whether you should hire a new employee or an
independent contractor. An independent contractor, also known as a consultant, is one who performs specific services on a
contract basis. For a start-up company this may be an attractive option as it reduces costs relating to:
    • Payroll – the employer does not have to pay social security, unemployment, or workers’ compensation costs for an
      independent contractor. An hourly/daily or project based fee is generally the only payment.
    • Benefits – this point is deserving of special mention because health care costs in the U.S. tend to be exorbitant by Irish
      standards and as such, health benefits represent a significant financial burden to the employer. Total U.S. health benefit
      costs rose by 6.1 percent in 2007 to an average of U.S.$7,983 per employee1. The ability to avoid this cost can notably
      reduce cash outflow.
    • Taxes – the independent contractor is responsible for filing and paying their own taxes. The major responsibility of the
      employer is to provide a 1099 form at the end of the year.
   The use of independent contractors also enables you to adjust your workforce to the changing demands of your company,
to deal with the peaks and the troughs.
   On the other hand, however, that which makes a contractor independent is their ability to choose the projects and hours that
they work. Many contractors charge considerable hourly or daily fees. A contractor may be providing services to two or more
organizations at the same time, so ensure that there is a non-compete clause in any work contract with an independent consultant.
Full Time Employee
    The benefit of making the commitment to hire an employee demonstrates loyalty on the employer’s behalf and thus, will
result in having an individual with more loyalty than an independent contractor. Also, an employee can perform a variety of
roles within the organization, thereby improving work flow and ultimately providing continuity of service to the client.
Employees are salaried and the employer is responsible for paying social security and payroll taxes in addition to providing a
benefits package (see Compensation and Benefits section). The time-to-hire may take longer than hiring an independent
contractor, but it may also be easier to attract professionals with relevant experience who are seeking a position where they
can add value, however, you must be incorporated to hire an employee.
   Note: It is important to be clear about the distinction between an employee and independent contractor – if you make an
error in classifying an employee as an independent contractor, you could find yourself in trouble with the U.S. Internal Revenue
Service (IRS) and will be liable for employment tax, interest, and a penalty. Where the lines are blurred, err on the side of
caution and seek relevant counsel to keep current with the legalities.

Identification of Recruitment Need
   You have identified the need to hire someone in the U.S. but prior to initiating the recruitment process, it is worth
considering the following to ensure a smoother and more efficient process:
    • Has the necessary approval been given by management to proceed with the recruitment process? You do not want to
      expend your recruiting efforts if there is no firm commitment to bringing a new staff member on board.
    • Has the budget been approved? The amount of money allocated for recruitment can greatly affect your options. Have
      you considered the compensation package you are prepared to offer for this position - the base salary range, bonus,
      commission and so on?
    • How quickly must the position be filled? It is important not to underestimate how long the hiring process may take.
      A good rule of thumb is to expect hiring a qualified candidate to take up to 90 days. If your organization does not have
      a HR department, has a dedicated person been appointed to manage the recruitment process? If you relax your
      recruitment efforts, there is a danger that another organization will grab the candidate you failed to pursue – quality
      candidates do not stay on the market for very long.
    • Determine the exemption level of the available position - The Fair Labor Standards Act defines exempt employees as
      workers who are legally exempted from receiving overtime compensation; that is, employers do not have to pay
      professionals for overtime. Alternatively, ‘nonexempt’ means one is entitled to receive overtime pay. This is important in
      terms of what sources you use for recruiting, i.e. search firms or professional associations would most likely produce
      qualified exempt candidates; while newspapers ads or employment agencies would likely yield nonexempt candidates.

According to the annual National Survey of Employer-Sponsored Health Plans conducted by Mercer

Develop a Job Description
    Every company is looking for high-potential, quality employees in a diminishing labor pool this makes finding good talent
an increasingly challenging task for managers. A good job description provides the solid foundation for successfully finding
the right candidate. The job description is ultimately an advertisement for your company and so it should be designed to
attract the most desirable candidates. Be sure to state anything in your offer which may differentiate you from other
employers. For example, the option for telecommuting or working from home is something that may make the position
more appealing.
   It is equally important to make the job description realistic in terms of the requirements and expectations to filter out
unsuitable candidates – having a job description that is too general will result in an increased number of candidates, but not
necessarily those that are more qualified.
   A typical job description contains several major parts:
   • Job Title - a brief, general idea of what the job entails, the level of expected activity, and the scope of responsibility
   • General Description - a brief overview of the responsibilities of the job
   • Reporting Relationship(s) - the position the candidate reports to and the positions reporting to the candidate if applicable
   • Characteristic Duties - a list of the job duties and responsibilities (usually in order of importance or percentage of
     time spent)
   • Minimum and Preferred Qualifications - the education, training, experience, and skill requirements considered essential to
     satisfactorily perform the job
   • Disclaimer - statement indicating that the job description is not meant to be all-inclusive of the duties and responsibilities
     of the job.
Sourcing Potential Candidates
    Although the talent pool is much larger and the location is different, the same principles apply when sourcing candidates
in the U.S.. There are multiple ways to go about finding suitable candidates:
   Personal Contacts & Networks:
    The first course of action is to contact those you have worked with in the past who may be aware of someone interested in
a job. To cast the net out further, use your business networks and industry contacts since people in the industry will know the
key high potential players. Attending trade shows, seminars, and networking sessions is another viable way of meeting
prospective candidates. These events also represent an opportunity to talk to others who may have experiences to share about
their own past recruiting experiences.
   Electronic Recruiting
   The process of receiving and reviewing resumes has changed dramatically over the past decade; increasingly employers are
using the Internet to recruit either by developing career web pages of their own or by linking up with web-based job search
services. Applicants have become very adept at posting their resumes electronically.
   • General Job Boards – is one of the largest on-line general job boards and represents a great way of
     targeting potential candidates. However, when considering the use of a general job board, remember that you are
     sharing your advertisement space with a host of other companies and recruitment firms. To keep costs to a minimum visit
     local job boards as well before committing to any one board. Ask for a trial run and resist signing any contracts until you
     have had success in terms of a response rate. Additional services offered by on-line boards are resume banks in which
     employers can search the on-line resume bank for an extra fee.
    More recently, the advent of Web 2.0 tools have added a new dimension to recruiting. Social networking sites provide a
virtual rolodex for both employers and employees. LinkedIn, for example, is increasingly utilized to source potential candidates
by employers and also represents a forum for employees to open themselves up to the myriad of opportunities available.
   Examples of general on-line job boards include:
   One of the most desirable scenarios when it comes to sourcing job candidates is the passive candidate who is currently
happily employed. These candidates are generally harder to recruit since they are not seeking a new position. Recruiting a
passive candidate requires more energy and commitment and although they may not be actively searching for a job, passive
candidates are proactively managing their careers. It is not uncommon for successful and career focused sales and marketing
personnel to maintain a current resume in an on-line job bank. These individuals are not adverse to change if the right
opportunity presents itself; therefore, it is up to you as an employer to find creative ways to entice them.

   Note: The U.S. Equal Employment Opportunity Commission (“EEOC”) recently proposed a set of guidelines for online
recruiting - these guidelines define an applicant and require employers to keep detailed records of each applicant based on
race, gender and ethnicity. These guidelines apply exclusively to the internet and related technologies2.
    • Industry Specific/Professional Associations – These boards target candidates with experience in specific industries and
      enable you to reach a more targeted audience. Examples of these boards include:
     -                         (Biotechnology and Pharmaceuticals)
     -                             (Technology)
     -                   (Financial Services)
     -                 (Construction)
    Professional Recruiters:
    An alternative option is to engage the services of a professional recruitment or employment agency. There are costs
involved but if you have had no previous experience with hiring in the U.S., this may still prove the most effective route if you
wish to expedite the recruitment process. To reiterate, the job description is vital when using a recruiter to ensure that they
know exactly what you are looking for and that you don’t get bombarded with irrelevant resumes. The recruiter has the task
of removing those not suitable and you should be presented with three to four of the most desirable candidates to choose
from. Given their expertise and contacts in this area, recruiters can also provide you with a broad range of services including
screening and selection of candidates, coordinating interviews, providing contacts for business formation, providing reference
and background checks and performing payroll services.
  The fees charged by recruitment agencies to find a permanent employee is dependent on a number of factors including the
demographics, the position to be filled, and the fee structure agreed with the recruiter. The fee structure can either be:
    Retainer – You pay the recruitment firm a fee in advance for services to be rendered with the understanding that if you
choose not to hire through the recruitment firm you do not get any money back. A more common approach to a retainer is
for both parties to agree to a modified retainer. One third is paid up-front, another third is paid once the candidate has been
hired and the final third is paid after an agreed upon period of time after employment has commenced.
    Contingency – Payment to the recruitment firm is only contingent on whether or not you hire a candidate proposed by the
recruitment firm. In turn, the recruitment firm can charge between 20-30% of the first year total compensation, and is higher
for more senior level executives. For example, a very senior level may command a fee of one year’s salary. There is typically
some stipulation built into the contract should the candidate fail to perform and is terminated within a set period of time.
   Temporary employment agencies can provide you with many different types of employees, including administrative
personnel, salespersons, technicians, engineers, and programmers. A benefit to using a temp agency is that you can assess an
individual’s performance prior to offering a permanent position. However, temp agencies are not typically a good source for
high level business or marketing managers.
Interviewing and Selection of Candidates
   Whether you are relying on your own resources or using a professional recruiter, your goal should be to identify at least
3-4 candidates to interview in person. This will follow pre-screening of a greater number of candidates by phone.
   The purpose of a phone screen is to confirm the applicant’s interest, confirm employment and educational history, assess
verbal communication skills, and determine if the candidate has the specific technical skills required of the position.
    The phone screen will allow you to remove candidates from the list of potential hires without wasting time and money on
a face-to-face meeting. A professional recruiting service should be able to conduct the phone screen for you. If you are not
using a recruiting service, then some simple preparation prior to the phone screen will allow for a more efficient call. Review
the resume, note any discrepancies, and research any noted companies that are not familiar. Some sample questions include:
    • Tell me why you left company X?
    • Tell me about your current position?
    • Why have you made the decision to look for another job?
    • You took some time off between company X and company Y, what did you do during that time?
    • How did you find out about our position?
    • Confirm any technical skills that are required for the job?
    The Application Form
   Always have applicants fill out a company application form. This form provides much information about a potential hire.
Take some time to fill out your current company application form to make sure it is both practical and user friendly. Often
application forms do not provide enough space to answer the question or may lack proper grammar.

The EEOC guidelines can be found at

   Reference Checks
    One of the most frequent and sometimes overlooked places to check for warning signs is at the very beginning of the
process when resumes and job applications are initially screened. An important point to look for on the resume is “job-
hopping” or frequent company changes. If a candidate has changed jobs every couple of years or less, it may be a warning
sign that this candidate does not stay in any job for too long; either because they are using employers as stepping stones to
further their career or because there are other more serious ongoing job-performance problems. This makes reference checking
even more important. A few of the best questions to ask references about short-tenure candidates might include:
   • Why did X leave?
   • Would you hire X again?
   • Could X have stayed with your company if he/she had wanted to?
   Face-to-face Interviewing
    Once the candidate has passed through the phone screen and the reference checks, a formalized face-to-face interview can
be conducted. At this stage, the list of candidates should be relatively small (3-4) and should include only those that have the
relevant experience required of the position. Sample interview questions include:
   • Can you tell me about a time when you exceeded expectations?
   • What was the most challenging part of your job at company X?
   • In your current position do have any direct reports and who do you report into?
   • Are you willing to travel? (sometimes to Ireland?)
   • Have you heard of the company XYZ corp.?
   • XYZ Company has a partial list of leads, how would you go about identifying more leads for XYZ corp.?
   • Given that you would initially be the only rep in the field how many days do you anticipate you can be out meeting customers?
    There are specific U.S. regulations around the types of questions that are allowed and not allowed. Managers who
interview job applicants must be aware of applicable federal and state anti-discrimination laws. It is critically important to
adhere to these. The types of questions that are appropriate include:
   • Ask what attracted the candidate to the position.
   • Ask about any gaps in employment history, without, making assumptions about marriage, children etc.
   • Ask what the candidate expects from the employer and where they see themselves in five years (in terms of the position).
   • Ask what the candidate liked and disliked about their past position(s).
   • Ask how the candidate would describe themselves in terms of their personality.
   • Ask about their strengths and weaknesses.
   To avoid lawsuits, do not ask any of the following questions:
   • Do NOT ask about race, age, religion, national origin, sexual orientation, marriage, pregnancy or disability. (One caveat is
     that you can ask about job skills in terms of manufacturing, i.e. whether the candidate can operate a crane, forklift etc.)
   • Do NOT ask how many sick days the individual took at the last job.
   • Do NOT ask about credit or financial history unless it is crucial for the job (i.e. financial advisor or bank examiner).
   • Do NOT comment on the job seeker’s appearance because this may be misconstrued as harassment, no matter how
     benign the comment.
   • Do NOT ask whether he or she is a member of a union. This question is strictly prohibited by law.
   • Do NOT ask the employee to take a physical examination unless all employees are required to do so.
The Job Offer and Related Matters
    The ‘At-Will’ clause has been the unofficial employment contract for decades. ‘At-Will Employment’ means that if an
employee is not covered by an employment contract, the employee can't be forced to stay with an employer and, in turn, an
employer can't be forced to keep the employee and can terminate him/her at any time. In other words, the employee can quit
at any time and the employer can let the employee go at any time. Of course, there are exceptions to this and laws that
protect employees from wrongful dismissal. Although some employees do have employment contracts drawn up (this is
typically reserved for top executives), common practice still remains to send a brief job offer letter with basic information
about the job, related compensation and simply stated ‘at will’ relationship.
  Careful wording of the offer document will circumvent any inadvertent contracts – e.g., the promise of a specific
employment period, severance in the case of termination, or equity without vesting.
   Reserve employment contracts for the top executives. With very senior talent, expect to have the most negotiation over
compensation and the following three issues: 1) whether equity will be awarded and the vesting terms; 2) the amount of severance
pay and what will trigger the obligation; and, 3) the duration of post-employment non-competition or non-solicitation restriction.

   The Non-Disclosure and Non-Compete Clauses
    Although the laws of most states require employees to maintain the confidentiality of their employer’s confidential
information, you may seek additional protection by requiring the employee or independent contractor to sign a non-
disclosure agreement (NDA). An NDA usually contains a provision making clear that an employee’s inventions relating to
company’s business belong to the company, even if not made on company time or equipment. An NDA can also be used to
prohibit an independent contractor from discussing confidential business issues with competitors.
    If there is reason to believe that the employee will be in a position to hurt your company by joining a competitor, you can
also have them sign a non-compete agreement. This will prohibit them from competing against your company within a certain
geographic area for a period of time after they leave. Have your counsel review any NDA or non-compete before you ask
employees to sign it.

   Total compensation is based on typical practices at various income levels. The employer's costs include base salary, bonuses,
commissions if sales position, an equity interest for senior level personnel (usually unvested stock options or restricted shares
that vest over time), and benefits. The company-paid benefits, reflecting broad-based benefits – are those benefits available
to all employees. Benefits covered include the following, which are defined below.
   • Social Security
   • Healthcare
   • Disability insurance
   • Retirement plans such as 401(k)
   • Time off
   • Pension
   Social Security. Social Security is a complicated benefit program sponsored by the U.S. federal government. Often noted
as FICA (Federal Insurance Contribution Act) on the paystub, Social Security covers three benefits: disability, retirement,
and Medicare. The FICA taxes paid out of the employees’ pay and the employer's matching payment help fund these
three programs.
   The Social Security tax is a flat rate of 15.3 percent, half of which is paid by employees and the other half by employers. In
other words, for the year 2008, each party pays 7.65 percent of the first $103,000 of a worker’s annual pay. Medicare cost is
an additional 1.45 percent on all pay, which is paid by both employees and employers.
   Healthcare. Healthcare benefits are perhaps one of the most important benefits companies offer employees through
subsidies. Typical coverage includes medical insurance and dental insurance. If your company is large and well established, the
employee health benefits may also include vision care, prescription drug benefits, and counseling services.
   Whatever the plan - individual, individual plus one, or family coverage in an HMO, PPO, or indemnity plan - employers often
pay a significant portion of the costs. The employee will usually still pay something for healthcare coverage, but it is a small
amount compared to what the employer pays.
   Disability Insurance. Some employers offer short-term and long-term disability insurance (STD and LTD) to eligible
employees. If an employee is away from work for an extended period due to injury or maternity leave, the employee will
receive partial income through the employer's disability insurance programs.
   Short-term disability coverage usually does not begin until an eligible employee has been out of work for five to ten
consecutive days. A typical plan might pay a disabled employee 80 to 100 percent of base salary for the first 10 to 30 days
away from work, then 50 to 75 percent thereafter. STD normally covers a maximum of 180 days.
   Long-term disability policies usually pay benefits for a few years, up until the age of 65 in some cases. Coverage usually
begins after the short-term disability coverage period ends.
   Because the company often pays the entire premium, or pays the premium up to a certain amount of coverage, it is
important to add disability insurance when calculating the value of the total compensation package.
   401(k) Retirement Plans. Section 401(k) of the Internal Revenue Code allows employees to contribute to retirement plans.
This code section has now become the de facto common name of a specific type of retirement plan. These tax-deferred
savings plans allow employees to contribute by deferring compensation; these contributions may accumulate interest until
disbursements are made. The interest and often the contributions are tax-deferred.
    Employers often make additional contributions to these retirement plans. Employer contributions often match some or all
of the employee‘s contributions. Employer matching is usually between 25 cents and a dollar for each dollar the employee
contributes to the retirement account, up to a preset limit. Inclusion of the employer’s contribution to a 401(k) when
calculating total compensation is also part of the total compensation package.
   Time Off. Companies offer paid time off in the form of vacations, holidays, personal leave, and sick days. Typically,
employees receive two to four weeks of vacation plus 10 to 12 holidays yearly. Companies may also grant between one and
four personal days, while sick days can vary from five to 15 days a year. Some companies have written policies that include
paid time off for election, bereavement leave, military service, and jury duty.

   Because an employee is paid even though they are not working, paid time off is a significant component of the “hidden
paycheck” and can increase the value of total compensation.
    A portion of the employer’s cost for this time off is included in base salary, but does not represent the full cost of this
benefit. When an employee takes paid time off, the employer continues to pay that employee and either pays another person
to take on that employee's work or suffers a loss in productivity and associated soft costs for the days the employee is absent.
   Pension. A pension plan is a retirement plan that pays a fixed monthly amount each year during retirement, like an
annuity. The Employee Retirement Income Security Act of 1974 (ERISA) does not require employers to provide pension plans,
but does set the minimum standards for those employers who offer pension plans.
    Companies pay a specified amount in benefit to employees, otherwise known as a defined benefits plan. The amount is
calculated with a formula that may include salary, years of service, and a fixed percentage. Most pension plans allow
employees to start claiming the benefits at age 65.
     A pension plan offers retired employees stability because the benefits are defined by a formula, rather than being subject
to investment performance risks such as in a 401(k) plan. Because an employer probably pays the full cost of the pension plan
(if you have one), pension plan benefits are an important component of the total compensation package.
    Marketing and sales compensation packages can vary depending on experience level, geography, and educational level. The
ranges below take these factors into account. Employees with MBAs typically garner higher salaries than those without an
MBA. Those employees with relevant and valid experience will receive at least the midpoint of the range and those that work
for companies based in large cities such as New York City will also require the higher end of the compensation package.
   Sales Rep                       $85K-110K
   VP Business Development         $120K-160K
   Sr. Director                    $150K-200K
   For both marketing and sales, the rest of the compensation package is represented by the percentages found below:
   Bonuses                         20-30%
   SS                              5.5%
   401k/403b                       4.5%
   Disability                      1.2%
   Healthcare                      4.0%
   Pension                         3.0%
   Time off                        9.5%

    Each organization will have its own way of welcoming the new employee to the team but it is worth making a brief note
about on-boarding. On-boarding, or employee orientation, is an important part of the recruitment process and one that the
hiring company should not overlook. On-boarding is not just about getting an employee settled into their new role but is an
investment in employee retention, morale and productivity. An effective on-boarding process helps to minimize the learning
curve for a new employee and enables them to become a productive member of the team more quickly. Generally, an on-
boarding program should address the following: Company Overview; Job Expectations; Policies and Procedures; and,
Administrative Housekeeping Items.

   Leading companies recognize that a strong management team is a real advantage over the competition, enabling a
company to achieve strategic growth and performance objectives.
   Hiring an individual with U.S. marketplace experience can minimize start-up challenges and move your company forward.
People are, by far, the most important key to the success or failure of any business endeavor!


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