This is the second in an ongoing series covering the value legal agreements bring to your business beyond the surface. From boosting your bottom line and expanding your business to hiring the most talented team and improving every relationship you enter into, this series offers a comprehensive look at how effective legal agreements can enhance just about every aspect of your operation.
When it comes to onboarding a new team member, whether they are an employee or an independent contractor, it's fairly common to have the relationship not turn out quite the way you had hoped it would. This occurs because the individual either doesn't provide the services you thought they promised they would provide, or they fail to live up to your expectations in some other way.
A Failure of Process
The cost of team-member turnover could be one of the highest expenses in your business, not just financially, but in terms of time and energy too. In many cases, changing up your agreement process can ensure you are hiring the right people, who will be with you for a long time and grow alongside you and your business.
Most business owners have a standard employment agreement signed by all team members or no signed agreement at all. In either case, you are setting yourself up for loss right from the start. Every single person you hire, whether as an independent contractor or as an employee, must sign an agreement, not because it's required by law, but because it's going to save you from big losses down the road.
Your agreement needs to be as specific as possible about your expectations for the relationship, establishing metrics for success and time frames for specific goals and objectives to be achieved. When you share these expectations, metrics of success, and time frames with your new hire, you are setting them up to succeed from the very start. And you are giving them an opportunity to clarify whether the expectations are clear and can be met.
Rather than using a generic legal agreement you find online, you should always work with an experienced business lawyer like us, who can create comprehensive agreements for both employees and contractors that are specific to your business. In this way, you can have a solid agreement template, including fill-in-the-blank provisions for your specific expectations, metrics, and time frames for each hire, all ready to go whenever you onboard a new hire.
Clarifying Your Expectations
What's more, a trusted lawyer can customize your agreements to make them more personal, catering to your specific needs, style, and way of doing business. Having well considered and customizable agreements helps you make better hires because it forces you to be proactive and think through your expectations for the relationship ahead of time. It forces you to consider what kind of things will make the relationship a thrilling success, along with what could cause the relationship to fail.
The more important the new hire is, the more time you should take to negotiate the terms of the relationship. As the business owner, you can provide the template, or base agreement, and then give the new team member the time and space to review it with you and ask questions. Taking the time to careful review and consider the agreement together is extremely important and should not be overlooked.
Built to Last
If you are bringing on a business partner or a high-level team member, I can promise you this: There will be times in the future when you do NOT want to be in business with that person. I can't tell you exactly what will happen or when it will happen, but inevitably something will come up that makes you feel this way.
And if you don't have a sound agreement in place that provides you with a reason to not just run away, you might do just that. But running away from a relationship like that is not good for you, and it's not good for your business.
It's vital to create solid agreements when you are fond of each other and have high hopes for the relationship. By doing so, you can tailor those agreements to address future outcomes that may be off the charts bad or even just less than ideal, and that's what's going to keep you invested in the relationship when it reaches its breaking point. Conversely, there may be occasions when the right call is to run, and a good agreement will provide you with a way to get out as well.
It's About the Process, Not the Paper
When used wisely, agreements can provide you with a solid foundation for the relationship when hiring your new team members or bringing on your new business partners. Keep in mind, your agreements aren't about the paper; they are about the process.
As your Family Business Lawyer™, we specialize in creating comprehensive employment agreements and partnership agreements for small businesses just like yours. Whether you need new agreements created or want to review ones you already have—even those drafted by another lawyer—contact a Family Business Lawyer™ today.
This article is a service of R&R Legal Advisors and Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.