Knowing When to Add Staff
You are probably attracted to the title of this article because you have been thinking of adding a person or two to your company, but you're not yet convinced it is the right thing to do. Well, hopefully, I can provide some thought-provoking discussion to help you make that determination.
Can you identify with any of the following scenarios?
- It is taking longer to fill customer orders or respond to their service needs.
- Instead of having enough business to last for the next four weeks (or whatever timeframe makes sense in your field), you notice that you have enough to last 8 - 10 weeks. You are thinking of turning down business because you can't handle the load.
- You wish you could enter a new market, new geography or new product line, but just don't have the manpower to do it now.
- You are spending more of your time on existing business/client contact when your gut is telling you to focus on the future.
- You have plans to increase your revenue by at least 25% over the next year.
These are all symptoms or indicators that you may need to add some people to your growing company. The decision you have to make is whether to add people to your payroll; have an outside organization handle the increased workload; re-arrange current jobs to address these symptoms; or slow down the business growth.
Here are some questions to ask:
- How much more revenue will the company have to generate for us to be able to afford a new employee? Don't forget to include the full cost of having an employee including salary, benefits, office expenses, etc. Your increase in revenue should be at least three times the employee cost.
- Is adding a person a luxury or a necessity in having the company achieve its long-term goals?
- What is it that you want to add and how available are those skills in your marketplace? If they are not that available, could you reorganize some jobs and wind up hiring someone with skills that are readily available?
- Is this additional work likely to be permanent or will it last for only a few months? If it is permanent (or at least a year), it is a strong indication that an additional person(s) is needed; if it is a short-term work spike, perhaps a temporary employee is the best answer.
- Is the current staff fully occupied by performing necessary, value-producing work, or are there some tasks that can be eliminated, thereby creating time to perform the new tasks.
- What is the revenue per employee now and what will it be when you add more people? It is normal to expect a slight reduction in the beginning, however, your mid- to long-term trend line should show revenue and profit per employee increasing.
- How quickly can we respond to customer needs, questions, or orders? Will the additional people reduce that time? The answer should be a definite YES.
- How much will it cost you to acquire and fully train the person, including hiring, training and productivity costs?
- How will you measure the positive impact of adding this person? What will cause customers and current employees to say WOW when this person is fully productive?
- You will more than likely have to give up some of your duties if a new person is going to be brought on board. Are you ready and committed to do this?
Deciding whether and when to add employees is not always a simple decision to make. As the saying goes, you need to spend money to make money and making these staff addition decisions are a good example of that practice. The key is to know that you are going to grow your business and adding staff is necessary to accomplish that objective.
Would you like to discuss this topic with the author?
Bliss & Associates Inc.
www.blissassociates.com
301 Wynswept Point, Seneca, SC 296725
Tele: 864-888-3100
E-mail wbliss@blissassociates.com
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