Here Are 3 Things To Consider First
As companies grow, hiring decisions are critical and often difficult. You find yourself asking not only who to hire but also when is the right time to hire? If you’re like most businesses out there, you’re not in a state of hypergrowth. If you were, you would constantly be on the lookout for new employees and building your team as quickly as possible. However, if you are like most businesses, you need to think strategically about when you bring new people on.
In my roles as a Scaling Up coach and CEO of Tulip Media Group, I’ve seen so many companies—including our own—make poor decisions around when to hire. We’ve hired people too quickly, and we haven’t hired people quickly enough. Understanding when the right time to hire is for your company can help you avoid costly gaps in your customer service and in your team’s workload.
To help you get a better sense of when the right time to hire is for your company, I want you to consider three things first:
1. Are you hiring to replace someone?
2. Are you hiring to fill new positions?
3. Are you hiring to staff a startup or a new division of your business?
Are You Hiring to Replace Someone?
Let’s imagine you walked in on Monday morning and one of your key employees has tendered their resignation. Assuming this person was being utilized well and was a productive contributor to the company, it’s fairly obvious that you need to hire right away to replace that horsepower in your team as quickly as possible. However, despite the time constraints you are facing and the temptation to accept any qualified replacement, I want to challenge you to hire up.
It is often the case when someone quits that managers hire too quickly and they end up hiring down. They simply fill the position with a warm body that isn’t going to fill the role to its full potential. Unfortunately, this is damaging for the company in the long run because it leads to a lower performance and productivity standard for everyone.
Whenever your team experiences a loss, you should instead always look for someone who is better, regardless of how strong the outgoing employee was in their position. Perhaps this means the new hire’s background is a superior fit for the role or perhaps they have a more suitable set of skills than their predecessor. Investing time and resources into hiring up every time you need to replace a team member will help your company mature, improve its competencies, and solidify its position in the marketplace.
Are You Hiring to Fill New Positions?
As the demand for your products and services increases, the need to hire more people to take on the additional responsibilities rises naturally. However, it can be difficult to pinpoint exactly when you need to increase your head count. In this instance, I challenge you to look at the situation through a return-on-investment lens.
Let’s say your business model runs best when your labor costs are about 30% of sales. If 30% is ideal, then you want to make sure you don’t exceed it. This means you should wait until your labor costs are well below 30% of sales before you bring on a new hire. For example, if the new hire’s salary will amount to 4% of current sales, then you want to wait until your labor costs are at around 26% of sales before you bring that new person on.
Remember that you’re not investing in a new product or service offering, you’re simply trying to keep up with the growth of your existing products and services, so your labor ratios should remain constant as you grow. If you look at it this way, you won’t hire new bodies until the business is there to support them. In a sense, you won’t hire until your business absolutely needs to or until your team is feeling really stretched as a result of the labor shortage.
I would sooner have people that are too busy and having a hard time keeping up for a short period of time than a team that is not busy enough. That breeds complacency and brings the performance of everybody down as a result.
Are You Hiring to Staff a Startup or a New Division of Your Business?
When you are staffing a startup or investing in labor for a new division of your existing business, you are working to build capacity for future business. This is the riskiest hiring scenario. In this case, you need to have a clear idea of the results you want to achieve and how quickly you want to achieve them with the addition of each new hire. If you don’t set clear goals and expectations for each new hire, it could end up costing your business dearly.
You should look at these hiring decisions as you would any new investment. Know what your investment is, be clear on your expectations, and track your progress. Once you have identified your timeline for results along with milestones, you need to reevaluate your investment at each milestone. If your new hires are not achieving the results you expected at any given milestone, you should assess the potential for recovery and consider whether pulling the plug and revising your plan for growth might be a better option.
Accelerate Your Growth with Tulip Media Group
Whether you are starting to feel the pull to increase your head count or if you’ve just staffed a new venture, Tulip Media Group can help you grow and achieve your target return on investment sooner. Our tailored digital and print marketing programs are guaranteed to get results for your company with increased conversions and more interactions with potential customers. Learn more at TulipMediaGroup.com and book an appointment with one of our production specialists today.