If you want to own a successful small business it makes sense to develop good hiring strategies. A big part of this is knowing when it makes sense to hire additional staff. It’s a question you must get right because there is a lot at stake. If you delay hiring too long, you run the risk of seeing your service level degrade. That is very expensive because once a client is gone…they’re gone. The cost to replace a client can be extremely high.
On the other hand, if you hire before you actually need too, you spend money on wages (and training) that you may not even need.
Where is the balance?
The key to smart hiring is having a well-articulated “staff leverage plan”. What is a “staff leverage plan”? This is simply a written strategy detailing:
- Descriptions of each staff person’s responsibilities.
- The tasks the new hire will perform.
- The expected pay off. How much time will the newly hired person free up for other, higher paid staff?
Of course this is an art and not a science. Don’t expect perfection. But if you have a written strategy about hiring new people and if you have a good interviewing process, you probably won’t get far off the track. The added benefit is that having such a written strategy is a good way to motivate existing staff too. People like working within structure.
Let’s take an example to see how this works. The Manager of Administration at my firm is responsible for client service. He takes care of questions clients have about their statements, checks, deposits, etc. He also handles the paperwork for all new accounts.
It is critically important to the success of our business that these functions be executed promptly, professionally and accurately. As a result, we have certain response time standards that we must adhere to.
If I see that our response time is slipping, I know it’s time to make a change. But the first thing I look at is technology. I’d much rather invest in software and automation than hire new people if possible. The return on investment is much higher. But that can’t always be done. When more technology won’t solve my business problem and when I see that the response time is below standard, I take it to the next level.
But before I hire someone, I try to determine why our response time is sluggish. Do we have a temporary wave of business and service that needs to be taken care of or is this a longer term situation? How long has the problem persisted? Do we have a reasonable expectation to get back on track without adding staff?
In order to fully answer these questions, I talk to my office manager at length and over a period of time. I don’t want our decisions to be influenced by the events of any one particular day.
If we determine that it’s time to add staff, we are ready to take the next step.
Before I hire anyone I ready myself and seasoned staff for greater demands and harder work ahead. That’s because in addition to the greater work flow, we’ve got to train our new team member. That all adds to our work load. It doesn’t lighten it.
Given the way we hire new employees and the way we train new staff, I expect a lot from our newly hired team members. I give them 2 months to get up to speed. I don’t expect that new employee to master everything there is to learn in that time. But I do expect the person to be able to work independently (with oversight) and to add value.
Before the new person comes on board, I always tell him or her that I’m going to give them 30 days. At the end of the first 30 days, I tell them I am giving them an additional 30 days if it looks like they are on track.
During that entire 2 month period, I look for a few things to happen.
First, like I said, I want to see the person work independently as much as possible. There is nothing worse than hiring someone and having that person eat up a salary PLUS the time and expense of your trained staff.
The next thing I want to see is a quicker response time overall. If it really made sense to hire someone new we should see better performance elsewhere. If we don’t get that improvement, the new hire is let go. I run a small business so we don’t have to go through this process often. But it’s nice to know we’ve got a procedure in place for the rare occasions when we do need it.
As you can see, if you want to run a successful business, you have to keep your finger on the pulse of what’s going on. This is not to say that you can’t automate and delegate. Actually, I strongly suggest you use both these strategies to run your business successfully. But delegating and automating can never be an excuse for ignoring what goes on inside your business and what your clients’ experiences are.
Talk to your clients often. Solicit their input. Ask how you can improve their experience – and take action based on what you hear.
Knowing when it’s time to hire new staff is difficult. You’re going to get it wrong from time to time. But learn from your mistakes and adjust. Above all else, have written standards and strictly enforce them in order to make sure you have the best staff serving your clients at all times.
How do you know when it’s time to hire in your business? What has your experience been?