What to Do Before Hiring More Employees

By QuickBooks

2 min read

If you’re thinking of expanding your operations this year, you may need to hire additional help to handle the workload. You won’t be alone: A recent survey of Inc. 5000 businesses shows that eight out of 10 plan to increase their head count in 2014.

Before enlisting anyone, however, make sure the benefits of doing so will outweigh the costs. You’ll also want to carefully develop each new role and its job description, so you can build a productive team. Follow these guidelines to make the process go smoothly.

1. Assess the situation. Feeling overwhelmed? Take a step back to figure out why. Ask yourself questions such as: Am I spending too many hours on administrative tasks that could be completed by others? Am I missing out on the chance to reach new customers? If you already have one or more employees, consider asking them to weigh in. Could they take on more responsibility, making it possible to avoid hiring more workers?

2. Set clear goals and expectations. If, after assessing your situation, you decide to hire someone new, you’ll want to clearly identify how he or she will contribute to the business. Ira Wolfe, president of Success Performance Solutions, suggests envisioning yourself sitting down with the new employee after, say, three months or so. What will the new employee have accomplished during that initial period? Will the worker have boosted revenue, reduced excessive overtime, finished additional projects, or helped improve morale? “Be as specific as possible,” Wolfe says. By doing so, you’ll establish metrics for gauging success that justify the expense.

3. Consider starting with a short-term contract. At Travefy, an online group travel planner, new employees generally begin with a four- to six-week contract. “This contract period is invaluable,” says CEO David Donner Chait, because it allows management to evaluate a potential hire’s skills. “While they may be great on paper, can they achieve the tasks required by the position in an effective manner?” The strategy also helps Travefy determine the impact of the position. “We’re able to effectively conduct a cost-benefit analysis of the position itself to make sure it’s additive to our company.”

4. Keep costs in mind. “Make sure the new hire will be an investment, not an expense,” Wolfe advises. For sales positions, this analysis can be fairly simple. Non-income producing positions, such as administrative work and management, can take a bit more calculating. To start, he suggests, consider looking at revenue per employee: “How much more revenue would we need to produce to cover the cost of the new employee and increase profitability?” The answer can help guide your hiring decisions.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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