Peer-to-Peer: When is the right time to staff up?

Question

“Can anyone offer advice on how to decide that it’s time to hire more staff? Our recent revenue growth has been solid though modest, and we’re expecting similar growth next year. But you can never be sure you’ll achieve the growth you hope for, and we’d hate to hire people, then have to lay them off if we fall short. How do other executives decide when it’s time to staff up”

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Reader responses

Ben Blakley:

I recommend putting together a forecast of the resources you’ll need to continue growing. Each year, we sit down with our managers and find out how many people they need in each of their areas to get the job done. Then we break down the different functional areas of projected needs into resource units, where one resource = one full-time person. Using this model we can determine where there are likely to be shortages and surpluses and adjust our hiring strategy accordingly. A sensitivity analysis would be used to provide for different scenarios such as large increases in sales volume or lowered expectations. In terms of hiring, you may want to consider hiring on specific three-month contracts, and then extending those contracts based on your needs.

Kevin Dee, Eagle Professional Resources Inc.:

I would advise using a couple of strategies:

• One, bring in independent contractors. At first blush they seem expensive (maybe $50 an hour versus $50,000 per year) but they are actually very cost effective for the following reasons: a. You only bring them on when you need them, so they are billable almost 100% of their time; b. You have no responsibility for their career… management, HR issues, training, vacations, sickness, etc.; c. They hit the ground running because you only bring highly qualified people in, rather than trying to force-fit employees whose skills might be in other areas; d. There are no severance costs and you can let them go with almost no notice if the project demands change.
• Two, use temp employees, with a view to making them permanent if the longer-term business seems to be there. This allows you to try before you buy and not actually commit to headcount before the business is firmed up.

For his answer, Kevin Dee will receive a copy of Advantage Play: The manager’s guide to creative problem solving, by David Ben.

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