7 Questions To Ask Before Hiring New Staff
Employees are an essential yet expensive inevitability for every business. From impoverished startups to multinational corporate behemoths a recurring question for every business is – “When do we hire more people?”
First off, I’m going to assume that everyone reading this blog wants to grow their company. The costs of hiring staff are self-evident but there are also costs associated with not hiring staff when you should. For example hampering growth and damaging client relationships because of failure to meet deadlines and deliveries quotas.
The ideal time to hire additional employees differs between companies and even between departments in the same company and only someone truly conversant with your company and its needs. For small businesses this almost always involves the owner(s) and they make the decision as to when the best time is.
Here are some fundamental questions to ask about your company, where you want it to go, and what is happening now that will help you decide.
If you’re considering hiring staff it is likely that you have recently experienced growth. In the IDD service arena acquiring new clients usually leads to long term relationships between provider and clients and hiring new support staff is likely to be appropriate. However if the assignment of clients is temporary eg clients assigned to your agency following a natural disaster, who are expected to return to their previous accommodations shortly then either having your current staff work some overtime or hiring appropriately trained contract staff may be a better solution.
It is especially important to ask this question if you’re considering hiring staff who don’t directly contribute to the bottom line (overhead staff). For an IDD service company overhead staff include administrative team members, billing and human resources staff etc as opposed to billable staff like your direct support staff and nursing staff (in some states eg Texas).
Have you noticed a rise in the number of customer complaints about service quality, deadline delays or employee concerns that they cannot keep up with their jobs? Are you concerned that your company brand is suffering because of deteriorating customer service? Do you know what amount of work to expect from each type of employee/day and are your employees doing the expected and more ie examine the utilization rates of your current employees – the percentage of their time that is billable versus gross profit.
The first thing to do is to try and see if your current business processes can be made more efficient with automation e.g. with the use of an EHR. Focused Software can save your case managers 1.5 hours/client, nurses 3.5 hours/full assessment and billing staff 8 hours/week on average. Our EHR can bring value as well as make your organization a whole lot more efficient, incorporate automated quality control checks (difficult with paper) AND save you money! If your IDD service employees seem to be busy, but gross profit is too low, they may be inefficient, billing incorrectly or improperly trained. You should first consider investing in training or improving your processes before hiring additional staff if this is the case.
Remember in the mid to long term automated solutions are always far cheaper than hiring even your least specialized member of staff – so always consider these first.
If after doing the above and your team still can’t adequately handle the volume of work, it may be a sign that you do need more help., deliver
If employees seem to be busy, but gross profit is too low, they may be inefficient, billing incorrectly or improperly trained.
The key to success is matching hiring to the time when new employees can begin to generate revenue. In many cases, it takes eight to 10 weeks to hire someone. On top of that you’ll need to train so just how quickly can you put new people to work?
Needing more help is fine, but do you need to hire in-house? You might have business processes that could be outsourced to other companies for a reasonable increase in variable costs you can handle through pricing rather than the fixed business costs of permanent employees. That way, your business can more effectively respond to changes in demand. Some areas to consider might be call centers, fulfillment, or accounting. In fact Focused Software offers ancillary separate services eg initial company set-up, Policy and Procedure creation etc so our clients can focus on their core competencies. Moving some tasks outside the company frees internal resources to do the caring work that you started the IDD service business for in the beginning!
Consider increasing the efficiency of current staff by using automated solutions such as EHRs, like
Focused Software, before hiring additional staff. It is almost always cheaper.
It may be that you can handle some tasks internally more easily than you think. An example: Do you really need a full-time bookkeeper, or with the use of an integrated EHR (eg FocusedSoftware’s QuickBooks Pro integration) can you find 10 minutes or so a month to synchronize importing reimbursements into your accounting system and have an accountant review the work? By optimizing direct support staff work and supervision you could focus on higher level functions. Just imagine – what other tasks you could take on? Figure out what your time is worth by going on to sites like jobs.com and determine what a person with similar qualifications and experience to you earns/hour and then decide if it really makes sense for you to be doing direct support work or other humdrum administrative tasks so often. What seems to be frugality may actually be foolhardiness.
Growing a business typically has a strong hit on profitability. You ramp up for where you think the business will go within the next few months. That means temporary excess capacity that adds more fixed costs, including benefits, worker’s comp, and additional payroll taxes even though it will take a while for the new employees to get to full functionality. These additional costs get distributed over all your sales and cut gross margins until growth catches up and restores a more normal balance.
As you can’t both grow the business and generally cut expenditures at the same time, the hit will be to profitability and possibly your personal income. Do you have the capital to support the growth? Are you prepared, if necessary, to reduce your personal expenses and plans to help underwrite the growth? If not, you will find yourself at war with what you want to do for the business, ultimately hurting everything.
Be most wary of hiring additional executives until the business is really cooking. Even a vice president of sales may be ineffective if the company does not have sufficient revenue.
An often forgotten but critically important fact is hiring and then firing a staff member shortly after hiring because “you can’t afford it” frequently indicates a lack of adequate research and planning before the hire. This unfortunate circumstance is not just destabilizing and wasteful with regards to your organization; it is frequently devastating to the fired individual! It may have longstanding consequences on the former employee’s psyche and confidence.
Don’t forget your startup needs the processes, procedures, and organization to handle a sudden influx of employees. They will all need orientation, training, and management. There might be additional federal or state legal requirements should the staff size expand to certain numbers. You may need additional office space, equipment, and software licenses.
Remember you can hire from within for certain positions; it’s generally cheaper, the staff are familiar with company culture and it takes less time to train. However this only works if you’d think the person is an excellent fit for the new position regardless of the other advantages.
Having to hire then quickly fire a new staff member because “you can’t afford it” indicates a lack of prior planning.
Not just bad for your company – it is frequently devastating to the fired individual’s psyche and confidence!
At the end of the day hiring great staff is a science as well as an art. Do your home work but listen to your gut too. If you find someone who is an absolute perfect fit for your core values and beliefs, especially if the person can generate income, you should strongly consider hiring him or her. Hiring the right people is even more important than timing. If they’re rock stars, you’ll find ways to make them billable.
Make sure you’ve carefully considered all of your options before you pull the trigger. Remember you owe your best efforts to your employees, including doing all you can to make the right hire. Hiring employees is a big step especially for a new business. Do your homework, consider the implications, and be ready so your company can continue to be successful.
As state reimbursement margins continue to decrease the knee-jerk response of hiring more staff will no longer be tenable. Call FOCUSED SOFTWARE TODAY and we’ll show you how to optimize the staff you currently have!
Photograph: Mohamed Hassan (super busy businessman)