Few things are a fraught as deciding when it’s time to hire employees, which employees to hire, and how many you can reasonably expect to support over time. Let’s look at some of the determinants.
You Can’t Do It All Anymore
This, I’ve found, is the most common reason small businesses hire the first employee. The owner is tired, working too many hours, stressed, and the only reasonable answer seems to be another body on payroll. Maybe. Maybe not.
Seriously evaluate the tasks you need to do – write them on a piece of paper, note how many hours per week each requires, rank them from those you enjoy to those you detest (the latter tend to take more time and create more stress). Now consider which tasks would alleviate the most strain on you. Losing several hours a week to maintaining the books? Hate the task? Then hiring a warehouse person may not be the answer. That hire may relieve you of some time to spend on the books, but which would you rather do? Shelve stock or create a P & L? Those are the kinds of questions you need to honestly answer before you consider taking on a new hire. I’m not suggesting the warehouse person would not be valuable, I’m suggesting you evaluate which kind of work you prefer to spend you day doing.
Many tasks can be outsourced for less money than hiring an employee. The hourly cost may seem higher, but you are paying no benefits, giving no bonuses, covering no vacations or sick leave. Consider outside help before you hire. (see our article Things to Consider When You Begin to Hire Employeesfor key information).
Contractors (outside people you pay to handle specific work) may be at least a short-term answer and provide some breathing space.
Employees are Difficult
There is nothing harder to manage than people. Period. Employees seem to believe that your business is not their entire reason for being and expect a whole range of things from you that you may not even be aware of. (See our article Managing People). Their view of what they are due, whether in salary or time off, may differ markedly from your own. Young employees, if you are not in their general age group, may have an entirely different take on the life/work balance than you do.
If you have not managed people in the past, take the time to get some education in the subject. It’s widely available on line. We have several articles on management in addition to the one noted above.
Before You Hire
Before you hire an employee, have in place the key documents that will make the transition easier for both you and the new hire.
- Write an Employee Handbook. It may sound silly to write a book for a single employee, but it codifies the terms of employment, set out the policies by which management and employees will be governed – and saves a lot of arguments. See out article on Having An Employee Handbook is Paramount.
- As part of the handbook, or as a separate document, you should lay out basics on salary reviews (these may differ from one type of employee to another, so a separate document may be simpler), any ownership or profit sharing, benefits, vacations, etc. Give each employee a copy and have them sign for it. Anytime there is a change, put it in writing and have them sign again.
- Understand all of the local, state and federal taxing authorities and what is required from you.This alone may make a contractor more attractive.
- Investigate insurances you will need – from increased liability to workmen’s compensation.
Hire the Right Person
As discussed in the article Managing People, you will have a management style and you should hire people who will thrive under that style. If you are a micromanager, don’t hire Type A self-starters. Both of you will be miserable.
Fill the Right Job
If you’ve done your list of tasks and time, you will want to hire for the role which both alleviates your stress and makes the business run more smoothly. Consider your own talents and how this new person should fit into the organization, how he or she would complement your strengths. Often owners hire people like themselves because that is the type pf person they understand and have confidence in but duplicating your strong points may not be what the business needs.
Give thought to the role this hire will need to fill and what that means in terms of experience, talent and personality.
Retain Your Hires
You will spend time and money to hire an employee. Training will also cost you time and money. Hiring the right person for the right job will save you both – and alleviate a lot of stress.