When to employ a new member of staff, and when not to!

A typical conundrum for business owners is timing the recruitment of a new member of staff. For any business to grow, it will require a regular intake of skills and resources. Choosing the moment to employ is one element; understanding the financial implications and what return on investment needs to be is another.

I suspect as a business owner; you will have experienced that conundrum on numerous occasions. You will have identified the need for a new resource and appreciated the contribution a skilled individual can bring to the business. However, have you looked at a detailed analysis of how much it is going to cost, the impact it will have on your overheads, margins and profitability, and established the long-term benefits of that extra person's contribution to increased turnover and profitability?

I hear the term non-productive staff quite often, and this can suggest (if misinterpreted) that a particular member of a team, typically a person in an administrative role, doesn't contribute to the profits of a company. That thought process is a myth and can be proved by analysing the so-called 'non-productive' member of staff by their contribution to efficient operations. Typically, administrators are considered non-productive, but without that administrator, you don't have the efficiency they bring to the business by offering backroom support. Improving efficiency with a competent and organised administrator saves time in the more front-facing departments of the company. Time is money!

Optimise the machine

Every business is a machine or production line, whether manufacturing or services and should be linear in its operations. When one department doesn't perform, it can harm the rest of the company. Every member of staff should be considered a vital part of that machine. How well that person operates is critical to sustained business success — an obvious statement, but all too often overlooked and neglected.

We expect all members of staff to make a considerable contribution to the performance of the business, whether they are visible, i.e., sales consultants, or the more junior and typically less costly administration clerk. I talk a great deal about marginal gains. If each member of the team contributes, then the quality of that contribution should be continually nurtured to make a difference to the bottom line. The conundrum of taking on a new member of staff firstly requires due diligence and an understanding that the investment is the best use of funds. Looking inwards, operational improvements and the enhanced performance of existing staff should come first through support and training. Do you need a new body, or can you save that investment by making efficiency and operational improvements?

Decision made?

If you have analysed everything, and you do need that new member of staff, I have created a recruitment calculator. It enables you to enter the employee costs including, anticipated salary, benefits, employers expenses and overheads. The calculator will then return a figure representative of the real investment in a new employee to the business. It will illustrate your break-even point on the new employee, and allow you to consider the contribution you require them to make towards the profitability of the company by setting performance-related targets pertinent to their role.

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