One of the most difficult aspects of growing a company is deciding when to take on additional employees. In theory it is simple; when the workload is too high the company takes on another employee to reduce the workload to an acceptable level. The quality of service to customers is therefore maintained, without any initial, significant reduction in the company’s profit; the aim being to increase the profit as the new employee settles in. However, in practice the growth of a company is never as simple as the theory!
On one hand, if recruitment is too early, an employees’ workload is reduced and the level of service provided to clients is maintained, which is positive. However, for the company, profits will decrease, due to the increased expenditure on the new employee’s wages, which may not be counter-acted by increased turnover. On the other hand, if recruitment is too late and the workload is too high, then the service received by clients would deteriate. Although profits may increase in the short term, the expansion of the company could be reduced in the medium to long term, as existing clients may choose to take their business elsewhere, due to a reduction in the quality of service they expect.
The main difference between theory and reality is that the company’s workload and profits do not increase in a linear relationship with time and the recruitment process is not as simple as finding the right person as soon as you need them. In relation to workload the problem is that although the general trend may be upwards, there are many peaks and troughs, due to a large range of variables, which are often beyond the control of a company. For example, the time frame for clients to be able to fund projects can have a subsequent effect on the companies’ workload. However, there are more controllable variables, including the companies’ cash flow and profit, which can be maximised by getting invoices paid on time.
The principle difficulty of recruitment is the time it can take to find the right candidate. Usually, this process can be time consuming due to advertising the job, the interview process and finally offering the correct candidate the job. This often takes months rather than weeks to complete. If employing someone from an existing company, the notice period before they can start working for your company can further increase the recruitment time. Taking this into consideration, the recruitment process is likely to be the most uncontrollable variable from the problems identified. In my opinion, it is better to recruit a little early, rather than late, as an initial reduction in profit in the short term is better than potentially losing existing clients and hindering the company’s growth.
In order to try and make the correct decision with regards to recruitment, continued analysis of the business’ relevant Key Performance Indicators (KPI’s) is integral to successful recruitment. This should help to minimise any risk to the company’s profits or quality standards by avoiding recruiting too early or too late. It is important to examine what has happened in the recent past and what is the realistic potential workload for the company in the short to medium term. This analysis should take into account the recruitment policy of recruiting slightly earlier rather than later.
I have established with the different variables it is virtually impossible to recruit someone at the perfect theoretical time, only to reach the best practical recruitment solution, by having a recruitment strategy.
What strategy does your company have for recruitment?
I really enjoyed reading this post. Great step by step description!