by Dave Clough
The job generates income
It is usually easy to decide to add salespeople. Once you have a proven sales system and onboarding process, adding more proven salespeople just brings in more money (break even in 6+ months) because they tend to be heavily commission based.
While salespeople directly affect revenue, other jobs also increase revenue directly. Hiring anyone who is “billable” (like a consultant or attorney) is usually a good choice if he is not “on the bench,” meaning as long as he is working on client work. If the person can be billable quickly, the decision is typically an easy one.
Other indirect revenue producers may also be easy decisions. If you cannot keep up with orders, and it is sustainable, it may be time to hire someone to fix the bottleneck. But don’t just hire anyone; hire someone with the appropriate skills that will alleviate the bottleneck.
High ROI
Hiring an “overhead” position is a harder choice. An overhead position is one that does not contribute to increasing the revenue. Administrators, human resources and maintenance employees are examples of overhead, and you need to look for a return on investment (ROI) on a permanent position.
Typically I recommend hiring contractors for things that are not core competencies for your business. HR contractors are common for small businesses because you don’t need HR help all the time, but when you do, it is great to have an experienced professional available. Administrators are the tougher positions to decide upon hiring.
My recommendation is to hire administrative help if that help will free up a revenue producing person to be more effective. For the solopreneur looking to grow, I recommend getting a great assistant who will complement the abilities of the founder and offload the non-revenue producing work. For a sales group that has to do all their own documentation, I recommend getting help that allows the salespeople to do what they are uniquely qualified to do; find and close more clients.
Maximize the value of a productive, well-compensated executive/employee by taking the administrative tasks (ex. bookkeeping, logistical, clerical, reporting) off of her plate. The ROI should be high.
Create a new position
To put this in a context that will make sense, consider how filing is done (whether electronic or paper) as an analogy. Typically information needs to be “filed,” so a folder is created and the information is added to it. Then when related information needs to be filed, it is put into the same folder, and this continues until the folder gets big or unwieldy. Once it gets so big that it takes too long to find the information you want quickly, either a new folder or sub-folder is created and a group of more tightly related information is put into the new folder. Creating new positions should happen in the same way.
When a company is small, employees typically wear many hats and the founder may be referred to the “chief cook and bottle-washer.” Everyone chips in where needed. As a company grows, positions become more specialized. Once an employee has to wear too many important hats (like having too much information in the folder), a new position (or folder) needs to be created. The most important or best mastered tasks continue to be done by the person, and the rest is taken off of her plate. In doing so, always consider if these are related skills that a new hire could easily bring if the position is vacated.
There may already be someone in the company who has the talent and time to pick up the tasks, but in a growing company, it could be better to create a new position to focus on the tasks that have been shucked off. Staffed by someone with the skills to do these tasks, the new position can make these formerly low priority tasks stand out to help the company, and the seasoned employee’s retained tasks get more attention and renewed focus.
I once had a client who ran a health club. The Membership Services (sales) people not only sold memberships to prospective clients, but also handled members’ questions and concerns. I recommended that the two major tasks be separated for many reasons:
Good salespeople are hard to find, so it is better to leverage their unique talents (lead generation and closing) and leave the rest to another department.
Focusing the salespeople on proactive tasks rather than reactive issues results in continuous sales flow.
There are many more customer service type people who can handle members’ concerns (and are likely more empathetic) to provide a satisfactory resolution.
The cost of a customer service person is lower than a good salesperson, so why spend more on a function than you need to?
Taking the reactive tasks off the plate of the sales staff not only brought clarity in roles, but also brought better results to both positions.
Watch out for…
Whether you agree or disagree with the labor laws, certain laws kick in when companies get to a certain size (10, 20, or 50 employees for example). These laws include Family and Medical Leave, Parental Leave, Medical Insurance, COBRA, and others. Also, individual states can make the laws more stringent, so know your local laws.
For instance, many years ago, Massachusetts required companies to provide health insurance if they had 11 employees or more, but then the Affordable Care Act raised that to 50 employees or more. This will likely change again if it is replaced with another policy.
Part-time vs. Full-time
For small businesses, I recommend looking seriously at part-time employees for administrative jobs and short term needs.
Benefits of part-time employees:
Great talent is often untapped.
I have had great results by hiring stay-at-home moms for administrative jobs (bookkeeping is a great example). In many cases they are overqualified, know how to get things done quickly, and have the ability to multitask.
There are times in life when people need to work part time instead of full time. I have seen this happen for a year or two when an elderly parent needs care. As above, there are very competent people who can easily handle the administrative job.
One client hired an Olympic athlete for times that fit around training hours.
College students can often work after or between classes, but just be aware that academics will likely come before their job.
Employers don’t have to pay benefits if employee works under 20 hours/week. This is true everywhere, and in some places the limit is over 30 hours.
Hours can provide great scheduling flexibility.
Many of those mentioned under #1 can work outside of regular hours.
Don’t have to overpay when not a full-time need. When the part-time person moves on, you may then have a need for full-time and can find the right person.
If part-time people make up a full time position, losing one leaves much less than a 40 hour gap to fill.
Potential negatives to part-time employees:
The commitment (and maybe passion) is not present.
The job is likely not the employee’s life goal.
A better paying, more flexible, or more local job can draw your part-timer away.
When life circumstances change, employee will move on.
They may have less knowledge of the job.
Lack of time and consistency in the job prevents depth of knowledge.
If the job is seasonal, the person could have been away from the job for months, and may not come back.
It takes longer than a full time employee to become proficient due to fewer hours per week.
The part time employee may have been hired for her incredible potential, but she may not have the experience doing this kind of job before.
You may not find the competency you desire.
Some jobs require depth of experience, and that may be hard to find in a part-timer.
The ideal candidate is not doing an online search that includes the words “part-time,” so your position may not be seen by those with the desired skills.
If you can afford to hire a full-time employee, it is probably better for a growing company. Caution: don’t try to lowball the compensation if you can’t afford to pay the full-time m
arket rate because you’ll get what you pay for – something less than an A-player. A part-time employee can be a great fit at least in the short term. Just don’t shortcut the hiring process because it is a part-time position.
Now that you’ve determined you need to hire someone, for what job are you hiring?
Some job titles may say secretary, marketer, or administrator, but exactly what will the person be doing? What is it that the new employee needs to do that someone else can‘t do? What kind of experience is necessary in order to succeed in this job?
Note: do use plain English in the job description. Don’t use a title like “Queen of Awesomeness” if you are looking for an HR Director. Use the wording that someone would use in a Google Search.
This is where a great job description comes in. The job description should motivate A-players. It should say “What success looks like.” We’ll dive into this in the following chapters.
Summary & Action Items
Do you really need to hire for this position?
Is someone in the wrong place in the company who can fit this need?
Can you restructure/shuffle current employees to cover the tasks of this position?
Can it be done by a part time person?
Can it be done more economically by a contractor?
What will be the return on the investment?
Signs you need to make a hire:
Everyone is swamped with too much work
You are leaving money on the table
You will save money
The job generates income
High ROI
Create a new position
Watch out for labor laws!
Part-time vs. Full-time
Now that you’ve determined you need to hire someone, for what job are you hiring?
Chapter 3: The Process
The Perfect Hire Blueprint process is a logical, step by step, linear process. While the process has been condensed successfully in some cases (I don’t recommend this), it has been proven to work in many companies and for many different positions. The process has been used to hire positions such as sales, marketing, admin, CPA, membership services, fitness trainers, front desk greeters, engineers and other tech positions, and managerial positions such as COO.
The process solves the overall issue: How do I hire the right person when the resume and cover letter are written by experts, the candidate is coached on how to interview, the references won’t tell me the real scoop, and headhunters cost too much?
Here is a one-page view of the process:
To download this grid, visit PerfectHireBlueprint.com/Resources
Overview of the Process
There are 11 steps above in the grid for a snapshot of the Perfect Hire Blueprint. Here are all the steps in summary and then we’ll dive into each:
Part 1: Setup
Job opening is determined.
Profile/Benchmark for position is created.
Job description is created and pay structure is determined.
Approval to hire is obtained.
Interview team is determined (your A-players) and roles are defined.
Ad is created and pushed to all sourcing channels (if necessary, recruiters are contracted).
Part 2: Screen
Leads come in from all sources and all are entered into tracking software.
Leads are either filtered and sent to hiring manager or are sent directly to hiring manager without qualification depending on department.
Hiring manager or screener reviews the candidate’s information and determines if phone/video screen is warranted.
Candidates that don’t make the grade are informed that the company does not see a good match.
If phone screen goes well, hiring manger (may have help of assistant) schedules interview with candidate and with team of interviewers.
The day of the interview, the candidate meets with each interviewer.
Assessment is taken and Gap Analysis is created.
Assessment analysis is provided to the hiring manager.
Hiring manger has second interview to follow up on issues raised during first visit and by the Assessment.
A roundtable is convened to confirm which candidate, if any, is qualified.
Hiring manger determines if offer is to be made and creates offer letter (may have admin help).
Part 3: Secure
Approved offer is presented to candidate.
Offer acceptance procedures are followed to insure new hire shows up on first day.
Onboarding.
This might look like a lot of steps, but this book is about finding the Perfect Hire. If you follow the process, you will get the Perfect Hire. If you skip one or multiple steps, the surety of the process drops. You may be able to find great employees by doing only a few of the steps, but if you want a repeatable process that consistently places the right people in the right seats to help grow your company, and reduce the required management oversight, this process could be exactly what you need.
If you are worried that this is too much for your business or that it takes too long, all of this can happen very fast, and it needs to. I recommend that you move quickly no matter the environment. When there are 100+ people for every job opening (such as what happened in the US in 2010-2012), the hiring company is in control. Since there aren’t enough jobs to go around, candidates are more tolerant of a company that moves slowly and makes them jump through hoops.
When there are fewer candidates for each job (as is the case in a growing economy), the control shifts to the A-players. If a company does not have a smooth, less demanding application and interview process, the A-players will move on to good companies that do move quickly and offer a growth path. But of course, if the company has a reputation of only hiring A-players, an A-player will do what is needed to get hired.
Selling an Interview Candidate
“Selling” your company to an interview candidate is incredibly important to keep in mind during the entire hiring process.
At the time of this writing the labor market is tightening (at or near all-time low unemployment). There are fewer candidates applying for each job, and there are fewer good candidates who are actively looking. The best candidates will have more opportunities than just your company. There may be times when you won’t even be able to find any minimally qualified candidates, never mind A-players. My advice is not to settle, but to keep searching.
This is why getting the candidate excited about your company is critically important. It is a seller’s market, and the seller is putting a higher price on her high demand skills. If you are going to get the best people to say yes to your company, you need to do more than just wait until the offer to see if the candidate is interested.
You should be selling the benefits of your company early in the process.
If the candidate wants to work for your company:
the process goes faster (he returns calls and his schedule is more flexible),
you are less likely to get into a salary auction (bidding wars are brutal),
the offer does not have to be the best in order to get him to accept, and
you won’t get that call after the offer is accepted saying he took another job or he wants another concession.
If the candidate is indifferent about your company:
the person tends to drag his feet to allow other companies to compete (this could also include the company at which he is currently employed),
he doesn’t appear to be totally engaged in the conversation or interview (read the body language),
the candidate just disappears; no longer able to be reached by phone or email,
your offer will be just the starting point for the negotiation, and
he will find minor reasons why the job is not ideal (commute is 5 minutes longer, traffic is worse, daycare is in the other direction, etc.).
Here’s what you need to do to sell your company and the position during the process:
The ad and job description need to highlight WHY someone should work for your company. Asking current employees why they work there is the best way to get the real reasons, rather than the key reasons perceived by management.
