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Berkonomics

Hire ahead of need only when growth is stable.

Many companies have made the mistake of using the forecast to plan and executive hiring of new employees so that they could be trained and up to speed when the demand arrives.  Although such a practice does add to overhead by bringing employees aboard before they become economic contributors to the bottom line, there is much to be said about service quality by having trained employees on the front line when the customers want and need them.

There are periods in any economy or industry segment when growth seems steady and there are few warning flags ahead.  In such instances, it is much less risky for a company to execute its plans for spending in coordination with forecast revenues.  But there are many more times in which the near term future is far less predictable, and when early hiring decisions may be just the wrong move, reducing flexibility and reserve resources.  It is during such more common times, that you should consider using temporary employees to fill demand as needed, even if brought aboard a bit early for pre-training.  And increasingly, there are off shore service providers able to contribute to production and service, expanding and contracting at will, with some sacrifice in control and sometimes in quality.

Further, a company suffers in its reputation with its employees when hiring and firing in short cycles to meet short term needs, unless those brought aboard are hired as temporary or seasonal workers.  Every employee wants a stable work environment and does his or her best work in a culture of mutual trust as to continued service as a reward for good work.  Constant interruptions in the chain of command, changes within the ranks and threats of impending layoffs together combine to form one of the greatest impediments to efficiency and a strong corporate culture.

  • For much of my marketing career, I have been fortunate to be involved also in recruiting and hiring. (A marketing person doing that? What’s the rationale? Prizes will be awarded for neatness and originality.)

    Anyway, one of the earliest things I learned “on the job” when hiring for high-skill positions is the importance of having a strong bench — a “taxi squad,” if you will — in reserve for when you suddenly do need to staff up in response to need, or when key people leave suddenly.

    So many companies large and small are obsessed with hiring the “perfect” FTE (who doesn’t exist) and fail to include contractors, freelancers, other interim people, as well as previous FTE candidates, in their reserve talent pool. Someone whose credentials, experience, or other attributes did not previously fit your profile for a full time position could turn out to be a perfectly good interim solution — and could also prove to be capable of working his/her way into a full time position. Yes, the interims may need more supervision, but that’s preferable to an empty chair. Just make sure you’re clear with your legal department on who’s a 1099, who’s a W-2, etc. and manage accordingly. The beauty of interim plug-ins, IMHO, is that you can find out pretty quickly who works and who doesn’t, and make changes immediately.

    Being fast and flexible in recruiting and hiring is critical. More and more, I think hiring is too important to leave to the HR department…

  • Dave, very well said and thank you for bringing this delicate and controversial subject to the table. I believe a balance of economics, good forecasting, and sound reasoning is crucial when decisions are made to add people to an organization. Adding one salaried position at $80,000, with benefits and overhead turns, to $100,000 per year. If you make the right choice and the right decision that turns into a $1,000,000 investment…as a good associate will stay with you over 10 years.

    The perfect mix of temporary, permanent and off-shore staff can lead to interesting and passionate executive team discussions. This is good, as people, at a technology company, are the number one resource, and by far the largest investment. People decisions also have the greatest impact on how well, or not, customers are served.

    I believe it is a good blend of all three (temporary, permanent and off shore resources) that leads to success for today’s technology companies. The degree of success can be measured by an organization that offers top quality products, has excellent customer service, is growing revenue, and, at the same time, has bottom line profits fueling new growth. Good solid corporate values are the core foundation of that success.

    Regards,

    Rick

    Richard Munson
    President and Chief Executive Officer
    Multi-Systems, Inc
    7600 North 15th Street
    Phoenix, AZ 85020
    602.870.4200 x 4224

    Rick.Munson@msisolutions.com

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