More often than not, hiring is perceived as a sign your business is doing well. But while it can be an indicator of growth, it shouldn't be seen as a silver bullet for time-poor entrepreneurs driven by a desperate need for more hours in the day. And here's why...
Hiring can hurt. Not only does taking on your first employees spell an (often unwanted) alteration in your job description – from CEO to trainer, manager and HR – it also demands a whole new set of skills than simply learning to delegate.
Hiring statistics you need to know
The hiring process takes 27.5 days in the UK and 23.8 days in the US
Nearly three in four employers (74%) say they've hired the wrong person for a position
Almost four in 10 (38%) interviewees exit their organization within a year of joining. Two out of three employees who leave in the first year do so within the first six months.
What happens when you hire?
You've probably heard the phrase "leaders eat last”. In fact, Simon Sinek wrote the book on it. In it he investigates great leaders from Marine Corps Officers – who don't just sacrifice their place at the table but often their own comfort and even their lives for those in their care – to the heads of big business and government putting aside their own interests to protect their teams.
Hire a team, and suddenly you've new responsibilities beyond paying your own mortgage and bills. Your employees come first, and they need instruction, training and motivation.
Many entrepreneurs are so immersed in their own businesses, they cannot understand why their employers have different motivations, like career progression over business growth. As such, many are completely unprepared for the change.
Barnaby Lashbrooke, CEO of virtual assistant site Time Etc
"I started my business with two other co-founders. For months we worked as a team, sharing our skills, ideas, planning and developing our vision of how the business would function and grow. My time was spent mostly coding our platform from scratch. Work then was exciting, enjoyable and fairly straightforward.
"That all changed when we leased an office space and started to hire. It felt like a sensible thing to do, and the only way to grow. And so, without really pausing to think, we started interviewing, spurred on by the nice comments from people who said we must be doing well. I wore those compliments like a badge of honor, though I see now they weren't based on fact.
"Fast forward a few short months and things were not going so well. We had failed to pick up as many new customers as we had anticipated. Suddenly $26,000 a month needed to be budgeted for payroll and we were running low on funds.
"Added to that, our small and initially enthusiastic team didn't have enough to do and people were starting to get demotivated. Back then, I didn't know the first thing about good leadership, or how to inspire others, so most of my time was consumed with firefighting HR issues.”
A NOTE: Dissuading you from hiring a team is not the intention of this article – all growing businesses must hire, eventually. The intention is to help you go in with your eyes wide open, and understand exactly when is the right time to do it.
Here are our top four things to consider if you're thinking about hiring:
1. Do you need to hire at all?
"I'd rather interview 50 people and not hire anyone than hire the wrong person."
You are fortunate to run businesses in an age when traditional employment is not the only option. There are dozens of platforms and marketplaces that connect skilled people to projects and businesses, and others that'll do services traditionally done in-house:
Highly-experienced and rigorously screened virtual assistants on hand to perform administrative tasks, sales, marketing and social media tasks, research, writing and blogging by the hour.
Formerly Elance-oDesk, this is the largest freelancing platform in the world with 18M registered freelancers.
Another all-rounder freelance platform connecting businesses with 2M freelancers.
This platform allows employers to post work for site members who place bids in a competitive tender process. The top three categories that most frequently get job requests are IT and software, design, media and architecture, and writing and content.
Exclusive network of the "top 3%” of freelance software developers, designers, finance experts, product managers, and project managers.
Experienced consultants available for projects and interim roles, including CFOs, CIOs, COOs, MBAs and specialists.
Use of virtual assistants, freelancers and other remote nomads for ongoing or one-off tasks and projects can be scaled up or down as required, saving you time, stress and money. Plus, a huge amount of talent exists in the freelance marketplace. A 2019 study by Upwork revealed that more people than ever see freelancing as a long-term career path.
In 2019, as many freelancers said they view this way of working as a long-term career choice as they do a temporary way to make money.
The share of those who freelance full time increased from 17% in 2014 to 28% in 2019.
Freelancers are most likely to be skilled professionals: 45% of freelancers provided skilled services such as programming, marketing, IT and business consulting. (Source: Upwork)
Top tip: Freelancer platforms that don't vet their users can be much more time consuming to work with. Instead, pick sites that do their best to pick the best. Once you've found a freelancer you love working with, stick with them and get your tasks and projects in early. The best freelancers are in high demand!
It isn't just people power that can help get you over the line. There are also plenty of cloud-based software tools (e.g. Xero or Quickbooks for payroll, VAT returns and expenses) that can automate processes and save you hours per month.
If you're convinced the jobs you need doing cannot be automated, then it's worth asking yourself these questions before you start advertising roles:
- What are your goals and how would adding someone to your team help you to realize those goals?
- Do the jobs or tasks you need doing require a skilled professional?
- Do you have enough work for that person to be full time employed?
- Who will onboard, oversee, manage and motivate that employee (which are key to making any hire a success)?
- Do you have an HR function in place, or would you need to outsource too?
Story: Phil, plumbing business owner
When Phil started his plumbing business back in 2007, one of the first things he learned was that hiring full-time isn't the problem-solver he thought it would be. With work piling up Phil thought that he needed more hands to help, so he hired a qualified engineer on a big salary.
Realizing the engineer would need transport, Phil leased and branded a van for his first employee to use. As their workload continued to grow, Phil hired more engineers and leased more vans and his business was thriving. Until the following summer.
A prolonged heat wave hit the country which changed everything about his business. During the unexpectedly long and scorching summer, no-one was using their heating. Work dried up for Phil's large team and employees were being paid to twiddle their thumbs.
Phil was stuck in a situation no-one wants to find themselves in: do I have to let my workers go, only to hire again in the winter?
Phil spoke to his engineers and they agreed to move to freelance contracts. This way, they could work on other jobs in their spare time and the business could stay afloat.
What Phil learned, the hard way, is that hiring full-time workers in a small business is often the least financially sensible thing you can do. Overheads always need to be met, even when sales dry up. Understanding your business, your customers, and seasonal demand, is key to getting hiring right. And this isn't easy when your business is new.
Top tip: Businesses should be aware of the rules around hiring freelancers and possible risks (e.g. protecting data and intellectual property). Do some thorough research before outsourcing. Some freelancer websites will guide you through the process or offer resources that can help.
2. Understand how it changes your role and prepare for your new responsibilities
"Hiring people is an art, not a science."
Howard Schulz was wrong. While a little bit of magic is needed in hiring, that doesn't mean it isn't a rigorous and mostly analytical process. There are several important things employers must do when hiring, including:
- Make sure their recruitment practices are fair
- Write employee documentation, including employment contracts
- Understand employee rights to vacations/annual leave, sick pay, parental leave etc.
- Protect the health, safety and welfare of their employees
- Understand your HR duties (e.g. considering requests for flexible working)
- Set up pensions/401(k) and other employee benefits
- Set up a payroll function
- Make sure technology and client data is secure
- Offer training and career development
Very few people become business owners because they want to manage people. And yet entrepreneurs hiring for the very first time must inevitably take up the mantle of manager, at least temporarily.
You need to be ready for the impact of this on your role and prepared for the change. Instead of business growth, a large amount of your time will now be consumed by recruitment, managerial and HR tasks.
Watch online tutorials (there are plenty on YouTube) and check government resources to get up to date information regarding your responsibilities and legal obligations. Speak to a freelance HR expert and find out if they'd be willing to help you get prepared, by providing template documents and helping you to customize them.
You'll also need to understand what motivates your employees to do their best work. Good leadership is a skill that you need to keep working on.
Almost three quarters (72%) of 14,000 new hires surveyed said the most important thing during onboarding is one-to-one time with their manager (Source: LinkedIn)
Companies are only as good as the people that run them. If those people are mismanaged, confused or unhappy then it will start showing in your company culture, in their work, and in their interactions with customers and stakeholders. You need to work towards becoming as talented at managing people as you are at the work that led you to start your business.
A good leader is someone who can communicate, empathise, understand and help others grow. And that takes hard work to master.
3. What tech can do for you
"Machines take me by surprise with great frequency."
When you add more people into the mix, things inevitably get more complicated. You'll need an easy way to track holiday requests, absences, benefits and progression and a secure way to keep employees records on file. Cloud-based HR software can whip you into shape before you start expanding, because spreadsheets won't do.
According to employees, the number one thing holding back digital transformation at a business is the CEO or board of directors. (Source: Futurum)
Some handy time-saving tools for automating business admin:
Xero, Intuit, Wave, Zoho, Sage, Freshbooks
Web-based accounting tools for SMEs that can provide you with a quick overview of your financial position, and simple tools to speed up processes like invoicing, chasing late payers, VAT returns, logging expenses.
An expense management system that logs and tracks receipts, expenses and creates reports
Social media management software that lets you schedule posts ahead of time and analyse results, among other features
What the calculator is to the maths, Grammarly is to English. A spelling and grammar checking tool.
Manage your teams using cloud-based HR software. Handle time-off requests, create appraisals, surveys and monitor employee benefits.
Simple-to-use chatbots that can resolve frequently asked questions on your website or social media and highlight important messages.
Integrate all your apps so work can be instantly shared between documents, Dropbox, Slack or your calendar so you don't have to bounce between tabs and programs.
4. Write the job description
"If you think it's expensive to hire a professional, wait until you hire an amateur."Red Adair
If you're convinced you're ready to hire a full time employee, then it's time to crystallize the role. What do you want them to accomplish and what traits and skills will that person need to work with you?
- What tasks will they be performing?
- Who will be managing them?
- What sort of personality will fit well into your culture?
- What pay and benefits can you offer to attract the best candidates?
- What can your small business offer that a larger business might not (e.g. responsibility, autonomy, performance-linked bonuses, flexible work)
72% of hiring managers say they provide clear job descriptions, yet only 36% of candidates say they are provided with clear job descriptions (Source: Allegis Group)
Next, you need to be ready to sell yourself and your business to talented applicants. Why should people want to work for you? What can you offer that other businesses don't?
You need to be able to get the attention of the very best, especially if this is one of your first hires.
When done at the right moment, with a defined role set out, plenty of preparation and a clear understanding of all comes with hiring, it really can invigorate your business.