Ask the Expert: Evan Hackel / Chloe A.
“I need more staff, but I can’t get budget. Do you have suggestions?” - Chloe A., New Jersey
There are generally two reasons why a company needs additional staff. One is that your company is organizationally inefficient. The other is that there are legitimate business reasons why you need more people to achieve your operational mission.
If inefficiency is the reason, you don’t need to hire more staff. You need to ask whether the organization can be restructured, roles can be changed, or the flow of work can be revised. If you can achieve your desired result, which is better productivity, in those ways, you have accomplished your goal without hiring new people. Far too often, companies hire people without looking at those issues.
Good Structure, Not Enough Staff . . .
If on the other hand you conclude that your structure and operations are good, but you simply don’t have enough people to achieve the organizational mission, it is time to think about hiring.
But before hiring, create a Profit and Loss (P&L) statement for each new employee you might bring on board. The P&L should look like this:
Profit (the potential new revenue or profits the new employee will bring in)
- The cost of the new employee (the cost of hiring, salary, benefits, etc.)
= The financial benefit of hiring the employee
To summarize, profit minus cost equals the financial benefit that employee represents. The P&L will predict the financial result that you can expect if you hire a new person.
The increased profits could result from something immediate, like an incremental improvement in sales. Yet you also have to consider that bringing the right employees on board can result in other financial benefits too. The right employee might be able to negotiate more favorable agreements with vendors. He or she might be such a good manager that employee turnover is reduced, that your franchise becomes more valuable or easier to sell, or that you enjoy other benefits. As best as you can, try to factor some of those benefits into the top line of your P&L statement.
Remember that there are ways to bring new people on board and control payroll expenditures at the same time. Incentive bonuses work well to achieve that goal. If an employee stays in your employ for a year, for example, he or she will receive a bonus at that time. That is a strategy that both controls payroll expenditures and provides an incentive for employees to stay.
Another consideration is that you have to be sure to hire the right people - people who have the experiences, aptitudes, skills and positive attitude to make a meaningful contribution. Still another consideration? Invest in training your employees, because it is one of the most reliable ways to make sure that the people you bring on board will make a real contribution, and that they will make it soon after they come on board.
Evan Hackel is a 35-year franchising veteran as both a franchisor and franchisee. He is CEO of Tortal Training, a leading training development company, and principal of Ingage Consulting. He is a speaker, hosts "Training Unleashed," a podcast covering training for business, and author of Ingaging Leadership. To hire Evan as a speaker, visit evanspeaksfranchising.com. Follow @ehackel or call 704-452-7368. Why not have Evan Hackel address your group about franchising success?