Whether your business is a startup or a well-established company, hiring can make or break a business. Unfortunately, this decision can be difficult, as it has a significant financial impact on a company.
However, the impact of hiring extends far beyond a company's wallet. Hiring can negatively or positively affect many aspects of a business.
When hiring is done well, it can:
While a well-rounded employee is essential, different team members specialize in other aspects of work. Therefore, allowing employees to focus on what they do best can increase productivity.
Effective hiring can create a domino effect in cutting costs.
By increasing productivity, a company can grow and expand. In addition, new employees bring new expertise to the table and allow for an increased workload.
Good hiring increased both client and employee satisfaction, decreasing employee turnover. The fewer employees leave, the less money needs to be spent on training and hiring. It can also help you reduce hiring surprises by anticipating which employees will retire and what circumstances will require an increased workforce.
Better company cultureHiring can increase productivity, passion, and creativeness. Bad hiring can create a culture of overworked employees.
Creating a data-based hiring plan takes the guessing out of the hiring process, which ultimately saves time.
Informed business decisions take the pressure off a company's finances and its executives.
When hiring is done poorly, it can:
Create unnecessary expenditures
Too many employees can create unnecessary costs.
Training an excess of employees can decrease the productivity of existing employees.Increase employee turnoverNot only is employee turnover incredibly expensive, but it can also lower the productivity of other employees. This is because an employee takes a certain amount of time to train and to reach peak productivity.
How to create an effective hiring plan
Creating a hiring plan is essential, and planning is only practical when it's effective.Effective plans are aligned with the vision of your company, taking into account its goals. If your company's goal is to grow, hire with growth in mind.
Your plan should be action-oriented and easy to understand. Action-oriented plans are accessible to a team. Causal's real-time modeling allows your team to understand and execute a hiring pla.
Customize your hiring plan
Not all hiring plans are suitable for every company. A hiring strategy for a SaaS business may look different than hiring for a retail company. You can use Causal to build your hiring plan. We'll make the planning process easy. Causal's hiring plan demo will help you plan through the financial aspects of this decision and hire based on revenue.
When to hire additional employees
Hiring an employee is impactful, both financially and logistically. Here are some factors to look at before hiring additional employees.
What's your growth target - and can you hit that without an additional employee/s?
As revenue increases, workload increases. New employees may be needed to allow for maximum revenue growth and to avoid a stagnant company. Causal's Revenue-based Hiring template will tell you how many employees are needed based on revenue growth so that you can plan for your future hires now.
How heavy is your employee workload?
While it's easy to have too much work and not enough employees, the opposite is also true. If there isn't a large workload, additional employees may not be worth the financial detriment or part-time employees may be a better option.
Can you offer competitive compensation options?
It's also important to look at the finances of hiring a new employee, and the compensation you can offer. Causal's Startup Recurring Liquidity Calculator will help you figure out what and how you present your employees' competitive compensation. While a person's salary at a startup won't be as high as at a well-established company, startups can offer benefits such as a percentage of shares an employee can sell. This way, an employee will benefit from their position in your company sooner rather than later.
What is the additional cost of an employee?
While cost-per-employee is a simple way of calculating the negative impacts of hiring, it often misses the potential financial upsides of hiring. To fix this, a company can calculate revenue-per-employee.
When hiring is needed, this revenue-per-employee will increase with a new hire. Small companies tend to have an average revenue-per-employee of around $100,000. The larger the number, the better.
Research the revenue per employee of companies similar to yours for a good starting point.
Hire based on data
With technological advances, data-based hiring is easier than ever. However, the sheer amount of data available can overwhelm and confuse the hiring process. Instead of hiring a data scientist, which can be expensive and time-consuming, consider using Causal.
You can input the numbers and interact with the template. We'll predict the outcomes of all scenarios, not just one, so you can make the most informed decision. Hiring is a team effort. Causal can be used in real-time during meetings to make sure the whole team is on board.
With Causal's easy and straightforward modeling, you don't need to be a data scientist to hire based on data.
And don't stop after you hire...
A company can use data to decide when to hire, but it should also be used to judge employees' productivity. Causal understands that current employee productivity is critical. Our templates take into account the decreased productivity that comes from training new hires.
While the total amount of productive hours generated by your workforce increases with each hire, it also takes time, energy, and money to train a new hire. With templates like our Hiring Impact on Engineer Productivity templates, we'll create a simple interactive model so you can see how hiring will increase or decrease overall productivity.
Causal has templates for every step in the hiring process, with models that can be adjusted as your data changes. Our models will grow with your company.