Is Your Business Ready to Recruit New Employees?

By: Kristina Meyer
October 17th, 2011

Since March, unemployment claims have been steadily decreasing, according to the United States Labor Department’s Unemployment Insurance Weekly Claims Report.

As the economy recovers and businesses stabilize, more and more business owners are eager to get back to business. Excited to push ahead, many make recruiting new employees one of their first steps toward growth. But increasing your headcount can be a big burden for your organization if you hire new employees before your business is ready.

“One of the most significant decisions any employer makes is to hire someone as a permanent employee,” says Jack Smith, president of Purity Technology, LLC, a Houston-based technologies services company that provides IT staffing and recruiting services. “An employer must have just the right number, type, and cost structure so that the costs don’t create a profit problem for their business.”

There are several factors you should consider before recruiting new employees.

Evaluate your need. Before you start recruiting applicants, you should determine what you’re trying to accomplish by hiring a new employee.

“Prior to the employee hiring process, business owners should determine what tasks need to be addressed by the workforce, and gauge how many people will be needed to accomplish that task,” says Smith.

Once you pinpoint your actual needs, you can determine whether you need to bring on a new person or whether an existing employee or group can take on these duties. Smith says that often, employers can avoid recruiting new employees by reevaluating the current positions and redesigning the workflow.

If an external candidate appears to be your best bet, you need to clearly define what you need and want before you dive into a pool of candidates. Smith suggests that you allow a minimum of 30 minutes or more of uninterruptible time to briefly summarize the major duties of the job, and make a list of everything you might possibly want in your new hire.

“At this point, it is beneficial to compose a job description and a job specification,” says Smith. “The job description and specification are tools which can not only aid the employer in finding the appropriate person to fill a job opening, but can also help guide the employee during his or her time with the business.”

Take into account your current staff. Once an employee is hired, most of the time the responsibilities for overseeing that person are handed off to a director, manager or supervisor. To be sure you’re benefiting your current workforce and not burdening them, you need to make sure that whoever is overseeing the new employee can handle the added responsibilities.

“Ultimately, a business owner should focus on what ‘pain or gain’ bringing in a new employee to the organization will have, not only on the business, but the entire staff,” says Robin Milstead, a recruiting performance consultant at Insperity, a Houston-based business performance solutions company.

Without proper supervision, your new employee may make mistakes and cause disruptions to your operations. This can greatly affect your company’s overall productivity and profitability.

You should also consider how the new hire will affect morale. For example, if you have an employee who has been with your company for awhile and he has all the qualifications to fill the position, you may want to consider offering him a chance to interview for the position. If you hire an external candidate without at least giving your current employees a chance to interview, he may become resentful and share his negative feelings with other staff members. This can be damaging to your reputation and overall company culture.

Determine the market salary. In order to attract the right people, you have to come up with a competitive offer. Before you even think about recruiting new employees, you need to know what they’re going to cost you, says Smith.

Many times business owners want their new employees to possess specific credentials, skills and experiences. Highly-talented employees are in greater demand, therefore they don’t come cheap. You have to create a competitive offer in order to win them over.

“Presently there is a misconception among business owners that the market is a ‘buyers market’ and that they have their pick, but this is ill thinking,” says Milstead. “Depending on the industry and geographic area, the unemployment rate may have never affected a particular workforce, therefore, there is still a talent shortage. We see this heavily in the information technology sector as well as healthcare and engineering.”

To determine what compensation your new employee is going to expect, check the local job other business owners in your area and industry what they’re paying people for similar positions. The U.S. Bureau of Labor Statistics can provide you with market data as well.

Consider the costs. While employees can be your greatest asset, they can be your most expensive one as well. Before you decide to hire a new employee, you must figure out whether you can do it without affecting the bottom line, says Smith.

An employee’s salary and benefits aren’t the only costs you have to consider. Posting job ads, performing background checks and conducting new employee training can also cut into your budget. Not to mention the time you spend writing advertisements, reading resumes and interviewing applicants.

“The ‘true cost’ of adding new employees to your business, in terms of additional revenues, is somewhere between four and 20 times more than the employee’s annual salary and benefits,” says Smith.

Anyone that has ever done it on their own will agree that to get it right, you must dedicate a substantial amount of resources, time and manpower to recruiting and hiring process.

“To make a good new hire decision, you must be prepared to invest a lot of personal time and effort, so that you get it right, as it could cost the business a lot if it is wrong,” say Smith.

Outsourcing. Because of the cost and time demands, many businesses choose to outsource their recruiting efforts or hire a professional recruiter to do the work for them. While you will still have to pay a recruiting fee, you will not have give up your time to find new employees.

When you outsource your recruiting, the recruiter you hire will take over many of the necessary tasks, including interviewing and selection training for hiring managers, wage and salary surveys, job descriptions, advertising for the position, employee referral programs, and explaining the final offer to new hire, says Milstead.

“Many firms will charge 20 to 30 percent of the base salary of a candidate,” she says.

There are also firms that specialize in recruiting for small organizations or specific industries. Milstead says, many times, their pricing is based on the search and the project at hand.

If you decided that your business is ready to recruit new employees, but you don’t have the time or the know-how to do a thorough job, a professional recruiter can help you find the help you need without pulling you away from your business.

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