To employ or not to employ?
by Fred Roed on 18/01/07 at 10:57 pm
11 comments
There comes a time in every small start-up when you have to decide: ‘Should I employ someone to help ease the burden of my growing business?’
I have experienced a rollercoaster ride mulling over this question. I started my first real business when I was 25 (selling comic books to mates at school doesn’t count). Now, seven years later, I have a fair amount of experience with this challenge. At one harrowing stage, in my previous business, I had 20 full-time people in my employ. Currently, World Wide Creative exists at a breathe-easy quota of 4 employees (Mike, Mrs Mike, Mrs Fred and myself), with a team of ‘insourced’ legends, Andrew, Shane and Aubrey. I call them insourced because we all work out of the same studio. We also have 2 outsourced designers who we give regular work to.
We are now looking for a programmer (see in the previous post). It’s a big thing, because our little operation has grown somewhat in the last two years. We now have new products, more jobs, and a bunch of ‘accelerator’ projects – the name we give to projects like the Bug Zapper. Andrew, the incumbent programmer, and Shane, the incumbent designer and strategist, are putting their focus on these accelerator projects in the form of Live Alchemy. With all the changes, World Wide Creative must move to a different studio and find a programmer to replace Andrew. There is no debate about employing a programmer, since we need someone to maintain our sites and servers, but the question is now: when should we hire a full-time designer?
The E-Myth method
Michael Gerber, author of The E-Myth Revisited, talks about creating ‘Turn-Key’ operations* (otherwise know as franchises). This means that you first create the systems to run your business, document every process and procedure, and then fill the roles with people. We started doing this around 13 months ago, and we now have the makings of a pretty mean Company Manual. The benefit is that when you employ someone, that person slots neatly into the system and is immediately effective in their role. The Company Manual ensures there are no grey areas. Waiters will know this well. A waiter often is hamstrung at a restaurant where the systems are not well organised, and as a result, are made to look bad. The problem is, the E-Myth strategy tells us how to create a good structure in order to employ people – but it still doesn’t tell us when that magic moment arrives to start looking for someone.
When does it become unavoidable to employ?
In the case of our new programmer, it boils down to cost. The role is a full-time one, so to outsource becomes too expensive. With the designer it is not so simple. Right now, we aim to sell 4 websites per month. So, that means that we need to design 4 website layouts a month. This takes around 6 – 8 days out a potential 20 working days that a designer would work for us. That’s 12 days of redundant time. We could get the person to help out with other stuff, but, in truth, we have enough people to do the jobs that need doing. On the other hand, if the new guy relieves some of the small jobs, Mike and I have more time to go out and sell. And so on.
So, what is the answer? How do we know when it’s time?
Here are some suggestions:
- You rely purely on instinct
- Your eyes are bleeding from being overworked
- You fall asleep in meetings with clients
- You visit a sangoma and hear what the bones have to say
- You do a spreadsheet and work out the cost vs hrs saved
- You make a big sale that will cover the cost of the new employee and your own salary for the next 12 months.
Not sure, but I think the last two ring true for me.
Fred Roed is the marketing guy in the Ideate crew. Fred is the CEO of web marketing company World Wide Creative and the co-founder of online learning portal Heavy Chef. Fred loves writing about people out there doing marketing right. Follow Fred on Twitter here. View more articles by Fred Roed.
Mike Perk
Jan 19th, 2007
Brilliant post buddy. I suppose because I’m on the journey with you its really prevalent in my mind as well at the moment. Its a little scarier for me because I’ve always outsourced and the only contact with running a team was over 6 years ago at M&S and as the personnel manager you seemed to attract the wrong issues. Owning the company and having the worry of being the source of income for a family other than your own is also something that I’m sure will play on my mind. But at the same time I know instinctively that if we don’t do it we will continue as we are (which is pretty damn good at the moment) but not grow, both personally and as a company.
Let the Adventure begin.
Karin
Jan 19th, 2007
Hi Fred, Mike
I think you’re overlooking something basic. The E-myth (read it a while ago, not very impressed, but there you go) covers indeed the importance of systems and ’slotting’ new people in ‘roles’ you now do yourself.
But, another important issue in running and especially growing a business is having an Action Plan and aStrategy Plan (Profit Master software is a great help in this, I will write more about this in the coming weeks – hopefully). There you plan where you want to be in 5 years time (including turnover – costs etc), that tells you where you need to be in 3 years time and that tells you what you have to do this year.
The moment of hiring a new employee is then ‘dictated’ by your Action plan, wavering on it stops your planned growth.
And don’t forget “Good to Great”: get the right people on board in the right places, don’t hire the first one who sounds right: he/she is there for the whole ride.
Fred
Jan 19th, 2007
nice one Karin – sage advice.
Karin
Jan 20th, 2007
Like to take the credit, but it’s not my program or advice, just sharing the ideas/tips/help from my mentor with you all
Mike
Jan 21st, 2007
Thanks for the post – topical issue on my radar at the moment. Personally, I think talent, character and the good ol’ gut play a big role in the hiring process. At least for me. People with good character can be taught the systems (as per you Manual), but people who are capable from the outset but lack integrity and character can’t learn it.
Then there’s the talent issue. I know that if I hire talented people, I can expect a maximum of 6 months out of them, regardless of how cool or progressive the environment is. So I cater for that fluidity. That said, talent is nice to have around. It inspires, raises the company profile and if handled correctly, provides great returns.
However, I’m new to this so I may be on the wrong track entirely.
rafiq
Jan 22nd, 2007
Actually Mike, think you hit the nail on the head. Great comment.
Andrew
Jan 22nd, 2007
“Smart and gets things done”. That’s what I look for. The “gets things done” is just as important as the smart bit, but often overlooked. It’s quite easy to pick it up from a CV or interview if you look for comments like, “my company needed a better way of communicating, so I read up on Wiki’s one weekend and set it up on an old server, after teaching myself some basic Linux”.
Karin
Jan 22nd, 2007
That’s an important issue you highlight Andrew:
not afraid to take the initiative to make things better, faster, simpler versus waiting to be told to find a solutions.
Frank Zappa
Jan 23rd, 2007
If you want to get things done, I propose you fire both Fred and Mike from the payroll.
Fred
Jan 25th, 2007
Zappa, you’re getting a snot klap when I see you brother.
neola
May 10th, 2007
Hi
My comment is not in line with what I would tell you as a recruiter, but as a partner in another business I will tell you hire when you meet that WOW person. 2 WOW programmers will be more valuable then 5000 plain programmers – see Google (I rest my case).
Why do so few people have that WOW factor?