Strategic Hiring: A New Data-Driven Approach to Knowing When to Hire
Against the dynamic landscape of today’s recruitment market, knowing when to expand your team is crucial to maintaining a competitive edge, giving yourself every opportunity to maximise commercial opportunities as well as protecting burn out of your most precious assets, your people. Whether your company is a startup or an established enterprise, the decision to hire new positions requires careful consideration, but how do you know when and who and what? Is there a formula to follow to make life easier? Well, no, not necessarily, because the reality is every business is different. One businesses flex-capacity is likely to be another’s operation stretching towards, or maybe even beyond, breaking point, and the industry, sales cycle, culture, management and a number of factors come into play.
It’s easier for established companies to have enough information to know when to hire, they have more experience of established sales patterns or workloads, with a known and defined number of heads to deliver various aspects of their business. Experience is on their side in that regard. But for new organisations, it can come down to instinct and some rudimentary calculations, but it doesn’t have to. In an increasingly data driven world, one where if you haven’t already, you’re certainly considering using a data-led approach to some or many aspects of your business, why not use this same approach to hiring? That said, it’s not an exact science when people are involved. People will disrupt AI because they make odd decisions and can sometimes take strange and unpredictable actions, so be prepared for a few bumps in the road. But, by using the data you have, you may just mitigate some of the risks as much as you can.
- Understanding the Need for New Positions
Before diving into hiring, it’s important to understand the signs your business or operations will give you when it’s beginning to ask for new positions. Some key indicators include:
- Workload Overload: If your current employees are consistently overwhelmed with tasks and struggling to meet deadlines, it might be a sign that your team needs reinforcements
- Growing Demand: A surge in customer demand for your products or services may require additional personnel to ensure timely delivery and quality service
- Innovation Initiatives: If your company is planning to launch new projects, products, or services, you might need specialised skills that your current team lacks
- Market Expansion: When your business expands into new markets or geographical regions, you’ll likely need localised teams to cater to those areas effectively.
Also, consider mental health and burnout of the current workforce. Remember the elastic band analogy:
People are like rubber bands. Stretch them too far, or for too long, and they snap. On the other hand, fail to stretch them at all and they lose elasticity, breaking under the slightest stress.
Look at your order book or future projects to help you determine what the existing team can cope with, and what will stretch them too far for too long. If you’re losing one person for every two you hire, you’re not using the data effectively.
- Analysing Data to Determine Hiring Needs
Data should be the cornerstone of your decision-making process when it comes to hiring. Here are some data points to consider:
- Revenue and Sales Growth: Track your revenue and sales growth over time. If there’s a consistent upward trend, it’s a good indication that your company is ready to expand its workforce
- Workload Metrics: Measure the average workload of your employees, including the number of tasks, projects, and hours worked. A sudden increase in workload could signal the need for new hires
- Customer Feedback and Complaints: Monitor customer feedback and complaints closely. An uptick in complaints or a decline in customer satisfaction might point to a stretched workforce unable to meet customer expectations
- Employee Engagement and Turnover: High employee turnover and low engagement can indicate an overwhelmed workforce. Regularly survey your employees to gauge their job satisfaction and stress levels.
Hiring in many regards is a leap of faith for growing and new businesses – will the person fit into our culture, are we hiring too quickly, do we really need this person yet. With these simple metrics included into the decision-making process, you’re at least applying some calculations to help get to a final decision. You’re beginning to put together your Go/No-Go decision framework, and it moves away from decision-making based on a feeling and more towards a defined business process.
- Prioritising New Positions for Maximum Impact
Once you’ve established the need for new positions, prioritisation becomes essential. Here’s how to approach it:
- Critical Skill Gap: Identify positions that require skills critical to driving your company’s immediate goals. Prioritise roles that can contribute directly to revenue generation or project success
- Bottlenecks: Identify areas where your current team faces bottlenecks. Hiring in these areas can lead to efficiency gains across the board
- Strategic Alignment: Align new positions with your company’s long-term strategy. Consider roles that will be vital for future growth and expansion
- Innovation and Specialisation: If your company is planning to launch innovative products or services, prioritise positions that bring specialised expertise to the table
- Market Demand: Prioritise roles that directly cater to increased market demand. This ensures you can capitalise on opportunities swiftly.
And Not Only That…
According to a study by the Harvard Business Review, companies with high growth rates are 2.3 times more likely to prioritise data-driven decisions in their hiring processes. Why? Because they have to and because they’ve usually learned from their mistakes. The cost of making a bad hire can vary depending upon the research you look at, it can be as low as 50-60% times the annual salary according to The Society for Human Resource Management (SHRM), and up to 15% times the annual salary for senior executives. Personally, we use the multiplier of 4.7 times the employment costs for standard employees, because both the UK’s Recruitment and Employment Confederation and Forbes research, both point towards this figure. Either way, it’s not inexpensive. Not only that, but according to LinkedIn, 82% of hiring managers agree a data-driven approach to recruiting leads to better hires and retention rates.
Hiring is a massive step towards any organisation’s growth and success, for most businesses it’s the most important element that will determine success or failure. It doesn’t matter what technology you’ve created and what brilliant idea your founder has had to leverage it against if you can’t get the right people in place to bring that product to market in time. Decisions to hire new people, particularly into newly created roles, can significantly impact your company’s growth trajectory. By leveraging the data you already have access to, and prioritising roles strategically, you can move forward a little more confident in any decisions to hire that you make, and that your new hires and positions will have a meaningful impact on the business.
And one final point, it starts your hiring culture off on the right footing: not hiring to fill gaps, hiring with a vision for the future.