Consider the cost of maintaining a lean team
Thursday, March 23, 2017
In times of uncertainty or negative growth, it makes sense to keep staffing to a minimum and draw on freelance or outsourced help when and if needed. When business begins to pick up, however, often the smarter strategy is to add staff in order to keep up with increased demand.
Yet some potential clients I speak with still remember the sting of having to lay off employees during the last recession and are reluctant to staff up their firms again. I sympathize, but times change, and business decisions must change with them. Before rejecting the idea of hiring additional personnel, consider the cost to your business by not doing so.
Understaffing puts a design firm in a position to have to say "no" to projects that it's not able to take on. If more business is coming your way, chances are the same is true for freelance and outsourced workers as well. You can't always count on them to be available when you need them or to be able to meet your client's project schedule.
How much revenue would your firm lose if it has to turn down an "average" project? How does that compare to the cost of additional staff? If you say "no" to the client, will they come back to you the next time they have a project, or switch their allegiance to another firm? That could cost you a substantial amount of revenue and new business over time.
When you diminish your staff capacity, you put a strain on the rest of your business. This can result in missed deadlines for existing projects (and possibly financial penalties), thus eroding clients' confidence and jeopardizing future business. You also wind up overtaxing employees, making them less creative, efficient and productive, and increasing the risk for error.
In the end, you may have to pay them considerable overtime or compensate them for the extra hours through bonuses or paid leave. That's money that could be directed toward hiring another full-time employee, thus reducing everyone's stress level and potential for burnout.
Plus, with fewer professional staff, principals end up doing more design. That leaves them with less time for client management and for business development — time they should be spending prospecting for the next "big" project so the firm does not experience fiscal peaks and valleys throughout the year.
How much is your current staff costing you if they are left idle because no projects are coming into the firm?
True, adding staff, even a junior-level or administrative employee, is not an insignificant cost. If your business is experiencing only sporadic growth or a fallow period, now is probably not the right time for you to think of hiring.
If, however, you are seeing increased demand like many firms at the moment, then you should be thinking of adding personnel before you really need them. The pool of qualified candidates is not as large as it was a year or two ago. You have to allow time to recruit, onboard and orient the right person(s).
For firms of more than a few staff, I highly recommend that you begin by developing a staffing plan to think through what skills and capacities your firm will require as it grows as well for near-term needs. That will give you a more comprehensive picture of who and when you need to hire, recruiting and promotion strategies, and equitable compensation for all staff.
If you still have doubts, consider this: It only takes losing a key employee to make one realize that loyal, dependable, productive staff are not an expense but a source of revenue and an investment in your firm's future.
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