By Kirk Hulett
Since September 2008 some advisers controlled costs by reducing staff. Others reduced the hours for current staff and delayed additional hiring. Now that we are beginning to see signs of recovery, advisers are asking, "When should I re-hire?"
What advisers should be asking is, "What should I re-hire?" You have probably become more productive during the downturn, learning to do more with less. You don't want to revert to old habits that will cause those gains to back slide. As you look at whether or not to expand staff, consider what skills may be missing in your practice. What new knowledge and experience do you need to acquire in your team?
To prepare to hire, use a "work style" assessment test to identify skill gaps within your team. What new hire will enable you to dedicate more time to developing new business? For example, if you are spending several hours each week doing portfolio updates for client meetings, hire someone with analytical skills to take over that workload. Track how you spend your time for one week. Identify the most time consuming, non-revenue generating task and hire someone to do it for you.
There are a couple of ways to think about hiring new staff. Should you wait until you have an acute need before hiring an additional person? The advantage of this approach is that it's low risk. You'll likely have increased your revenue by the time the need is acute, thus you'll easily be able to cover the additional salary. The disadvantage if you wait is that the strain on existing staff and systems may have reached a critical level. The opportunity cost of waiting is that you could have leveraged existing staff to train the new person. Once the need is acute, there may be no one available for such training.
On the other hand, what is the situation if you hire before the need is acute? Having an additional staff member may help you maximize new client acquisition during the recovery period. You'll also have the luxury of time to prepare the new hire to be a quick contributor. But hiring before you have the revenue to support the additional expense will result in lower margins, at least for some period of time. And if you aren't careful about how you integrate the new person into your existing system, you may never capture the gain, ending up worse off financially even though the decision to expand staff may have been appropriate.
Here are some things you can do to ensure that the time you choose to hire is neither too cold nor too hot:
- Have a business/marketing plan in place so you capture value from the new hire immediately.
- Have a robust training plan based on your standard operating procedures.
- Create a contingency plan, in advance, in case the revenue to support the new hire does not materialize as expected.
- Bring the new hire on board on a part-time basis with a timeline and benchmarks to guide the move to full time.
- Use a temporary agency to staff the position. It may be more expensive at first, but it makes it easier to end the working arrangement if necessary.
- Ask your staff to help define the "Goldilocks" moment-the time that is "just right" for hiring.
Once you make the decision to hire, where will you look for a new hire in this new economy? You'll likely have access to a pool of highly talented people. There will be corporate layoff survivors, for whom a job offer at a small company will be very attractive. There is also a large group of corporate refugees. These people still have jobs, but are demoralized due to layoffs and constant restructuring to get the same amount of production from a reduced workforce.
Don't overlook stay-at-home parents who may be looking for part-time, flexible work schedules. Finally, there are the refugees from parents' basements-the recent college graduates who are struggling to kick-off their working careers during these difficult times.
There are a lot of good people out there who will be excellent employees, on your terms, and when the time is right.
Kirk J. Hulett is senior vice president of strategy and practice management for Securities America Inc., an independent broker-dealer based in Omaha, Neb. He hosts a bi-weekly practice management podcast on www.advisorpod.com and is a member of the FPA Business Solutions 2010 task force.
Tools to Use
For a freeHiring Staff Cost/Benefit Analysis Worksheet, go to www.securitiesamerica.com/staff.html.