Why are you hiring?

Hiring more employees or staffing up is getting increasingly common with tech businesses. The tech industry appears like it wasn’t hit as hard by the latest batch of recessions so it’s been able to recover faster and start hiring early.

But this has become a talent-grab situation. Inexperienced people are getting hired for huge tech companies with little to no experience and are getting high compensated. What do their HR departments know?

I’m a software developer for Ruby on Rails. Right now just about every company is hiring Rails developers and paying obscene amounts to get them. It’s actually become a major seller’s market now, where someone with only a little experience can get high five and low six figure salary for just knowing the basics. (Side-note: this reminds me of another time in tech a few years back, that didn’t end very well…)

Wither or not you think this hiring problem in tech is normal, it does give other industries a chance to really examine the events with an impartial eye. It’s cheaper to learn from hiring mistakes at other companies, especially if they are your competition.

More bodies

With programming, it has been proven that adding more people can actually cause more problems and work. It’s far more complex than this example but if you think of a traffic jam it’s a lot like that. So if adding more people to a project or department might cause more work, then why are they doing it?

Expertise

Every organization has a base of knowledge within it. It might be a formal knowledge management system or just “stuff” people keep in their heads. However that knowledge is stored, it has to be given to each new hire. A great onboarding program will transfer some of this but there will always be gaps that existing employees have to fill in the new hires. Filling these gaps takes time and energy from existing employees. But what happens with a mass hire? Will these existing employees, who were productive, now have to spend all of their time training the new ones?

Indirect costs

You probably already understand that an employee’s cost is more than just their salary. Benefits, payroll taxes, and hiring costs are all part of the additional costs when hiring an employee.

What about the rest of the costs though?

To get a wholistic view of an employee’s costs you need to see everything that the business spends money on to retain each employee. A computer for them to work on? Cost. Power for that computer? Cost. Toilet paper? Cost.

While I don’t recommend becoming the toilet paper police, you need to be realistic about what it costs to have an employee. Then compare those costs to the results from that employee.

I guess my advise here is, don’t blindly start hiring people. With the indirect costs of each employee as high as they are, it can be easy to think hiring more people is the easiest way to get more done. Would you rather know that for sure than to take a guess though? I know I would.

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