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To Hire or Not to Hire? Key Considerations When Making Strategic Hiring Decisions

Insights

3 Minute Read

01/25/2024

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Many integrators are asking themselves right now whether “to hire or not to hire” additional employees for their businesses… that is the question. (All apologies to William Shakespeare’s Hamlet for the slight alteration of his most famous line.)

Indeed, in the dynamic landscape of operating a small custom integration business, the decision to hire an additional employee is a crucial one that can significantly impact the company's growth and sustainability. But when should you hire and what type of employee should you bring on board?

One methodology is to analyze your company’s performance data. That’s where D-Tools comes in handy. The software can provide you with the information that will help you make that big decision. Moreover, D-Tools Cloud has individual offerings designed for every size company. D-Tools Cloud Solo, which is free, is ideal for an entrepreneurial-based integration company, enabling a user to quickly create accurate and well-designed proposals. D-Tools Cloud Solo is especially helpful when the owner is handling both sales and installation duties. The software also enables an integrator to upgrade beyond just the proposal function to add service and project management modules as needed.

As more success breeds the need to add employees (and helps the entrepreneur maintain a work/life balance), integrators can upgrade to the D-Tools Duo plan, which includes two office licenses and three field licenses with full functionality of every module.

With the software in place that can accommodate your growth, then an integrator can focus on the question of when to add employees. One fundamental aspect to consider is understanding your internal strengths and weaknesses.

Conducting a thorough internal analysis helps identify gaps in skills and resources within the existing team:

∙ Are you more technically adept? Then perhaps you need a salesperson.

∙ Are you a relationship-builder? Then you might need a technician.

∙ Are you not adept at business practices like accounting and finance? Then maybe an admin person is your necessary hire.

Assessing your own capabilities allows you to pinpoint areas where additional expertise or manpower is required. Whether it's addressing a skill deficit or simply alleviating the workload, a clear understanding of internal dynamics is essential for effective decision-making. 

 

Financial Considerations: Revenue-Per-Employee

Financial considerations play a pivotal role in the hiring process. Calculating metrics such as revenue per employee, average sale price, and sales cycle timeframe can provide valuable insights. According to industry consultant Paul Self using data from CEDIA, a boutique-sized custom electronics company with fewer than seven employees should target approximately $192,000 in revenue per employee.

Understanding how much revenue each employee generates enables you to assess the financial feasibility of hiring. If the current team is stretched thin and revenue per employee is high, hiring may be justified. On the other hand, if revenue per employee is already low, it may be more prudent to focus on optimizing existing processes before expanding the workforce.

In a custom electronics company with annual revenues of less than $500,000, the owner typically handles sales, project management, engineering, and programming, while using two technicians, either as full-time employees or as independent contract laborers.

When an integration company grows to about $1 million in annual revenues, the owner commonly maintains the role of sales and project management, with about four technicians, one of whom might be handling the programming tasks. As a company grows, the need for processes becomes vital, and it is imperative to establish the proper means of internal communication.

Another critical factor is determining the type of employee needed to address specific challenges or opportunities. Are you contemplating a move into lighting fixtures or security? Finding an employee with a background in those specialties could be necessary to achieve those endeavors. Whatever the need, defining the role clearly is crucial. This ensures that the new hire's responsibilities align with the organization's objectives, maximizing their contribution to overall success.

 

Finding Work/Life Balance

Even if the financial metrics don’t quite support the need for an additional employee, there could be a physical and mental need to hire. Maintaining a work/life balance is not only essential for employees but also for integration company owners. While the prospect of growth is exciting, it's crucial to consider the impact on your own well-being. Taking on too much without adequate support can lead to burnout and negatively affect both personal and professional aspects of your life. Carefully assess your capacity to manage additional responsibilities and, if necessary, delegate tasks to new hires. Striking a balance ensures sustainable growth and a healthy work environment.

In conclusion, the decision to hire an additional employee for an integration business should be approached strategically. Internal analysis, financial considerations, and a clear understanding of the type of employee required are key components in this decision-making process. By evaluating internal strengths and weaknesses, calculating relevant financial metrics, and maintaining a work/life balance, small integration company owners can make informed choices that contribute to long-term success. With D-Tools tiered software solutions in place to assist, an integrator can rely on the software to make analytical hiring decisions that align with the organization's goals and pave the way for sustainable growth in a competitive business landscape.