5 Business Cases for Justifying an Increase in Headcount
One of our most popular articles here at MRH described one approach to justifying an increase in your staff level. Fighting for resources is a problem we’ve all dealt with as managers and one that can be extremely frustrating to overcome. So, I wanted to take the topic one step further and give you some more tools and options to help you put a sound business case together for justifying an increase in staff. Download the free template on our Tools and Templates page, which also includes sample calculations for determining the expected cost of adding staff.
When it comes to justifying additional staff and manpower, keep in mind that you need to identify the right type of help you need. In the following sections we take a look at the types of employees you should consider when working to increase your team’s capacity. We’ll start with the first thing managers think of – full-time employees – and then look at some alternate types of employees that may better suit your need, and are easier to justify in terms of the business case for hiring them.
1. Hiring Full Time Employees
When our teams’ need help, we as managers want to go and quickly increase capacity by hiring people. The most obvious type of staffing, of course, are full-time employees. Afterall, full-time employees increase our bandwidth of our department, are more stable in terms of long-term employment and turnover, and give you more flexibility as the manager to get things done. But full-time employees are easily the most expensive form of labor and come with the added financial burden of benefits and “overhead” activities such as performance reviews and paid vacation. For these reasons, creating a business case to justify adding full-time staff is tough, and is hard to sell to senior management unless your firm is growing rapidly.
For more on how to justify hiring additional staff, click here.
So while adding full-time staff may seem like a good idea and may be your first choice, many managers tend to overlook the specifics of their situation. If you envision a jump in workload for 6 months, for example, and you hire a full-time employee, what will happen at the end of those 6 months? No one wants to have to manage a layoff or a Reduction in Force (RIF), so be sure to think about that when looking at your situation. Thus, when it comes to creating a business case for adding employees be sure to consider other, less burdensome types of employees to see if they can fit the need (as discussed below). They are less expensive to the business, and are therefore more easily justified.
Pros: Significant Increase in Your Capacity, Fills Your Talent Pool, Possess Exact Skills You Need
Cons: Expensive, Difficult to Justify Headcount, Not Good For Short Term Spikes in Work
2. Hiring Interns
Interns are great. They’re energetic. They’re driven. And in terms of your business case for justifying additional staff, interns are cheap (sorry interns). Most interns are in school and are working to gain some practical experience in their field. For this reason, they are advantageous because they possess some of the skills you need, and are usually willing to take on any sort of project that helps them learn and gain experience. Hiring interns makes great business sense because, outside of cost, they also help fill your firm’s talent pipeline. When it comes time to hire new full-time employees next year, you already have a trained employee to fill the role.
On the downside, interns may lack all the specific skills you are looking for because they are still in school. For this reason, if you really need a specific skill set to strengthen your business, an intern would not be good replacement for hiring a full-time employee with the specific skills. Additionally, an internship is often the first exposure one gets to the professional environment, in response to which it can take time to adjust. Finally, between personal and school commitments, interns can take time to secure and train.
Pros: Energetic, Willing to Learn, Inexpensive, Can Serve As the Entry Point for Your Talent Pool
Cons: May Lack Certain Skills, May Need Professional Development, May Take Time to Obtain
3. Hiring Temporary Staff (Temps)
Temporary employees, or Temps, are good for handling spikes in work or to fill short-term needs. Further, temporary employees are easy to justify because they can be added quickly through an employment agency (possibly within a few days from the time you request them) and are inexpensive from a cost perspective. Temporary employees are particularly beneficial when you have mostly administrative type work, such as data entry, scanning, or other general office tasks for which you do not want to levy onto your permanent workforce.
Temps differ from interns in that temporary employees may not have the specific technical skills you may get from an intern who is learning the trade. In contrast, temps usually have transferable skills and have the general office experience that interns lack. Finally, temps can generally work as many hours as you require, while interns may be limited due to class schedules.
Pros: Inexpensive, Can be Obtained Quickly, Great for Spikes in Work
Cons: May Lack the Exact Skills You Need, Usually Limited to Admin and Basic Jobs
4. Hiring Contractors
Contract employees, or contractors, are similar to Temps, in that they are hired to fill temporary spikes in work. They differ, though, because contractors are typically specialized and hired to compliment your skilled labor pool. For example, you can hire contractors with engineering degrees, who can co-locate within your product design team to help add short-term capacity. Though the basic function of contractors is similar to interns and temps in that they bring in temporary manpower to address a shorter-term bump in workload, they bring with them the specific skills or training that you need. For this reason, contractors are quite a bit more expensive than temps or interns. However, since they are only for the short-term (less than a year) and are dedicated to a given project or task, they are still more affordable than hiring a full-time employee.
When it comes to putting a business case together to hiring contractor employees, therefore, you should be clear about your needs. Is the skill set required, or is a more affordable option, like a temps or interns, possible? Alternatively, can temps or interns be brought on board to take on administrative work to free up your more skilled, permanent employees’ time to focus on more technical work? One final thought to consider: though contractors are beneficial in many cases, any knowledge gained by a contractor typically leaves when their assignment is complete. As an example, if the contractor performs some financial evaluations for you for 6 months and happens to identify certain trends with the data, that information may not transfer to another employee who will remain with the organization.
Pros: Short Term, Skilled, Can Perform Specialized Functions
Cons: Most Expensive Form of Temporary Help, Learning Typically Leaves Upon Completion of Assignment
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5. Hiring an Outside Firm
Many managers tend to look at the work that sits in front of them and try to find ways to make it all happen. Maybe you do need to justify a new full-time head for your team. Maybe interns will be able to fill your need for manpower, or maybe contractors are the right way to go. The downside to increasing staff, though, is that it places more responsibility on you as the department manager. Think about it this way: you have to hire the people, get them setup with a computer, get them trained to the specifics of your work, and you will be interrupted regularly to answer questions as they come up to speed. If the work you need done is greater than 6 months, maybe this is ok.
But don’t overlook the benefits of outsourcing an entire activity. Depending on your type of work, perhaps issuing and Statement of Work (SOW) to an outside company to do the work is a better option than having you manage it internally. If you are looking to scan 50 old filing cabinets to free up floor space, for example, there are companies out there that will do that and manage all the work on your behalf. If you are looking to have some special analysis done on a new product design using a skill set your team does not have, find an outfit that specializes in that work, give them your requirements, and have them get back to you with the results. The point is, when it comes to justifying additional staffing for your team, you should also consider if the work you need done could simply be managed by an outside firm to remove the burden from your hands. Sometimes, this is the best way to go. It also puts the risk of uncertainty (employee turnover, logistical issues, cost of maintaining equipment) on someone else.
Of course, outsourcing does have its challenges because you lose some of the control you would have when you perform the task internally. Further, you lose the visibility of the day-to-day, which can result in schedule slips if there is miscommunication surrounding your requirements.
Pros: Possess Exact Skills Necessary, Reduces the Burden on You
Cons: Can Take Time to Initiate and Deliver, Requirements Must be Very Clear, You Lose Control Over Specifics
Ultimately, as we said in the previous article, data is your best friend when it comes to justifying adding headcount and staffing, full-time or temporary. Using the data – type of work, skills required, duration, urgency – be sure to critically analyze your situation to determine which type of labor mechanism best suits your needs. Your business case for more people will be far stronger when you present the various options and costs that exist, a use the data to make a sound recommendation.
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