How to Justify Hiring Specialists: Questions for a Sample Business Case
Any manager who has hired new employees has dealt with challenges related to cost. Why else do recruiters ask for a candidates salary as part of the initial screening process? What they’re really asking is “can I afford you?” I actually had one hiring manager tell me “This guy is making more than I do, we could never afford him.” But when it comes to justifying specialists and hiring more expensive employees for your team, you should think twice before writing them off from the start. Let’s take a look at some of the questions you should ask yourself when creating a business case to hire a specialist or a more expensive employee.
Four Basics Truths Behind Employee Costs
Here are four basic facts, that few managers will debate:
- Employees cost money
- The process of hiring costs money
- Hiring specialists and higher experienced employees to fit your needs often takes longer
- Specialists and higher experienced employees typically command higher salaries.
“The firm could have benefited from 10 years of specialized expertise for just 15% of the cost the company spent fixing a single issue.”
The reasons why many companies avoid hiring specialists are described well in an Inc.com article, namely, that companies these days tend to want generalists and people who can do multiple things, not just a person who does one thing really well. And further, the added length of education and training comes at a premium to employers. Why on earth would you want to spend more money recruiting and hiring a specialist, who is good at only one thing? The answer is simple: a highly talented employee cannot replace the value of a subject matter expert when you need one. And by the way, there is a fallacy in the generalist logic: just because specialists have expertise in a given area, doesn’t mean they are incapable in everything else!
Why Your Business Needs Specialists
To illustrate this point, consider one large manufacturing firm that made products for high temperature industrial applications. Upon purchasing raw material, the firm trimmed, formed, cut, stamped, rolled, polished, fastened, and welded the pieces together to achieve their end products. Because of their high-temperature end market applications, the materials the firm used went by names that most folks have never heard of – Rene, Haynes, Hastalloy – not the kind of things you can Google and learn all there is to know about them.
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Working with these unique materials was their core business. And while the firm employed highly experienced engineers and manufacturing gurus, they did not employ a single specialist – a metallurgist, a welding expert or a material scientist – who possessed deep knowledge or expertise of the exotic materials they used. Prior requests of management has been declined. “We’ve worked with these materials for years, we know what we are doing” they said.
“A great employee does not replace the value of a subject matter expert.”
In 2012, when customers began complaining their parts were failing prematurely, the firm launched a massive hunt for the root cause. Shortly into the investigation, a major quality issue related to a “standard” manufacturing process was discovered. When outside consultants were eventually brought in, it did not take them long to provide a few key pieces of information. “This material is highly susceptible to this condition, if a series of special processes are not used” they said. Despite the years of experience within the manufacturing firm, this single piece of specialized knowledge was simply absent from the organization.
Aside from the extraordinary expenses associated with compressed manufacturing trials, product testing, expedited shipping, and the hiring of outside consultants, the firm incurred a tremendous opportunity cost. Namely, by devoting a large number of employees to resolving the crisis, the firm missed out on several new opportunities where those same employees could have spent their time developing new products to help grow the business. During the 9-month investigation, the firm spent over $10M dollars (8% of its annual sales) investigating and correcting the problem. Finally, aside from the financial impact, the business lost a great deal of credibility from many of their long-term customers.
A Sample Business Case for Hiring a Specialist
Looking at this through the lens of a simple business case for hiring a specialist, let’s conservatively assume the business had opted to employ a specialist with expertise in these materials at say, $150,000 per year, including salary and benefits. Ignoring inflation, over 10 years, that would still be only $1.5M, or 15% of what the company incurred in single year trying to recover from the quality issue. And as discussed above, though a specialist on staff could have helped prevent this particular issue, he or she could certainly have added value elsewhere in the business, considering the materials they worked with on a daily basis.
Ignoring all other manufacturing glitches the firm had experienced during that time (and there were others), the firm could have benefited from 10 years of specialized expertise for just 15% of the cost the company spent fixing a single issue.
5 Questions You Must Answer To Justify Hiring a Specialist
While the example above may be an extreme case, it helps illustrate the value of hiring specialists and experts. But let’s not kid ourselves: no manager or business leader has the ability to hire at will in today’s business environment. However, there are ways to make the case for hiring specialists and higher costs employees when there are legitimate needs. Here are 5 questions you should ask yourself to help make that decision.
Question 1: What gaps and risks exist in your organization?
The first question you need to answer when trying to justify hiring a specialist is to look at the gaps and risks that exist within your current team or organization. Where in your business would the availability of a specialist ensure you have filled knowledge gaps and holes? In our example above, the lack of a metallurgist or materials scientist with expertise in high temperature alloys was a known risk. But don’t limit yourself to fields that may require a Ph.D. There are specialists out there in terms of tax strategies, international shipping, foreign languages, and health benefit systems.
Question 2: What key specialists are needed?
Before you go off trying to justify hiring a specialist for anything you can possibly imagine, think about what specialists and higher cost employees you might really need. In some cases, if knowledge is only needed on a temporary, or periodic basis, going to an outside consulting house may be more appropriate than hiring someone full-time. For example, an employee benefits specialist may not be needed all year round, but perhaps only for a couple of months out of the year when you are evaluating your company’s benefits program. Focus on key areas where you have a constant and perpetual need for specialized knowledge.
Question 3: What is the opportunity cost of having your other employees try to work a problem?
Imagine your company offers translation services from English to German. Are you going to try to have your German translators fumble through a translation into French, in order to work with a new client? Of course not. Rather than have your existing employees try to figure their way through a given problem, consider hiring a specialist if there are repeated and consistent challenges in a given area. In the real life example we provided above, metallurgy and material processing had been a known gap for years.
Question 4: What is the potential cost impact of not having a specialist?
Ask yourself, are there particular risks you face by lacking an expert or specialist? Don’t think of the nice-to-have reasons. Think about the need-to-have reasons for hiring another employee: legal compliance, customer impact, financial risk, etc. If your reason for not hiring a specialist or a more costly employee is “we’ll probably be ok” or “we can always call in an expert if that becomes an issue,” you’re walking a fine line. By the time you realize you need an expert, it might be too late.
Question 5: What opportunities will a specialist employee bring to your firm?
The biggest mistake managers make when they avoid hiring a resource is they only think about the cost, and fail to think about the benefits. Aside from providing internal expertise to ongoing projects, does bringing in an expert into your company give you an advantage over your competition? Does it help focus other resources on more important work? For example, instead of having 8 employees devote 10% of their time to a given topic, what type of benefit can you gain by bringing in a specialist to consolidate all of that work, and enabling your other employees focus on their regular jobs?
Getting Started with Your Justification for Hiring a Specialist
A great to start answering these questions is to conduct a SWOT analysis of your organization. In particular, look closely at the threats and weaknesses. Keep in mind that just because you may not have experienced a major issue as in our example above, it does not mean you are immune to having a need. Ultimately, hiring a specialist or a more expensive employee requires you take a good, hard look at your organization and carefully assess your risks.
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