The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “How do you know it’s time to hire more employees?” is written by Dale Chang, vice president of portfolio operations at Scale Venture Partners.
At Scale Venture Partners, a big part of my job is advising early-stage startups on the best ways to scale their companies and assemble the building blocks for long-term success. Needless to say, that involves thinking a lot about hiring.
When you’re a small company, every employee is significant. Each new hire can have a big impact on the company’s culture and productivity, so it’s important to be strategic when bringing on staff.
In my experience, companies should keep in mind four key considerations as they grow their team:
Get the culture right
Culture is core to every company’s DNA. As you bring on new people, think about the cultural coefficient—essentially, the rate at which you can integrate new employees while still maintaining your culture and values.
In some ways, it’s a catch 22: If you hire 100 people in a short period of time, your culture is bound to be affected, possibly in a detrimental way. On the other hand, being afraid of change can hold you back: If you’re too cautious, hiring stagnates and your business doesn’t grow.
So how do you scale while staying within your cultural coefficient? First, identify the values that are central to your culture and mission. Then, make sure your hiring managers are aligned on these values and keep them top of mind when they evaluate potential hires.
Culture is organic—it will evolve as your company grows. As you scale your team, keep the cultural coefficient in mind—be open to change while staying true to the values that make your business unique and successful.
Capacity goes both ways
There are two elements to functional capacity: the new hire’s competency for the job, and the company’s ability to train and support that person so they’re successful in the role.
It seems obvious, but it’s imperative that new employees have the requisite skills. While someone might be a perfect fit culturally, if their skills don’t match the role or they’ll need extensive handholding to get up to speed, they’re not a good investment.
So before you open a job requisition, ask the following: Do we have the training and onboarding resources to ensure the new hires will have what they need to succeed? You need the resources to integrate new employees so they can hit the ground running and drive growth right off the bat. If your strategy is to let newcomers fend for themselves, don’t be surprised if they’re slow to add value.
It’s all about leverage
Something I learned from years as a consultant is that you should hire people as leverage points, not release valves. Don’t wait until your staff is maxed out and frazzled before you bring in new people, or you won’t have the capacity to maximize their potential.
The best hires are those who have an exponential positive impact on the business. Think in multiples of 10 when considering how to leverage a new employee’s talents. If you bring on a new software developer, can that person generate 10 times more productivity for the engineering department? And can that, in turn, generate 10 times more sales? It’s a high bar, but if you aim high, you’ll get good results.
One way to add leverage to an organization is to think about the roles that have a positive impact on the productivity of an entire group of individuals. One client of mine put this idea to action in her company’s sales organization. Thinking about sales capacity, she increased not only the number of people carrying quotas, but also added a role focused on helping existing salespeople be more productive and new salespeople ramped faster.
Have a framework, but don’t be beholden to it. Great talent doesn’t come along every day, so be flexible. Your annual plan is just that—a plan. It’s a spreadsheet with a timeline for filling roles. If a stellar candidate turns up—someone who’s a great fit with the right skills—pull up that requisition even if it’s not on schedule.
As a small business, your people are everything. Whether you’re making your first hire or your 100th, every member of the team is important. These are tough times to hire good staff; competition is stiff and the best skills are in high demand. Keep these guidelines in mind and you’ll stand a better chance of scaling your business to success.