Good morning all,
One of life's great challenges is determining the validity of a warning. Someone yells 'FIRE!' in a crowded meeting room, for example, and suddenly we must determine if we should storm out at top speed or wait for additional information.
I think the toughest question to which this challenge applies in a business context involves hiring. I do not mean assessing candidates. What I refer to is prior to that step- the decision to open up a hiring process or not.
After all, it seems that every organization always has someone insisting on hiring more people. It is hard to decide whether to act or wait for more information. Luckily, I've stumbled across some decent wisdom on this topic over the years that has helped me answer this question.
The most obvious time is to fill an existing position (1). Someone leaves the team but their set of responsibilities remains. If the role is vital to the team, you begin searching for a replacement.
Usually, though, there are no obvious holes to fill. This standard case is tougher to figure out. I use two rules of thumb.
One is to consider if quality is slipping. Usually, the people directly involved with the work know. A team brainstorming session or an informal survey of individuals generally helps a decision maker determine simple metrics for quality measurement. When quality falls below the baseline level, start hiring.
A second consideration is knowing which projects are being ignored. A bad sign is if profitable ideas are not being worked on. A good way to gauge this is to find out what project or task is next for departments, teams, and individuals. If the list of 'current plans' you come up with is obviously profitable, it is probably time to hire.
The key unstated idea is the concept of dual reporting. This means each measurement requires a paired measurement to create context.
Most are skilled at simple measurement. It comes naturally because the real world gives us a lot of practice. (What time it is, how cold it is, etc.)
Creating context is an entirely different matter. Context is important because it directs action. (Are we late, should I bring a coat, etc.)
If you want to track inventory, you have to track shortages. If you want to track manpower, you have to track the frequency of cyclical or rushed production distributions (2).
Another way to think of it- efficiency is relevant only in times of scarcity. Like with measurement, the idea of being 'efficient' comes naturally to most people. But someone's efficiency in using time is completely irrelevant if they have no pressing obligations or deadlines.
Getting hiring right is very important. The wrong hire is capable of setting a team or organization back for an unknown amount of time. It is low quality, not high quantity, that clogs sinks. But hiring poorly for a known need is usually a reversible error.
Everything has a natural rate and limit to growth (3). Misreading these might lead to overshooting the correct size of a team or organization. A functioning drain does not resolve all the problems of overflow. Growing too quickly or becoming too big are problems that can sometimes be irreversible.
Therefore, careful monitoring to avoid this error is critical. Using a dual reporting concept is very helpful in making such an assessment. You set a standard or a baseline against which the need to hire is measured. That way, you at least know that the odds of your new hire being profitable or value-generating are favorable.
That is all business investment is- maximizing return on your initial outlay.
It can be hard to implement dual reporting for just the hiring stage. So, I simply recommend incorporating dual reporting at all times. Knowing context always helps.
Over time, this will help differentiate the false alarms from the true problems- especially when someone yells 'HIRE!' in the crowded meeting room.
Signed,
The Business Bro
Footnotes / potential gripes
1. Not that anyone would quit with you as a boss, of course, but sometimes life happens, you know?
One day, you come in and demand to know why Leslie is three weeks late to work.
'Lisa quit.'
'Who?'
'The person who quit. You kept calling her Leslie but her actual name is Lisa.'
Quitters! Only losers quit. 'L' doesn't stand for Leslie, it stands for LOSER!
And how dare...uh...how dare anybody tell me what I did wrong! Might want to review that seating chart over lunch, though.
2. Slow down...
Inventory is relevant only if customers are buying up products too fast for your production team to replace them. There is no need to hire for the sake of building up inventory if you are able to match sales to production.
The manpower thing is subtler- if the production distribution is rushed or cyclical, it usually means management is misusing manpower. Instead of hiring more people to be mismanaged, train your managers to distribute the existing manpower better throughout the production cycle.
3. Everything...? Nothing applies to everything!
Almost nothing should ever be described as applying to 'everything'. I suppose in this case, thinking about an organization's size relative to its field or industry might help make the statement more true. An organization in a shrinking industry (such as newspapers) might shrink in absolute terms (such as total employees or circulation) but still seek growth in relative concepts (such as hiring the best columnists or covering a wider geographical area).
Endnote
A thought about promoting from within...
Promoting from within is a good way to fill organizational gaps. One issue with promotion, though, is that it creates uncertainty in the position being vacated. In a sense, promoting from within brings an organization back to the first condition for hiring- the need to fill an open position.
One observation I've heard in various job interviews and scattered conversations this year is the trend for people my age (which basically covers anyone owning a college degree but not yet obviously locked into an obligation via geography, debt, or family) is the trend toward job hopping. (This is a slow but definite change from the employment structure of, say, several decades ago, but people comment on it anyway.)
I think one contributing factor to such a thing is the unacknowledged danger of internal promotion. An organization that promotes from within creates two performance uncertainties- the internal person promoted into the new role and the outside person coming in to fill the old position. Hiring from outside limits the uncertainty to just the one position. Junior people who observe such a hiring practice will get the hint and start looking around as soon as they feel ready for a promotion (which is somewhere between nine days and nine months after starting a role, I've observed).
One of life's great challenges is determining the validity of a warning. Someone yells 'FIRE!' in a crowded meeting room, for example, and suddenly we must determine if we should storm out at top speed or wait for additional information.
I think the toughest question to which this challenge applies in a business context involves hiring. I do not mean assessing candidates. What I refer to is prior to that step- the decision to open up a hiring process or not.
After all, it seems that every organization always has someone insisting on hiring more people. It is hard to decide whether to act or wait for more information. Luckily, I've stumbled across some decent wisdom on this topic over the years that has helped me answer this question.
The most obvious time is to fill an existing position (1). Someone leaves the team but their set of responsibilities remains. If the role is vital to the team, you begin searching for a replacement.
Usually, though, there are no obvious holes to fill. This standard case is tougher to figure out. I use two rules of thumb.
One is to consider if quality is slipping. Usually, the people directly involved with the work know. A team brainstorming session or an informal survey of individuals generally helps a decision maker determine simple metrics for quality measurement. When quality falls below the baseline level, start hiring.
A second consideration is knowing which projects are being ignored. A bad sign is if profitable ideas are not being worked on. A good way to gauge this is to find out what project or task is next for departments, teams, and individuals. If the list of 'current plans' you come up with is obviously profitable, it is probably time to hire.
The key unstated idea is the concept of dual reporting. This means each measurement requires a paired measurement to create context.
Most are skilled at simple measurement. It comes naturally because the real world gives us a lot of practice. (What time it is, how cold it is, etc.)
Creating context is an entirely different matter. Context is important because it directs action. (Are we late, should I bring a coat, etc.)
If you want to track inventory, you have to track shortages. If you want to track manpower, you have to track the frequency of cyclical or rushed production distributions (2).
Another way to think of it- efficiency is relevant only in times of scarcity. Like with measurement, the idea of being 'efficient' comes naturally to most people. But someone's efficiency in using time is completely irrelevant if they have no pressing obligations or deadlines.
Getting hiring right is very important. The wrong hire is capable of setting a team or organization back for an unknown amount of time. It is low quality, not high quantity, that clogs sinks. But hiring poorly for a known need is usually a reversible error.
Everything has a natural rate and limit to growth (3). Misreading these might lead to overshooting the correct size of a team or organization. A functioning drain does not resolve all the problems of overflow. Growing too quickly or becoming too big are problems that can sometimes be irreversible.
Therefore, careful monitoring to avoid this error is critical. Using a dual reporting concept is very helpful in making such an assessment. You set a standard or a baseline against which the need to hire is measured. That way, you at least know that the odds of your new hire being profitable or value-generating are favorable.
That is all business investment is- maximizing return on your initial outlay.
It can be hard to implement dual reporting for just the hiring stage. So, I simply recommend incorporating dual reporting at all times. Knowing context always helps.
Over time, this will help differentiate the false alarms from the true problems- especially when someone yells 'HIRE!' in the crowded meeting room.
Signed,
The Business Bro
Footnotes / potential gripes
1. Not that anyone would quit with you as a boss, of course, but sometimes life happens, you know?
One day, you come in and demand to know why Leslie is three weeks late to work.
'Lisa quit.'
'Who?'
'The person who quit. You kept calling her Leslie but her actual name is Lisa.'
Quitters! Only losers quit. 'L' doesn't stand for Leslie, it stands for LOSER!
And how dare...uh...how dare anybody tell me what I did wrong! Might want to review that seating chart over lunch, though.
2. Slow down...
Inventory is relevant only if customers are buying up products too fast for your production team to replace them. There is no need to hire for the sake of building up inventory if you are able to match sales to production.
The manpower thing is subtler- if the production distribution is rushed or cyclical, it usually means management is misusing manpower. Instead of hiring more people to be mismanaged, train your managers to distribute the existing manpower better throughout the production cycle.
3. Everything...? Nothing applies to everything!
Almost nothing should ever be described as applying to 'everything'. I suppose in this case, thinking about an organization's size relative to its field or industry might help make the statement more true. An organization in a shrinking industry (such as newspapers) might shrink in absolute terms (such as total employees or circulation) but still seek growth in relative concepts (such as hiring the best columnists or covering a wider geographical area).
Endnote
A thought about promoting from within...
Promoting from within is a good way to fill organizational gaps. One issue with promotion, though, is that it creates uncertainty in the position being vacated. In a sense, promoting from within brings an organization back to the first condition for hiring- the need to fill an open position.
One observation I've heard in various job interviews and scattered conversations this year is the trend for people my age (which basically covers anyone owning a college degree but not yet obviously locked into an obligation via geography, debt, or family) is the trend toward job hopping. (This is a slow but definite change from the employment structure of, say, several decades ago, but people comment on it anyway.)
I think one contributing factor to such a thing is the unacknowledged danger of internal promotion. An organization that promotes from within creates two performance uncertainties- the internal person promoted into the new role and the outside person coming in to fill the old position. Hiring from outside limits the uncertainty to just the one position. Junior people who observe such a hiring practice will get the hint and start looking around as soon as they feel ready for a promotion (which is somewhere between nine days and nine months after starting a role, I've observed).
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