Hiring is a big decision. Whether it’s your first hire or your fiftieth, the process rarely gets easier.
Knowing when to hire is the first step in getting recruitment right. Budgets, workload, and growth goals have to align to welcome a new team member full-time, but missing one of the three can lead to layoffs and burned bridges.
Below are three ways to tell if it’s a good time to bring on a new team member or if a short-term fix is needed.
Before even considering a hire, founders and leads need to think about a new employee’s role and what responsibilities they would have at the company. Asking the right questions at the start can help teams decide if a contractor or freelancer is a better fit. Here are just a few examples:
- How much overtime do current full-time employees clock?
- Does the task lie within the startup’s core competency?
- How time sensitive is the task?
- After this task is completed, what will the hire do?
These questions will quickly reveal if a startup just needs an extra pair of hands for now or if they’re ready to welcome someone over the long-term. It’s best that full-time hires are brought on because your current team is working loads of overtime or because you need help with a long-term project.
Freelancers tend to be best for specific, time-sensitive jobs that sit outside of the startup’s core product or structure. Bringing on a contractor fills needs for a longer time period at a set weekly or monthly rate. Both freelancers and contractors are great for side projects that don’t necessarily affect the organization’s core competency, but probably shouldn’t be brought on to build new products.
Figuring out how much to spend on a new hire is just one component of a complex process. While full-time employees receive a fixed salary there are also benefits, medical, and vacation or sick days to consider. Before writing a job description, make sure a new hire fits within your financial goals over the next few years.
On the other hand, freelancers come with fewer stipulations but higher hourly rates. Contractors might offer lower rates than freelancers in exchange for consistent work for a set period of time.
Keep in mind that the billable hours needed to get freelancers or contractors up to speed are basically lost time and money once that person moves on. Staying on the same page is also difficult, even with weakly check-ins and daily communication. And it will be harder to negotiate a lower rate in exchange for equity with these folks, unlike full-time hires.
If you’re still on the fence, Toptal has an excellent salaried hire vs. freelance rate calculator.
Hiring is the best signal to the outside world that a startup is thriving and growing financially.
But keep in mind that your prospects and continued growth hinge on hiring decisions made throughout the company’s life. That initial $500,000 of venture capital isn’t necessarily a sign to scale up. Often, it’s a way of testing whether a startup and its management are capable of guiding an organization’s growth.
Don’t feel like you need to grow simply because money is coming in from sales or investment. Set long-term goals and benchmarks with engineering and product leads to see if and when an extra staff member will be needed. Then, check in with sales to make sure you have the cash to support them over a long period of time.
Hiring is a sign of a thriving startup. Firing and layoffs spell doom to investors.
Hiring is a Big Step
Hiring is a magical opportunity for companies. It’s awesome to know that people want to contribute to your idea, and that you’re helping people feed their families and plan for their futures. But making a full-time hire is a huge responsibility that shouldn’t be taken lightly.
Before bringing someone on, think about your plans for the role and other ways you could complete planned tasks. Putting in work at the outset will lead to less heartache down the line.