The Only Reason to Hire an Employee!

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Shield-953533_1280I am often asked, “When do I know it is time to hire an employee?”

In return I ask them, “What is the only reason you should hire an employee?”  The normal answers I get are:

  • “The work isn’t getting done on a timely basis.”
  • “I have no time to improve my business.”
  • “My employees are working too much overtime.”
  • “My sales are increasing and I’m worried about maintaining the same quality.”
  • “I need this job done and no one in the company besides me can perform it.”

Now these are all good reasons.  But they aren’t the right reasons to hire a new employee.  The only reason you should ever hire a new employee is that it will make you more money!

Before you hire a single employee you must know, not guess, how that new employee will increase your profits.  If they won’t, don’t hire them!  No exceptions.

That doesn’t mean that you shouldn't hire an employee for a new venture.  But it does mean that it must become profitable within the allowed time frame or the job must be eliminated.

Markets and customers change over time.  Technology advancements change jobs over time as well.  This is why it is essential for every business owner to analyze every job on an annual basis to ensure that the job and the employee are still contributing to profits more than they are costing the company.

Failing to ensure that every job contributes to profits is the number one reason that growing companies start to stagnate.  Continued failure to correct problems inevitably leads to decline.

Don’t wait for your profits to drop!  Make sure now that every job and every new hire passes the profit test.