Give your managers the one tool they need to Justify Additional Staff
IN THIS ARTICLE
- Provide your managers with a free comprehensive template for justifying additional staff. It'll create a mini business case and increase their business acumen & critical thinking when justifying additional staff.
- Find out why it's important, and why small business doesn't do it well.
- Get prepared for the resistance you'll encounter from your managers.
Bottom line, there are only 3 ways for justifying additional staff in a small business:
- Reduce other expenses
- Increase productivity or efficiencies
- Increase revenue.
No magic formula or hocus pocus. It’s really that straightforward.
The Position Justification Form
The information captured in the Position Justification Form is typically required by Finance and/or senior management for justifying additional staff and incurring the expenses of additional headcount. It’s used by managers to:
- Create a business case for opening a new position that does not currently exist – or was not included in the current year’s budget
- Justify additional staff for the next fiscal period, during budget reviews
A good Position Justification Form includes exploration of each of the 3 justification options we discuss above. It provides the framework so you know exactly what questions to ask. The end result will be a mini business case that will defend the decision for adding a new employee. It's very likely that you'll never see the ones that don't!
Sample Justification Form to hire new employee
- Take a peak at a good Position Justification Form with an accompanying instructions document for your managers. Both can be previewed, downloaded and edited using Microsoft Word. It gives you all the tools you need to ensure your managers put their business hats on when contemplating adding headcount.
- Customize the documents to include your company's due diligence requirements when adding additional headcount.
- If you're looking for other documents to support opening a new position, check out the Opening & Advertising a Position kit, or other related kits for the Hiring Process.
- Also available is a full solution for Setting up a Department of Human Resources using editable documents.
Why Justify a New Employee?
Think about the last time a new position was approved in your small business. How much time was spent on the justification to hire a new employee? Did you ask for a business case to validate a reoccurring expense of $100,000 per year?
Small business owners and CEOs often don't have the time or know what questions to ask to ensure that proper position due diligence is done up front before the recruitment process begins. Here are a few reasons why you’ll want to implement a Position Justification Form soon:
- Ensures due diligence is done and there is strong business rationale to support a request for more headcount.
- Provides food for thought for the manager to look at alternatives to opening a new full time position. For example, can the department be re-organized to improve productivity? Can the use of technology improve efficiencies? Does the position have to be full time? Does it have to be filled by an employee? Can the additional headcount be a temporary expense?
- Ensures that the process around incurring additional staffing costs are just as rigorous as incurring any significant capital expense.
- Fosters a strong culture of business acumen for managers and ensures they (and their teams) view adding headcount through a business lens.
Here are 2 common consequences of not having a rigorous process for justifying adding a new employee:
- A long-term position could be opened and filled for the wrong reasons, for example, to meet a seasonal work crunch that could have been met with a temporary contractor.
- The costs associated with an unnecessary hire go well beyond the salary of the new hire--they include recruiting costs, learning curve, and staff time to interview and train. Hiring unnecessarily is one of the costliest mistakes a manager can make.
Justifying Additional Staff - an example close to home
Let’s say my family and I decide to hire someone to help with housekeeping. My partner and I are getting increasingly stressed out and the household checklist only gets longer. Stuff is falling through the cracks. We find ourselves getting to bed later each night to get things done and it just doesn't seem doable anymore.
Q: Are those good enough reasons to bring in the help? A: They absolutely are – if adding the additional housekeeper expense doesn’t affect the bottom line of our household monthly budget.
Let’s consider the options:
- Reduce other discretionary expenses:
I could eliminate the Starbucks and the lunch expenses. Reduce the number of times we eat out. Ditch the monthly salon expense and use hairdresser-in-a-box to dye my roots. Bonjour Loreal Paris? Decrease the number of empty wine bottles that end up in the recycling bin. Hunt for coupons.
- Increase productivity or efficiencies:
I could reduce the amount of time spent on Netflix, or Facebook. Get a Roomba to do my vacuuming. Ask my kids to get a part time job or learn to take the bus or carpool. I could maximize efficiency by re-jigging family member responsibilities to leverage everyone's skill sets.
- Increase revenue.
I could ask for a raise. Get promoted. Upgrade my skills to make myself more marketable. Change jobs. Draw on my home equity line of credit. Clean out the garage and sell stuff on Craigslist. Buy lottery tickets.
The take away is that there are some tough decisions and sacrifices to be made because my monthly household budget has a bottom line. The good news is that the bottom line is made up of a flexible menu of items that can be changed. Both the revenue and expense line can be modified, (10-3) = 7. (8-1) = 7, as long as the end result is 7.
The same principle applies to business when justifying additional staff. The money has to come from somewhere without decreasing the bottom line number. An exception to this is when it can be shown that there's a high probability of future return on investment in human capital.
The engine for this analysis is called a business case.
Resistance to New Hire Justification
- Be prepared. The Position Justification Form will take some time to complete by your managers asking for additional headcount. It requires some calculations and work up front, but is well worth the effort. You will encounter fierce resistance and push back from managers when asked to justify a new position and do the homework, particularly if your small business managers aren't accustomed to robust hiring processes or controls.
- Managers may even threaten to quit! You may hear words like, ‘bureaucratic’, ‘unnecessary’, or ‘HR make-work project’. And you'll definitely hear, ‘I’m too busy to fill out this form’! Be friendly but firm. Follow through with your request and insist that this be done. Managers are paid to manage, plan, and justify resources. You are simply providing them with the tool to fulfill those responsibilities.
Use your ‘red tape chips’ wisely when requesting staff to complete time-intensive processes. It is highly recommended that you insist your managers follow this process.
And if you’re really bold
- Ask a stakeholder with a healthy respect for the bottom line (for example, an investor) to vet all requests for new hires outside of the budgeting process. A face to face interview is conducted with the hiring manager to present his business case. This scenario transfers the 'bad cop' label to an external entity.
- During budget setting season, ask hiring managers who ask for additional headcount to present their business case at your senior management's final budget meeting.
Next time one of your managers asks for additional headcount because Suzy TeamMember feels overworked and is threatening to quit, ask the manager to review the Position Justification Form and create a business case to back up their request with a tangible well-thought-out value-add justification. If they threaten to quit or stomp their feet, perhaps ask them how they would handle their significant other insisting on <insert: hiring a housekeeper, buying a new boat, getting plastic surgery>. You could also send them this article!