NFIB

Increase Profitability by Slowing Hiring Growth
04/ 30/ 2002

Instead of downsizing existing staff to reduce payroll, small business owners can limit new hiring, and thereby control payroll growth, even as overall revenues and cash flows increase. In today's Workshop, Jeffrey Moses offers suggestions about how to effectively slow hiring, without sacrificing company growth or employee morale.

There are times when hiring is essential - new sales personnel to handle added territories or an operator for a piece of new equipment. But many times, hiring is initiated based on requests from department managers in response to increased workloads of existing staff.

Rather than hire automatically, consider two alternatives: shifting staff to take up the workload, or working with managers to assist in redistributing tasks among existing employees. This approach doesn't reduce payroll, but effectively limits payroll growth even as the company continues to advance. If you think like this, payroll will be reduced significantly in comparison to company revenue.

To effectively limit payroll increases this way, departments must be monitored to make sure the staff doesn't become overworked or that output quality isn't sacrificed. Managers should be made fully aware of the objective, so they can support the policy by creatively working with staff to take up the increasing workload.

Though not all employees will be thrilled with the increased workload, it will give them an increased sense of job security, whereas waves of hiring and layoffs often send the message that a workerÆs job is in jeopardy. In the long run, slowing hiring growth is one of the most stabilizing ways a company can increase the bottom line.

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