What are the most important points to remember when hiring?
Join Paddy who will explain the key factors that you need to remember when hiring into your team.
Video Transcript
By hiring people, the focus is usually on deciding who to hire rather than when. But the timing of hiring is very important for managers. I understand there’s rarely a perfect time to hire, particularly in busy and growing district agencies. So the best approach here is to be aware of all of the factors that contribute to make a good decision.
We’ll split these into free areas, candidate availability, your existing team and your company. So first, let’s talk about candidate availability. They’re going to be times when there are more candidates available to you than other times of the year. During these times, you might actually decide to actively hire because of the talent pool being bigger than at other times.
An example of this is the period immediately following Christmas and New year, where a lot of people think about their futures and the new year, new me kind of mindset kicks in. Another example is towards the end of spring start of summer, when many colleges and universities start to end their years and graduates are looking for different roles and looking to step into their careers. This means that you may actually strategically decide to increase your hiring activities to match these peaks in these times of the year, when candidate availability is higher than usual and try and take advantage of the increased talent pool.
Next, let’s look at the factors that relate to your team and how it may affect your hiring plans. So firstly, team capacity the capacity your team is likely to be one of the biggest drivers in hiring someone if your team is clearly really busy and struggling to get work done in the time they have. You might start to hire now. Most digital agencies will use some systems that allow to time track, and this will feed into their business models and drive revenue and drive profit.
As an example, an agency might actually say they want an employee to generate four times their annual salary, maybe even five times their salary, or even put a fixed number, such as 100,000 pounds per year, $105,000 per year for each employee. Alongside this, some agencies will set what’s called utilization targets, which means a number of billable hours. They expect someone to hit again. This will differ by agency, but it can range from 20 to 5 for a manager up to 70% to 80% for a junior to senior level staff.
This information should give you a strong indicator of how busy your team actually is, which is really important when making hiring decisions. However, be careful when relying on the numbers too much as even if someone looks like they have time to take on more work, they may not feel like they can. This can often happen because of complex or difficult accounts that might not take much actual time, but do take up lots of headspace and may be causing lots of stress. So while some may not be full on paper, they can feel full and therefore may not respond very well to being given more work.
This is why I need to combine the data with your broader knowledge of your team and their feelings about their current workload, and that allows you to make a balanced decision. Another factor in hiring more people is skills gaps in your existing team. For example, if you run a team of e-commerce web developers who work across Magento and shopify, but you’ve actually got more Shopify projects than your current team can deliver, you need to go out and hire more Shopify expertise. But before immediately doing that and hiring someone, you should also look whatever your team can be up skilled and whether they can take on more responsibilities and a higher workload.
If you do have someone in your team who’s doing really well, that would not only benefit from being accelerated into a more senior role, but also means you don’t need to hire someone you should consider going this route. The deal breaker here is likely to be at a time in which it takes to upskill them. If you can do it within the time it takes to hire someone, you should almost certainly go that route instead. If it takes a little bit longer, it’s probably worth doing.
But we’re going to take way longer than client work may actually suffer, and hiring someone is likely to be the best option. Next, I talk about experience, gaps and experience. Gap is where your team isn’t like in the hard skills, but do lack the seniority to handle more complicated or unexpected situations. So whilst being very skilled, they might not have the experience of someone who has been doing that same job for a number of years, and therefore they might need someone to learn from.
Not to mention, the clients are often reassured we’ve experienced people working on their projects. This means there may actually be times when you look at the makeup of your team from an experience perspective and make a decision based upon that. Another hiring factor that you’re definitely going to come across at some point is when you have team members who leave for other roles. This is often referred to as team churn.
When this happens, you manage to make a new hire in order to replace the skills and experience that you’ve just lost. This is particularly important in agencies when someone is leaving because it could lead to a client receiving less work and less results. So if you don’t fix this, then chances are that you’ll lose that client at some point in the future. Related to this, there might be times when someone said left a position, but you haven’t immediately replaced them for some reason.
Then over time, the team has become busier and you’re now in a position when you want to hire someone. This is called backfilling. The key difference between hiring normally and backfilling is that when you have backfill a position, you are not hiring for growth. You’re hiring someone simply because you have a need in the team and the current team is overworked and too stretched.
This distinction is really important because your seniors might see you hiring and expect this to lead to an increase in team capacity and therefore an increase in sales, revenue and profit. However, if you are back filling, then this is unlikely to be the case. Thirdly, let’s talk about company factors. There are a few factors that relate to the company as a whole, but might actually affect your team when trying to hire first company finances.
If the company isn’t very profitable right now or your team isn’t very profitable, then making a hiring decision becomes a bit harder because profit may suffer even more with the addition of a new hire. Now, every agency is different, but most will aim for a profit margin of between 20% and 30% If your team is below this, you might struggle to get sign off to hire someone you manage to justify a little bit more. For example, if you share that profit is low, then it should be right now. But making another hire will enable more growth and lead to a great profits in the future.
There’s a clear justification to make the hire right now. Your job here is to run a profitable team and balanced profits against a well-being and performance of your team. This balance is quite hard to strike because sometimes you may be running a very, very profitable team, but actually that team is very overworked and starting to burn out. And that’s never going to end well for anyone.
Another factor that can affect hiring decisions is the current sales pipeline of the company. If you have lots of potential new clients in the pipeline right now and you’re confident of signing them, then you may need to assess whether your current team will be able to handle those new clients, or if new people with more skills and experience are required. This is often a tough balance to strike because you don’t necessarily want to hire someone only for a strong pipeline to suddenly become very weak. But it’s your job to make a call on whether the current sales pipeline is strong enough to justify a new hire.
Finally, let’s talk about client churn. Client churn is an estimate of how many client projects you might lose over the course of a year. Of course, the goal is always to keep as many clients as you can. But the reality for agencies is at some point you will lose clients.
So knowing roughly what a normal client churn rate is for you allows you to balance this against a pipeline and make better decisions when it comes to hiring people in digital agencies is really a perfect time to hire. Your job is to ensure you have as much information and understanding as possible to make the best decision that you can. This means there might be times when you hire someone who is exceptional purely because of their talents and their potential. So even if profits aren’t great right now and a sales pipeline is quite weak, you may still make that judgment call to hire someone who seems exceptional.
Again, a lot of value because that kind of person may not come along very often. There might be times when profits are great. Your team is at capacity, but you actually decide to upskill someone in your team instead of hiring decisions coming above them. You could decide you don’t want to slow down that person’s progression and in fact want to speed it up.
So actually, you say I’m not going to hire someone right now, I’m going to enable that person to grow in their career, accelerate their progression, actually let them step up into that position instead.
