Last issue, the owner of a small retail chain based in Guelph, Ont., wrote to ask PROFIT-Xtra readers:
“The recession forced me to lay off five of my 30 employees. Since last October, my sales have started to pick up again. But so far I haven’t started hiring again, because I wanted to see whether the recovery was for real. Does anyone have any advice on how to decide when to start staffing up again?”
Best reader responses
Kelly J. Ramsay, Montreal:
“If your existing staff is showing signs of fatigue and morale is low, then it’s usually advisable to offload some of the added workload by hiring more staff. If, on the other hand, they are happy and things are going well in terms of sales, it may not be necessary to hire additional people right now. Ask them — they will tell you. In addition, if you are losing deals or your sales funnel is weak, then hiring additional resource may be appropriate, as this indicates a tired workforce. Whatever you do, you must consider the potentially harmful impact of hiring and then having to retrench.”
Allan Shaw, NEXX Step solutions, Toronto:
“With the economic upheaval of the past couple of years and the highly divergent forecasts for the potential of a double dip recession to GDP growth of 2.5%, I wouldn’t make any hasty decisions at the moment. Although some sectors have begun to show signs of improvement, the majority of others haven’t done so, given that we’re still in the very early stages of a potential and fragile recovery. The best advice I can offer you is to closely monitor your revenues for several quarters to ensure that there is a clear pattern of improvement and not just some type of seasonal effect. Once you’ve established a steady pattern of improvement, then consider a return to hiring. However, even once you’ve reached the point of hiring again, a slow and graduated pace is highly recommended.”
“When I had my accounting practice, I had the same conundrum. With the changes in the profession — competition from other professional associations, technology and so on — the pressure was always there to do more with less. In your case, the earlier cuts hopefully mean you took the opportunity to “clean house” to some extent, leaving motivated staff with you. Now they should be able to help, with appropriate rewards, to put that extra effort into the business, until you — and they — feel comfortable with taking on additional workers after being satisfied that what we’re seeing now is not a dead cat bounce.”
For his answer, Dave Peters will receive a copy of How to Build a Billion Dollar Company From Scratch, by Harry E. Figgie Jr.
Watch for another Peer-to-Peer question in the next PROFIT-Xtra.