Scaling Your Workforce
“You don’t build a business; you build people, then people build the business.”
Few businesses escaped the financial hit caused by a global pandemic and the disruption it caused to a bustling economy. Even with federal and state grants and loans, making ends meet was already a chore before the pandemic. The relatively small relief only put a Band-Aid on the books. It didn’t make up for lost foot traffic and sales.
As any business owner knows, labor is one of the highest costs of business. It is typically 20% to 35% of gross sales. In service businesses, it might be as high as 50% of gross. Reducing labor costs is a delicate balancing act since employees must provide superior customer service and grow the bottom line.
As the economy turns the corner, keeping human resource needs in balance will be one of the biggest challenges a small business can face. Yes, you need help, if you can find it. But bringing too many onboard at once can create its own set of problems, not only in terms of cash flow and higher labor costs but in scheduling, recruitment and retention. Employees have had enough uncertainty since March 2020. They don’t want to take a position only to find they don’t get the hours they were promised or, worse, are laid off again because receipts aren’t meeting predictions. An added layer of complexity is union employees, where seniority has its privilege, and any changes in employment can affect bumping rights and retirement benefits.
A Changing Landscape
In many respects, human resources were put through a Cuisinart during the pandemic. Lifelong employees were cut loose, new hires found they wanted something else out of their careers, priorities changed, and positions that were impossible to get in the past remain open for days, weeks and even months.
The vast majority of workers found they liked the flexibility to work where and when they please. Working 9 to 5 in an office – once the dream of every upwardly mobile worker – sounded like hell. In a 2021 survey, 54% of employees worldwide said they would leave their job post-COVID if they were not given the flexibility to work anywhere.
Of course, that doesn’t work for many business models. And yet, you as a business owner have the opportunity to transform your own workplace to meet the evolving needs of your workers while maximizing cash flow.
Throughout this crisis, you have been focused on the health and safety of the public, your customers and your employees. Where possible, you created opportunities for virtual work. Now that we are entering into a recovery phase, you can focus on the next set of workforce challenges.
As you recover and rebuild, evaluate your human resources needs from the bottom up. As you build a business over time, it’s easy to add positions that fill specific assignments. Over time, these positions may not be essential or even a good fit anymore. However, there is a tendency to keep the incumbent in the position because they’ve been loyal, been there a long time, or because coworkers like them.
If you had to close or significantly curtail your workforce, you have the chance to reimagine it. You can do this by 1) reassessing your recruitment and staffing goals, 2) inventorying your existing talent pool to see who fits your needs, 3) identifying top-tier team members who should be reskilled for new roles, and 4) creating a hiring plan that focuses on generalists rather than specialists.
Let’s use retail as an example. Pre-pandemic, there may have been lots of foot traffic, which required high volumes of floor staff. In the face of public health orders, customers found they liked shopping online and picking up orders curbside, so much so that your warehouse and fulfillment team were overwhelmed and understaffed at times. This is an opportunity to revisit your business model and readjust staffing to reflect changing customer needs and demands.
The same can be true for any business. There is a tendency to simply rehire old positions and never revise job descriptions. But do you really need these roles going forward? And if so, can they be rewritten to give you more flexibility in hiring and scheduling? Are there specific functions that can be handled by a contractor, gig worker or freelancer? Do full-time positions really need to be full-time, especially as you restart operations?
It’s also an excellent time to revisit your compensation structure. Is your compensation in line with the market? How do you stack up with your competitors? Note that we’re not talking about the guy down the street who also has a Mexican restaurant when referring to competitors. We’re talking about the general market. Everyone is looking for the best and brightest to join their operations, and candidates aren’t always looking for top dollar. Things like flexible schedules, remote work, alternate work schedules (4/10s) will be part of the recruitment and retention process.
Getting to Work
As you look at your staffing needs, think about critical skill gaps and how they need to be filled.
Identify the roles you have lost. These are the roles you will need to fill short-term and long-term. These are the critical positions to your organization, so it’s essential to have a clear view of the skills you have and the skills you’ll need to find in others as you restart and rebuild. Ideally, you will do this with a holistic view of the organization. It’s easy to think you need this position and that one. However, you want to do this strategically to maximize efficiency and productivity while still being lean and mean to absorb any unexpected changes in the marketplace or your operations.
Understand the gaps in skills. Your needs may be very different from what they were before. As you start to staff up, think about hiring people who can excel in more than one role – a generalist if you will – rather than specialists. You may also want to recruit more agile and collaborative workers who don’t mind cross-training or tackling new assignments on the fly.
Increase mobility. Before you recruit outside, perform an audit of your existing team. See who has skills or abilities that are transferable or adaptable. Often, employees have backgrounds or talents that don’t come up in a job interview. You may have the perfect fit for a new role within your ranks already. This isn’t necessarily about promoting upward either. You may want to consider a lateral move to a different part of the company if the skills are a good fit and the employee is excited about the opportunity.
One of the advantages of doing this is that you keep someone in your organization with institutional knowledge. They already understand the business’ mission and goals. They know all the machinations and processes that a new hire will take months of training or acculturation to understand. You may even reduce turnover since the employee may be looking elsewhere without you knowing about it because they want to do something more closely aligned with their goals and abilities. Most of all, they become a utility player for your company, being able to step into multiple roles without additional training or upskilling.