We’ve probably all heard the phrase “our #1 asset is our people.” Hiring and retaining good employees is often cited as a primary goal or concern for management at all levels, including a recent survey of CEOs where it was listed as their top concern. At the same time, all CEOs want to spend money smartly and save where they can. Keeping expenses down is a constant goal, and always a top concern.
That’s the paradox, employees are a cost as well as an asset. Securing the best workers for your company is going to cost money. The talent shortage in IT, engineering, accounting and financial services industries are driving salary and benefit costs up. You can see the problem, right? People costs going up means that one of your company’s goals (getting and keeping great people) is running straight into one of your other goals.
Does a CEO want to hear that the rollout of a new system is behind because of a delay in finding an IT Project Manager? Or find out that turnover in the IT department is 30% higher because salaries are not in line with the marketplace? Does he want to hear that expenses are overbudget? It all affects the bottom line.
Does it have to be a collision though? Is it always either or? Can these two goals get along?
Yes. They can. If you are thoughtful and strategic about where you cut costs, your company can manage expenses and have the team they need in place to succeed. No one can afford to ignore costs, but smart companies manage expenses by being proactive, not reactionary. They also understand where it’s important to spend wisely and where savings can be found.
Here are some dos and don’ts.
Do: Educate yourself about the labor market you are hiring for. Understand that supply and demand work very simply in hiring – a smaller pool of available workers drives costs up. And things can change quickly. There’s no locking in salaries or rates for multiple years. Keep on top of things and understand what you need to spend to acquire certain skills and experience. Know what the market is paying, and what the top performers are getting. Once you know what skills are commanding what, you can decide where you want to fit in.
Do: Evaluate your needs carefully and honestly. What skills are really required and how many years of experience do you really need? I’m not trying to talk you into spending more or less. I’m only reminding you that what you need most is what you will need to pay prevailing prices for. When you look across your organization, controlling or cutting costs will make more sense in some areas rather than others. You’ll focus on what’s critical to your core business. Put salary ranges in place based on this. Even within IT you may find it worth it to pay a higher salary that attracts the best programmer or knowledgeable call center workers, while being able to compromise in other areas depending on your business.
Don’t: Implement blanket reductions in staffing levels or freeze salaries and hiring across the board as a cost saving measure unless the situation requires that level of desperation (which is indicative of a whole other problem). Decreeing that every department has to cut costs evenly ignores the importance of getting business done. Growth and innovation come from investments of time, money, and attention; Not from retractions. How critical is IT to the daily functioning of your company? To its future product development? Answering these questions will help you prioritize spending appropriately.
Don’t: Think that you can get great people at bargain prices. That is simply not happening these days, if it even ever really was. If your pay is not competitive you will not attract, hire or retain the best people. Period. Overall unemployment is very low and IT unemployment even lower. The demand simply outpaces the supply. Understanding this means that you can make better decisions. It doesn’t mean you have to overpay or that there aren’t opportunities for saving on personnel costs. It means that you will get what you pay for, so plan carefully.
Do: Look for smart ways to save when hiring. If you need to divert resources to mission critical positions, where can you get the results you need without paying top dollar? Are there positions where you can hire a good worker with potential who doesn’t have a lot of experience? The lower salary saves you money, and on the job training and mentoring get them where they need to be eventually. Again, knowing where you can do this without adversely affecting productivity and results is critical to success.
Cost saving and personnel don’t have to be enemies! They can co-exist so that what matters to the company – innovation, growth, profits – continues to succeed. It’s just a matter of making sure that everyone is part of the conversation and understands that the priorities of the company need to productively coexist, and not try to dominate one another. Making knowledgeable decisions based on data and thoughtful planning. Be smart about saving money and hiring! Being strategic about both goals will lead to the best outcomes.
ATR can help you further align your staffing and recruiting to your company goals. Reach out to us today.