When Should Agencies Hire New Employees?

Determining when to grow your team can be incredibly difficult, and choosing wrong can significantly impact the studio’s performance, cash flow and profitability. If you hire too soon, you may waste money on an employee that doesn’t have enough work to do. If you wait too long to hire, you may have to pass up on new projects and miss out on growing your business. 

When deciding whether or not to hire a new employee, you may feel like it is a trade-off between agency profits or staff happiness. However, it doesn’t have to be – a good resource management system provides the data you need to balance financial consideration and staff happiness to make the best decision for your agency.

Employee Workload

Ultimately you want your employees to be productive and busy -it’s what they want as well, but it is crucial they are not overworked. Waiting until every employee is at their maximum capacity to hire is a recipe for burnout. Burnt-out employees are less productive, more likely to quit, have increased absenteeism and presenteeism rates, and can experience significant health impacts. This is especially true for creatives as they need the mental space to just sit and think about a task. An over-committed schedule often limits innovation and artistry.  

The kind of work employees are doing is just as important as how much they have to do. If a high-value employee is spending the majority of their time on low-value tasks, your agency is not capitalizing on its investment in that person and it may be a sign to hire a junior staff member.  

A good resource management system provides a holistic view of each employee’s workload, allowing you to easily identify where volume is exceeding capacity or where there is a mismatch between skill set and tasks.  

Financial Considerations

Of course, it must be financially feasible to hire a new employee. It may be tempting to hold off on hiring to avoid the onboarding and training costs, plus adding another salary to the payroll. But it is important to remember that hiring a new staff member is an investment in your agency, you are adding capacity and a profit centre. And when done strategically, will benefit the studio in the long term.  

There are costs taking too long to add capacity too. If burnt-out employees start quitting, you will have no choice but to accept the cost of rehiring and training replacements.  

Additionally, if the amount of work coming into your agency has increased enough to require another employee, but your revenue does not allow it, it may be time to raise your rates.  

Data collected by a resource management system will allow you to make more accurate estimates, easily see exactly how profitable each project is, and forecast future revenue. Combined with employee workload data you can determine precisely how much you can or cannot afford to spend on a new employee. It also helps you to determine if your agency is experiencing an overall increase in the volume of work, or if it can be attributed to a specific project or time of year. 

Final Thoughts

When it comes to hiring, agencies often feel like they have to choose either explicit profit costs or the implicit costs of employee happiness. In reality, it is possible to balance the two and maximize agency profitability while protecting and enhancing employee morale. A resource management system provides irreplaceable information for agency staffing decisions that allows you to make decisions based on data, not intuition.  

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