Using Headcount as a Last Resort for Solving Problems

Have you ever noticed that a company of 25 can’t imagine how it ever functioned with only 10 people? And a group of 100 can’t fathom how it was done with 25? And 500 can’t comprehend how 100 ever worked?

Startup mode forces people to think creatively about how to divide a blizzard of work across a small team. Roles are broad, job descriptions are fungible, and utility players are valued for their versatility.

As the business scales and adds headcount, roles become more focused. Utility players pick their favorite part of the job and give the rest to new hires. Those new hires are usually specialists who are experienced at that one function.

Once that happens, getting two or three functions back under one person feels overwhelming and impossible to the people involved —?no matter how much process change, automation, or reduced volume might have occurred.

Adding headcount is one of those “one way door” decisions —?it’s possible but very painful to reverse.

The best companies constantly strive to maximize revenue per employee —?certainly by growing revenue, but also by keeping the denominator low — because that’s how you can afford elite business athletes for an increasing percentage of your roster.

Thus, once you’re at a certain scale, adding headcount to the business should always be your last resort. Before hiring, ask yourself these questions.

• Is this a problem, or a friction to be tolerated? Some problems are not worth solving, because the solution will cost more than the problem itself. If this is true, stop calling it a problem, and embrace it as a point of friction that you intend to accept.
• Can you solve this problem with software? If it’s worth solving, you should first do everything in your power to automate it away, or make it a minuscule amount of work, by finding a way to solve it with software. Buying an off-the-shelf solution is almost always the cheapest way to do this. Alternatively, you can explore no-code or low-code process automation tools.
• Can you outsource the solution to a third party? Even if the problem requires human intervention and might require 40+ hours per week, you should strongly consider outsourcing the solution to a third-party firm. An outsourced solution can be changed, terminated, or restructured with relative flexibility. All the arguments against this approach can typically be solved with SLAs, performance guarantees, or built-in redundancy.
• Can you use contractors instead of employees? If the problem requires human intervention with a greater level of control than a third-party firm can offer, you should consider hiring a contract worker who works remotely from your core operations. That could allow you to shrink or expand the scale of the operation without affecting culture, morale, or the size of your office.

If all these approaches fall short, that’s when you should consider hiring a new employee — while recognizing that with each new hire, you are making your organization just a little bit harder to run.