Saturday, April 26, 2008

Balancing Hiring Needs with Growth.

We are a start-up and we don’t have a brand.We want to expand by hiring more, but human resource consultants are expensive. In some cases, they charge more than the hiree’s one month salary as commission.We can’t afford this. How do we go about hiring good talent without spending too much that can strain our meagre resources.

The second question is how do we motivate existing employees when we hire more. As the staff strength grows, they start feeling neglected and begin to leave for bigger brands.

How do we deal with this?

On the first question, it is a very tricky area. If the entrepreneur’s need is special and he has no network to feed in the talent required, then it is imperative to have an HR search firm working for him. What you could do in this case is try and negotiate with the consultants. For example, enter into a longer-term contract with them saying you would hire more people down the line and have an exclusivity contract with them. May be this would get you a better deal in terms of cost-to-the-company. You could also make contingent arrangements wherein the fee would depend on the calibre and quality of the talent supplied. The industry norm is that these consultants charge a certain percentage of salary that the hiree gets. Negotiation is the best way out of this dilemma. Search consultants are like real estate agents. They get paid if they find you the right asset. So you can base their fee on the value of the asset they find you.

The second problem is pretty typical. Today, every entrepreneur in India faces such a problem. There is no easy answer to it, but there are multiple ways to address the problem. The norm for most companies is to pay the market rate or not get talent at all. You could tap into your existing people and not look outside and train them to do any new task that may have come up. But if you look outside, you have to accept that internal inequity is always possible. The decision is solely yours. Before hiring, also ask is it a long term need or a short term need? If it is short term, do not risk inequity. Hire part-time consultants to carry out the new responsibility. If it is a long term need, then you have to figure out who are the right guys for the job, internal or external. If you realise that the choice is an external skill set, then you have to shift to risk mitigation. Communicate the value of the new hire to your existing employees. Poor communication with the employees brings in inequity. Talk to employees about the need to hire from outside. What additional value the new person brings to the company and why is it fair to pay a higher remuneration to the new person. When you do that, you have built support for the new hire. And as is the case with most employees, they are rational people. They will understand the situation. There may be cases when your existing employees also want to be part of the new responsibility. Get them to shadow this new guy and learn from him. And when future opportunities arise, try them out. Lastly, the only thing people resent is when they feel they’re being taken advantage of. Don’t ever be unfair to your existing people.

RAJAN SRIKANTH, Asia head of Mercer Human Resource Consulting

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