Although layoffs at large companies like Microsoft, Salesforce, and other big name tech organizations have made headlines in recent months, small to midsize companies are still very much in a hiring mindset.
“Companies like the Microsofts of the world, they are letting go of engineers, but if you ask mid market companies, or any company which is 300 employees to 1000 employees, they are still hiring and in that growth mindset,” said Tushar Makhija, founder and chief executive officer at TeamOhana, a headcount management platform, said in an interview.
Makhija has worked closely with CFOs for several years — the executive has worked with startups since 2008 — and TeamOhana is the fourth company he has built from the ground up.
In order to avoid operational lag as a result of hiring and onboarding, finance leaders need to be meticulous when it comes to hiring budgets, according to Makhija.
The key to this, he said, is the marriage between operational reality and hiring reality.
Tracking and measuring
“The beginning of the process of balancing headcount growth with cost efficiency starts with tracking and measuring,” he said.
This comes down to not only deciding who it is that you are going to hire, but on determining exactly what all of the costs are associated with that hire.
“As soon as you onboard someone you have to know, if there's an office space, you have to give them a desk. If you buy them a computer you have to get them access to basic tools like Slack and all of that keeps adding up and that multiple is where you can really run out of money, or you can actually make an operational difference,” he said.
Between the hot labor market and current macro environment, finance leaders cannot afford to either not have sufficient staff to support growth, or not properly manage their headcount spend.
Nearly a quarter (23%) of middle market businesses — those with revenues from $10 million to $1 billion — said that the current size of the workforce remains insufficient for market conditions, and over half (57%) plan to “aggressively hire” into 2023, according to the National Center for the Middle Market’s Year End Middle Market Indicator.
“When you think about hiring budgets, you need to not just think, okay I have a budget to hire 10 people, because it matters who those 10 people are,” said Makhija, “Hiring someone in Latin America will be a different cost than hiring a different candidate in the UK,” he said.
Getting these hiring budgets right really comes down to an incredibly strong relationship between the CFO and chief human resources officer, as well as the overall health of a business, and hiring plan, cohabitating in the same system, according to Makhija.
“Once you understand the goals of your company for the year, you then start to say, ‘okay how many engineers do we need? How many salespeople?’... But then what happens is that when the real tracking and when real implementation of this plan starts happening, that decision-making sometimes moves from the CFO office to the recruiting managers, and that is where the discipline starts breaking down,” he said.
Keeping the human element in hiring
“If a company's hiring plan was, ‘I want to hire 10 people in this department or I want to hire five people in that department,’ that takes the human element out of it, and can wind up being more costly,” said Makhija.
In order to hire effectively and avoid any operational lag, finance leaders need to really understand exactly what kind of hire their organization needs, he said.
“Instead of looking at just rows in a spreadsheet, we need to start talking about, ‘okay this is our budget for hiring, do we have enough recruiters? Do we have enough managers? Do we have learning resources? What is our onboarding program looking like?’ These are the questions finance leaders should be asking themselves when creating a hiring plan,” he said.
