Growing, young businesses can often make the mistake of hiring employees too early or too quickly with the hopes of increasing growth more rapidly. It can be especially difficult to offer competitive wages and benefit plans when the company isn’t bringing in enough revenue to support the increase in labor burden. Herein lies the conundrum- you want to increase revenue by expanding your team but it may be very risky to take on an increase of labor cost to meet your goals. It can be difficult to attract the right kind of employees you need to grow your business. As you start to hire and build your business, being completely transparent about the employee's full cost of employment will help that employee understand the size of the financial commitment you’re investing in them.
Before making any new hires, make sure that your team is functioning as best as they can with the resources they have. For start-ups and new businesses with smaller teams, time is your biggest commodity. Work hard. As hard as you can. Throwing more crew members on a boat that is taking on water doesn’t help you sail better- it makes you sink faster, just with more people. Do as much as you can until you have a crystal-clear idea of what is not possible without more help. Be careful not to overstate the potential benefits of hiring a new employee. Extra help may get the work done quicker but it does not always correlate to an increase in clients or interested customers. Make the hire as soon as it becomes apparent that demand is increasing enough to justify the added labor burden.
There is a lot more that goes into the true cost of labor than base salary. It’s important that your team understands exactly how much they are worth. Employees often consider the dollar amount on their paycheck as the full cost of their employment without taking health insurance, benefits, or the cost of onboarding into consideration. As business owners are fully aware, these costs add up. It’s important for employees to understand how much is being invested into them. As the employer, you are expected to provide these supplementary benefits to help retain your top talent or they’re going to move to a competitor that is able to provide what they need. Itemizing the cost of benefit plans clearly on paystubs is a great way to display exactly how much the company is investing in their work. This is an honest and transparent way to communicate the true cost of their employment and how much the company is investing in them.
Having a level of honesty and transparency between you and your employees builds trust and helps retain your top talent. Employees work for firms for financial stability and the more you’re able to instill trust and stability with them, the more they’re going to invest their talent and time into your firm. It can also become a competitive advantage between your firm and competitor firms. Top talent within your industry will start seeing your firm as a great place to work because of the level of honesty and transparency within the organization. While salary will continue to play a key role in attracting and retaining this human capital, providing a big picture view of your investment into each team members allows for a deeper understanding into your managing philosophy and shows that you value the team member’s work.
As an employer, you’ll see many direct and indirect benefits to being more open and transparent with your employees about their auxiliary costs of employment. You’ll notice a greater retention of top talent because they appreciate the transparency and have built a level of trust with you as an employee. You’ll also start to see the transparency as a competitive advantage as more employees will want to work for a firm that is open and honest with their employees.