Overhiring is a problem that might not be top of mind right now. After all, most employers are facing the opposite: being understaffed. But overnight, your business could undergo a perfect storm of money rolling in either from funding or a sudden sales bump and being “the” place to work thanks to your product or brand’s coolness factor or culture. In this market, the opportunity could present itself to hire, hire, hire. But just as suddenly, overhiring can lead to disaster.
The business world isn’t lacking in recent examples.
“We…got ahead of ourselves on hiring,” Glossier Inc. Founder and CEO Emily Weiss admitted as the company laid off about one-third of its corporate workforce in January 2022. Peloton was in the same boat by February, laying off 20% of its workforce.
There are dozens of ways organizations can find themselves in an overhiring situation. Some can’t be predicted, but others can (by following a few hiring best practices). See if the following resonate with your organization.
- You’re losing business focus. Weiss admits that this is where Glossier fell short. “Over the past two years, we prioritized certain strategic projects that distracted us from the laser-focus we needed to have on our core business: scaling our beauty brand,” she says. The layoffs were mainly among the tech team, and Weiss noted that as the brand shifts its tech strategy, it will include external partners over direct hires to better scale resources. Eliminating this hurdle starts with business strategy and reviewing that strategy—including hiring tied to core business objectives—at least yearly.
- Outside forces are taking over. The pandemic caused unpredictable consumer behavior, giving some businesses a sudden boost in business. This was Peloton’s saving grace…and apparent curse. What happened? We like this explanation from The Business of Business: “Peloton’s first mistake was simply being short-sighted and growing too fast. As sales skyrocketed during the COVID-19 lockdowns, executives at the company ramped up production, rolled out anill-fated treadmill and went on a hiring spree in California and New York. Amidst this expansion, the company didn’t seem to recognize that it might hit a wall in demand.” No doubt supply shortage costs didn’t help. Neither did a few PR strikes. And a return to the gym for the remaining consumer holdouts seemed to be the last straw. Again, business strategy played a huge role in this overhiring scenario. Peloton could not have predicted every hit it took, but it could have had a contingency in place for much of it.
- You need to refocus on quality over quantity when hiring. We asked several of our HT Group directors for tips on avoiding overhiring, and each came back with a version of this statement. “You need to think about where candidates can crossover from a functional skillset perspective to retain top talent even when times are tough,” advises Dave Benjamin, Practice Director of The HT Group Professional Services. Paul McGaughan, Practice Director of The HT Group Technical Recruiting, adds, “Each role you hire should be clearly defined with performance goals and a career path. In the event of overhiring, a cross-training plan needs to be in place to safeguard employees leaving due to lack of structure or being forced out because their one purpose for being there faded away.”
- You need to rely on contingency staffing for everything else. “When that long-term career path isn’t obvious, or there’s a need for a huge headcount increase that may be seasonal, unpredictable, or outside the core business strategy, that’s when contingency staffing makes the most sense,” says Stephanie Grubbs, Regional Managing Director of The HT Group General Staffing Division. “Using temporary staffing for sudden or seasonal rushes can help you fill your needs while your organization stays lean. Likewise, contract and temp-to-hire arrangements can help you ‘feel out’ unpredicted growth spurts. Essentially, these contingency workers are there to help you meet demand while you figure out the sustainability of the growth and how the cause of the growth fits (or not) into your core business.”
The HT Group’s Strategy on a Page (SoaP) workshop is a great first step in realigning your business strategy with hiring and other critical business functions. Then, bring in The HT Group recruiters to help you determine how to ramp up without creating an overhiring disaster.