Is it time to hire more people?

Years ago, a new line of business caused me to staff up the small call center I was running in anticipation of a spike in customer calls. The new business tanked and the calls never materialized but I kept my team busy with 'make work' projects while we waited for our fortunes to change. After weeks of waiting, I came to work one Friday and our President told me I needed to cut my team in half by the end of the day to help ward off a cash flow crisis.

Many companies faced similar challenges in 2008 and 2009 and now they may be reluctant to add new employees despite signs that business is picking up. My own experience was painful, but I learned a valuable lesson about staffing that I'd like to share.

The hidden cost of high productivity

There may be a hidden cost to growing productivity by delaying staffing increases. Customer service can suffer in customer-facing positions if you don't have enough people to handle your volume. Product quality can decline if your people are moving so fast to deliver your product or service that they don't take care to do it right. Whatever your people are doing, there is a limit to how much they can do.

How do you balance cost versus quality? Compare your employees' output against how much you are spending on them. This can vary quite a lot in the short-term, creating a curve that looks a bit like a roller-coaster. You can control costs AND improve quality if you look for ways to smooth out the curve.

Here's an example from a real client who had customer-facing employees. Points below the lower red line indicate poor productivity. Points above the higher red line indiciate productivity may have come at the expense of poor service. (We don't know if service really suffered, but it's a sign we should investigate.)

Does this business need to add employees? One graph doesn't provide all the answers, but it does suggest my client should start recruiting and interviewing candidates so he can immediately increasing staff if this trend continues.

Is it time for you to add employees? Or, do you still have too many? Perhaps you don't even know how to measure your employees' output to create this type of graph in the first place?! Feel free to drop me a line at I'd be happy to help you take a look.