Could over-hiring be the worst thing for a scale-up company?

Working for a start-up or scale-up is both exciting and tough. You’re building the company as you go, trying out new ways of working. It can be very rewarding but also very frustrating. The thing that keeps you going through all this frustration are the people.

In a small company, the people make the place.

So what happens when a scale-up has to scale-back?

Letting people go is never a pleasant task. All employees add something to the organization. When that person leaves, some part of the culture leaves with them. In larger organizations, because there are so many people, each individual person carry less of the burden of the culture. As one person leaves, their close friends and colleagues will notice a difference, but the wider organization will be less affected.

In a smaller company, each individual employee contributes significantly to the mood of the organization. Letting employees go in this environment can have significant negative impacts on the company.

The employees are let go take part of the culture with them, forcing the remaining team to try to pick up the pieces. The survivors of the cutbacks are nervous about their safety and role in the company. They may feel less valued than previously, and often small companies will end up with a number of voluntary redundancies along with the lay-offs.

Not only does this harm the corporate culture, but now you’re in a worse-off place than when you started, forced to once again go through the onerous task of finding and bringing in new talent.

Small companies are often hesitant to bring in independent consultants or contractors because they fear the effect that it would have on the company. Owners and hiring managers ask themselves “Would an independent consultant care as much about the company as an employee does?” and “Would a contractor imbue the same values that I want my employees to have?”.

Generally, the answer to both these questions is yes.

While a consultant may not be in it for the long run, they live on their reputation. They will fight to give you the rest result possible so that you’ll recommend them to your network (and they’ll be able to continue to work).

So the question to ask yourself at the end of the day is this: Would you risk a pandemic and mass exit of your best employees or will you bring in a project-specific consultant and keep your headcount low and your company lean?