Should I hire another person? 5

[milkshakelake]

I have a small structural engineering firm with 6 people including myself. I'm at a crossroads of deciding whether to hire another person or not. I've been mulling this over for months.

Reasons to hire:
-We have more work than we can handle
-Cannot deliver projects on time, therefore I can't focus on being the go-to firm in my area
-It will help me focus on getting more projects and/or streamlining the production

Reasons not to hire:
-I believe a depression like we haven't seen since 1930's is coming, and things will go extremely downhill. I don't want to just hire people and then fire them. It's someone's livelihood and career I'd be betting with.
-The reason I feel like the market is going to crash is because we're due for one, based on history. Plus there was so much money during Covid, huge inflation now, lots of people living on government assistance instead of working, and there will not be enough investors to keep my business going with 7 people. Interest rates are going up, reducing people's ability to build.

 

[SWComposites]

Well, if the big crash comes, you will likely be laying off more than the 7th person, so why not get the person now to help with the current work, and deal with the future issues later.

 

[AgMechEngr]

You could do a fixed term contract. Pump up the pay because you will not offer benefits. Possibly even offer a remote position to open up your pool of candidates.

 

[MotorCity]

Your reasons not to hire are pure speculation. Your reasons to hire are what your clients care about: getting quality documents on time. If you cannot meet your client's expectations, you may end up laying off instead of hiring.

 

[skeletron]

What about hiring part-time or on a project-to-project contract? Not necessarily a new grad, maybe someone with more training and the ability to step in with some experience.

 

[SwinnyGG]

Hiring good staff and maintaining your firm's reputation is the only chance you will have to survive a downturn if one comes.

We're already in a recession, by the way. And you still have more work than you can execute.

 

[milkshakelake]

@SWComposites I'd rather lay off 1 or 2 people than 2 or 3 people though. Plus, there's a minimum 3 month training period. (I like your username by the way.)

@AgMechEngr I thought about that, but it doesn't quite work because I have a 3 month training period with videos, mentoring, etc. My firm has strict standards so it's hard to even do remote positions. This type of training has been working pretty well so far; I can do more stuff with like 60% of the staff of other firms in my area.

@MotorCity Agreed, though I'd say it's informed speculation, not pure speculation. It's a good point that the reasons to hire are client focused.

@skeletron It doesn't really work with my operational model, which has 3 months of intense training. Like many firms, we have in-house tools and standards that take time to get used to, but produce fast results when they get used to it. Thanks for the idea though, it's one I've been thinking about.

@SwinnyGG Agreed, I do need to focus on reputation. Do you think the recession will get worse?

 

[phamENG]

Reasons to hire:
-We have more work than we can handle
-Cannot deliver projects on time, therefore I can't focus on being the go-to firm in my area
-It will help me focus on getting more projects and/or streamlining the production

These are solvable problems without hiring, but you have to take less work. Strategically select those clients who will continue to give you enough good work to keep your people busy and your business profitable. Ensure it's a diversified list - never know if you made a mistake or if one of your subordinates says the wrong thing an email. Downside to this, of course, is going to be the potential loss of profit.

Reasons not to hire:
-I believe a depression like we haven't seen since 1930's is coming, and things will go extremely downhill. I don't want to just hire people and then fire them. It's someone's livelihood and career I'd be betting with.
-The reason I feel like the market is going to crash is because we're due for one, based on history. Plus there was so much money during Covid, huge inflation now, lots of people living on government assistance instead of working, and there will not be enough investors to keep my business going with 7 people. Interest rates are going up, reducing people's ability to build.

Based on what data? Sure, it'll turn down, (by some metrics it already has, but economic metrics and day to day economic activity aren't always the same thing), but there's nothing suggesting a Great Depression style event. After all, that was caused by an unregulated stock market dominated by over leveraged stock purchases and market manipulation. Once the charade caught up with the players, the house of cards collapsed. Pretty sure that's not where we are now, nor is there some crazy bubble expanding in the middle of the economy to blow it all up like it did in 2008. And sure, some people went on government assistance instead of working, but the vast majority went on it because they couldn't work - facilities shut down, quarantines, etc. When my wife's department at the hospital was converted to a temporary ICU she got laid off. We got the $600/week for her since every other hospital also turned her department into ICU beds. It was nice to have - if somebody was slow on paying me in the first few months of my business it didn't keep me up at night. But living on that? Ha. It can be done, but not easily or comfortably. The idea that so many people quit their jobs to live at or below the poverty line on handouts while also ramping up consumer spending well above pre-pandemic levels within 1 year is an interesting paradox. Besides - the extra assistance programs have been over for months.

The trick is to be flexible and adaptable. If all you know how to do is design skyscrapers....you're eff'd in a turn down. But there is always a demand for our services at some level. Buildings will still need to be maintained/repaired, modified to suit peoples needs, etc. Government and institutional spending will often decrease to account for dips in tax revenues, but will rarely evaporate entirely. In a depression/recession there are a lot of paper losses (which are real losses for those who depend on payouts from their investment accounts), but the underlying wealth tends to remain. Those who hold it will use those times to try to make what money can be made and to position themselves to be on top when things come back. The trick is to figure out what clients you have that are spending that money or are connected to those expenditures and focus there.

So I say hire. Be smart about it. Share your concerns with your employees and let them know what the company's plans are for a big economic disruption. They are responsible for their own contingency planning. As long as you're frank with them about what could bring you to laying them off so they can prepare for it, I see no additional moral obligation as an employer.

 

[SwinnyGG]

Agreed, I do need to focus on reputation. Do you think the recession will get worse?

Maybe, but the economy isn't going to tank and put 100 million people on a bread line in the next three months. The fact that you have a 3 month training period is, in my opinion, not germane to the question at all.

In my opinion we're at a low, and while there will be some bumps I think the general trend is going to be upward over the next few years as society and the economy settle back to equilibrium after covid. Everyone is entitled to their own opinion, but in my view thinking that we are going to experience a true 'great depression' anywhere in the near future is alarmist at best.

 

[CWB1]

Is making up for some/all of the manpower shortage possible via overtime? I know many companies won't pay salaried employees OT but I'd encourage it, and despite the loud objections that usually come with the mention of OT/additional-OT, many folks will happily take any opportunity for extra income.

My other thought on the matter is simple - hire and fire as it makes sense for the business. Anybody that has been around more than a minute plans for and has lived through the business cycle. Unemployment is wickedly high atm, esp among engineers due to the last two years' economic downturn so you shouldn't lack applicants. Moreover, its also better for them to briefly have a job/paycheck than none at all. I dont believe we will get to a 1930s economy but another 2008'ish event is very probable, so do plan for the contingency but dont let it cost you anything today.

 

[phamENG]

Unemployment is wickedly high atm, esp among engineers due to the last two years' economic downturn so you shouldn't lack applicants.

Not so much in structural engineering. The last 2 years have been busier than any in the last 10. I don't know of anyone who has had much luck finding people. There were a few who shifted between firms at the beginning of the so-called "great resignation"....but most have settled and nobody can find anyone outside of new grads in May (and the odd off cycle grad in August or December, maybe). There are at least 25 job openings for structural engineers in my area, many of which have been open for several months. Most of the consulting firms can't hire anyone, and those they can find are asking to be paid what the principals are making with exactly zero real experience.

 

[skeletron]

I would take the leap and hire someone. If you are that busy and want to grow, then do it. If you have an intense 3-month training period, then the only thing you're losing now is time. Just find the right person and at least start the search now. I think this also betters the profession (in a global sense) because whether you have to lay this person off in 3 months, 3 years, or pay their pension in 30 years, at least they will have a growth in their own knowledge from the work experience and training.

 

[NorthCivil]

if you're too busy, why not just raise your prices / increase your charges. That will effectively just fire your worst clients. problem solved.

by being too busy, you might unwittingly be getting fired quietly by your good clients, who are willing to pay for good service.

 

[verymadmac]

To flip it on its head. If you are too busy to be marketing your company when facing a market downturn, you are in trouble. One of my old bosses pearls of wisdom was when you are to busy to market your company that's when you need it the most otherwise the customers will go else were, and on your forecast that would magnify the effects of a down turn.

 

[structuralsteelhead]

Tough market in my opinion/agreeing with phamENG,....market pool of US grads not what it used to be. Everyone going into programing. New grads want nearly what I'm paying myself after all the bills are paid. Who am I kidding, they want more than I'm paying myself. But when growing,...that's what may be required in the short term, and don't expect to make a profit off of any new/entry level employee for at least a year, even with a master's degree,...unless they've got great internship experience. But this you know if you've already built your shop to 6, good for you, you're making some right decisions and taking some leaps of faith that have turned out well. Don't lose momentum, any employment contract an at will agreement and hopefully you/your hire will both benefit in the long term. You're doing better than me,...still wearing most every hat!

 

[RacknRoll]

What positions are you looking for? Is it possible to reorganize the firm so engineers are doing more engineering work and less drafting or inspection-level work? (Not knowing your business it may be that you're already doing this). This may allow you to focus your hiring on non-engineers, perhaps broadening the pool of candidates.

 

[milkshakelake]

Everyone, thanks for the responses. I've been battling some health problems but now I'm back into high gear.

After reading everything, I decided to hire another person if my current rate of work keeps up. I might not need to. This problem is sorting itself out because the dreaded recession is starting to hit and a lot of my clients (especially architects) are running out of work themselves. So I might soon reach a level where I'm not overloaded, and maybe even a case where I have to fire someone (hopefully not).

@phamENG Thanks for the detailed response. You're probably right that it won't be a depression, just a regular recession that comes every 10 years or so. I like what you said about being flexible. I do plan to get into more design-adjacent stuff like inspections and break into some new industries like government work, so that will keep me diversified enough through the recession and position me well when the economy roars back.

@CWB1 You're right, I should hire and fire as needed. No need to overthink it.

@NorthCivil That's a tough one. I'm priced high already compared to competitors, and any higher would price myself out of the market. Thanks for the suggestion though, it makes sense.

@verymadmac Agreed, I'm starting up the marketing machine now. Planning to visit every architect, developer, and expeditor that I can. Will do networking events, presentations, etc.

@structuralsteelhead I can start making money off a new grad after 3 months of training. The training is kind of an upfront investment. I tried the other way, training them over a year, but they keep asking tons of questions and disrupting others' flow. For me, it's better to get that out of the way at the beginning and minimize their questions. Thanks for your input and good luck with your business! It's good to wear every hat at least once, even with things like accounting.

@RacknRoll I've separated the drafting and engineering work as much as possible, so I can get a lot done with another drafter. I might need it if the recession doesn't get worse.

 

[SteelPE]

This problem is sorting itself out because the dreaded recession is starting to hit and a lot of my clients (especially architects) are running out of work themselves.

This is a bit worrisome. I am thinking the same thing here. Back in June I was swamped with work and I had clients calling me about all these large projects that they wanted to complete.... a lot of which was new warehouses. Now, with Amazon rethinking their rapid expansions it seems like my clients are seeing them pull back and they are putting their projects on hold too. It's still too early to tell anything about 2023, but I am not overly hopeful.

 

[JStructsteel]

Can you incentivize the current employees, and I mean really make it worth their while to work overtime more? Might cut into your bottom line, but it would get things out the door and not hurt your reputation.

Can you sub work out to another firm?

 

[milkshakelake]

It's still too early to tell anything about 2023, but I am not overly hopeful.

Unfortunately, it's impossible to predict the future. The best I can do is read things like the Economist and Wall Street Journal. My tentative conclusion is that this is a recession like any other, which comes every 10 years, and it will happen. So I'll plan that way. The good thing is that there's not really any major downside to preparing for one, whereas there's a huge cost for not doing so.

Can you incentivize the current employees, and I mean really make it worth their while to work overtime more?

My team just doesn't want to work extra hours at the same rate. Maybe I'll look into 50% extra time, that could work as a temporary solution. In the meantime, while the work continues to lessen, I wouldn't have to fire anyone. About subbing out, I tried that before and there are all kinds of quality control issues. Things like different engineering/drafting standards and ways of doing things, and it becomes a lot of back and forth to resolve the issues.