Adding a new employee to your payroll involves considerable expense. In human resource-intensive businesses such as interior design, salaries and other forms of compensation can make up forty percent or more of the entire expense budget. On top of that are the costs related to conducting a job search and onboarding a new hire.
That level of investment may explain why so often smaller design firms tend to hire a less experienced employee. Results of our 2023 Interior Design Business Survey show that among all interior design firms, design assistant is the second most common staffing position, after interior designer. It was the most frequently hired new position within the past 12 months.
When it comes to hiring, though, less rarely means more.
The “penny saved” fallacy
During times of economic uncertainty, it would appear prudent to minimize business expenses. However, a common misperception among many employers is that they are saving money by hiring an employee who commands a lower salary. On the surface, that might seem to be the case. But dig a bit deeper and another story emerges. In many cases, they actually are losing money.
Why should that be the case? Calculate the difference between what is saved on salary with other costs and revenue losses:
- Less experienced employees require more resources for orientation and training.
- Depending on the skills required for the position, they may take much longer to reach a level of proficiency needed to carry out their duties at the desired level.
- Their ability to take on additional duties and act independently will be more incremental.
- They will be less productive for a longer period of time.
- They require more direct supervision, taking time away from other revenue-generating duties their supervisor or manager could be performing.
- They are more likely to leave the firm sooner in search of a better position.
The experience dividend
While hiring a more experienced employee usually requires offering a higher level of compensation, the expertise and organizational skills they bring to the firm more than pay for themselves in the long run. Consider the following assets of more senior employees:
- Experienced hires require much less onboarding time, orientation and training to get up to full speed on their duties.
- They are more productive faster.
- They bring additional and complementary skills that strengthen the performance of the whole team.
- They can help the firm to expand into new markets and areas of practice.
- In the case of a design professional, they can bill at a higher hourly rate.
- Depending on their experience level, they may be able to take over some team leadership, supervising or managing responsibilities, freeing up time for the firm principal(s) or owner(s) to spend on business development and attracting new clients.
- They can train or mentor other employees.
Although not always the case, more experienced employees tend to stay with a firm longer, are highly stable and reliable, adapt well to change, and exhibit more resilience when challenges arise. This is more likely to be the case when care has been taken during the hiring process to ensure there is a good fit between the new hire, their new role and duties, and the firm’s team and work culture.
Weighing the costs and benefits
When deciding at what level to hire a new employee, examine what is driving your choice. Do you only need an individual with entry-level skills, or are you mostly concerned about how much the new hire may increase your expenses?
Clearly, if all you require is someone to perform some basic duties, such as clerical or administrative tasks, you wouldn’t need or perhaps even want to hire someone who is overqualified. In that case, the return on investment will probably be satisfactory, given your needs. Be sure to factor in extra time and resources for orientation, training and supervising.
On the other hand, if you’re thinking of hiring a design assistant to save money when you really need an interior designer, you should reconsider. Look at the bigger picture. What is it you want to achieve for your business by hiring this person? Weigh the overall benefits of hiring a more experienced individual against the less value you are likely to get from hiring a less experienced person. The more experienced individual will end up generating more revenue for the firm than what they cost in compensation—often much more.
Similarly, when outsourcing work to freelancers or service providers, engage with the most experienced, expert personnel you can. You will get a better return on your outlays.
Planning for growth
Rather than settle for a hire with less experience and skill than what you need, plan ahead for how you will absorb the cost of the additional compensation until the more experience hire is generating greater revenues. The process is similar to investing in new technology or equipment. You will recuperate the sunk cost over time. Make that part of the growth strategy of your budget.
Costs aside, hiring staff is a big responsibility. You don’t want to hire someone and then have to let them go some time later because you can’t afford to keep paying their salary. If you have properly assessed your need, identified the business opportunity, and made a good hire, that is not likely to happen. Industry and human resource consultants will tell you, the risk of under-staffing your firm and losing out on revenue is much-greater than that of over-extending and over-staffing.