When to Hire In-House and When to Outstaff
Sometimes the big decisions in business don’t have to be hard ones. In this post, we’ll walk you through the factors that will help you get clear answers on how to expand your team’s capacity.
People are the fuel that drives companies forward, but growth doesn’t necessarily depend on increasing your headcount. Before you decide whether to fill a role in-house or hire external help, you should pause to consider where your company is at and where you need to go.
The first question to ask is, how does the role fit into your overarching business objectives?
Every role within your company should help solve a problem that relates to your objectives. Distinguishing how urgent these problems are can help you prioritize which roles require outside help, and which should be filled in-house.
Next, consider the stage that your company is at. Compared to established businesses, young startups need to use resources efficiently, but companies big and small face their own hiring challenges at any given time.
No matter what stage you’re at, knowing and understanding your core competencies is key to making smart hiring moves. Core competencies are the areas of your business that give you a competitive advantage; they’re where you really shine.
The chart below outlines how we think about these factors — problem priority level, company stage and existing core competencies — together, in order to help companies make smart, timely hiring decisions.
In the top left quadrant, we have large scale companies and low-urgency problems. Here, an organization understands the problem at hand, and has the time and resources to hire a competent full-time employee to tackle it.
Next we have large scale companies with high-urgency problems. An organization may not understand how to solve the problem, but it does have the resources to solve it. In these cases, we typically recommend hiring outside help (consultants) to create a strategy, then eventually bringing on full-time employees to execute once a plan is established.
In the bottom left quadrant, you have small scale companies with low urgency problems. Here, outside help is needed to fill a resource gap. The consultant’s role is less strategic, more functional: they can execute tasks — typically at a lower cost than a full-time employee — to help get the company to the next level.
Finally, we have small scale companies with high urgency problems. This is where dialing in your core competencies is most important. If the problem falls within a company’s existing area of expertise, its best to hire in-house, but if not, a consultant is usually best suited to solve the problem quickly, and solve it well.
Let’s look at an example.
L'Oreal has traditionally had core competencies in branding, marketing, distribution and product development, but not technology. So why would they have recently hired a CIO?
It could be that they're aiming to use technology in new and innovative ways, such as developing more personalized customer communications, messaging and targeting. This could mean that their business goals have evolved, meaning what was once a lower priority might now provide a competitive advantage: the ability to personalize their marketing through technology.
When it all boils down, there are two types of situations where outside consultants are ideal.
There are times when you know how to get where you’re going, but you need an extra set of arms to keep the boat moving forward. In a competitive talent market, it can take time to build out areas of core competency with the right hires… hiring externally is the most efficient way to to fill talent gaps, even if its only temporary.
Then there are situations where you know you have a problem, but your organization doesn’t have the expertise to solve it. Consultants can provide the strategic guidance you need to get over hurdles that would take you much longer to solve on your own, and they may even be able to manage entire functions of your business for the long run.
Say you’re a brand-driven company, meaning that your growth is led by your brand position. Given the resources, you’ll probably want to hire someone in-house to manage your brand. That person has an important role to play: ensuring that your brand is strong and consistent, guiding the marketing team… giving you a competitive edge.
Meanwhile, you might hire consultants externally to handle your finances, or even develop key assets for your business, like a mobile app, or a customer service capability. Instead of trying to do everything, your team can focus on doing what they do best, and your organization can direct more resources toward hiring the best within its core competency areas.
Over time, if it becomes critical to your company goals, you might bring mobile development in-house, while continuing to outsource other work to experts outside of your company. The key is to know what you need to accomplish in order to move closer to your goals, before you decide who you need to get there.
If you have a tough problem, our team can help you map out the right resources to solve it, whether that means outstaffing or bringing on your next full-time employee. Let’s get planning.
Special thanks to Clint Dunn for his contributions to this piece.