How to Make an Effective Hiring Decision

Before bringing someone into your business, it’s essential to evaluate whether hiring is truly the right move. A wrong hire can lead to unnecessary costs, inefficiency, and long-term operational issues. The average business is estimated to pay out between 1.5 and 4 times an employee's annual salary when they make a hiring-related mistake. 

Fortunately, this guide is here to help. We suggest using the points below as a practical guide to assess your readiness to hire and navigate the decision-making process.

Assess Business Readiness

First, determine whether your business is genuinely ready for a new team member and whether the workload justifies the role. Many startups believe they need to expand their teams immediately before they have evidence of significant customer demand. Hiring is sometimes more wishful thinking than it is a reflection of the business’s current status.

Confirm Budget Availability 

Second, you should ensure you can afford the full cost of employment. This includes:

• The base salary

• Tax payable

• Additional benefits (such a health insurance or gym memberships)

• Training

• The ongoing overheads of the employee

Usually, the sum of these costs is around double to the actual base salary. Therefore, the new hire must be expected to bring in at least twice their annual income.

Evaluate Utilisation

Next, think in more detail about utilisation. Can you use this person efficiently and consistently in your business? A large business can afford to have the average employee working less than four hours a day, but startups and SMBs can’t.

Check they won’t have long periods with insufficient tasks. If that’s a risk, consider hiring them fractionally (check out “Consider Alternatives” section).

Define What to Delegate

After that, decide what you want to delegate to them. Clearly identify the tasks, responsibilities, and outcomes you want this hire to take over. Do everything you can to keep this unambiguous. When you hire someone new, their value comes from knowing exactly what they need to do for you.

Consider Alternatives

Before committing to a full-time employee, explore purchasing the service temporarily. Consider using freelancers, contractors, or agencies for a period of time. These latter options are often significantly more affordable and flexible, especially for growing businesses that are unsure of their staffing requirements. For example, you could get freelancers to do your marketing temporarily before deciding to bring the department in-house.

Interview and Decision Process

During the hiring process, plan structured interviews. Use these and submitted CVs to shortlist the right candidates. Then, compare skill levels, and ensure the final decision is based on capability, fit, and business needs. Don’t allow anyone into the firm who could disrupt your hard-won culture.

HR Compliance for First Hire

Finally, when making your first hire, consult with an HR professional to ensure all legal and compliance requirements are correctly handled. These include things like:

• The right of the candidate to work in the UK

• A proper employment contract (necessary for formal roles)

• A payroll system that connects to HMRC

• Employer pension obligations

• Employee records

Don’t skip this step; this step is vital for your business.