6 min read

17 Smart Alternatives to Hiring New Employees

The labor market is getting competitive so here are 17 novel alternatives to hiring that can help small businesses during a labor shortage.
17 Smart Alternatives to Hiring New Employees

Having trouble finding people to work for your small business?

You’re not alone. In one survey, over 50% of small business owners identified hiring as their top challenge for 2022. Most business owners will deal with this problem by making new hires to replace old ones. However, there are other ways you can approach this problem without hiring. You can:

  1. Reduce the volume of work
  2. Improve the utilization of existing employees
  3. Improve retention of existing employees

In this post, I’m going to share 17 novel ways small businesses can serve their customers without needing to hire new people. Let’s get right to it!

Reduce the volume of work

Small business owners often think of hiring purely in terms of adding capacity to their business. One overlooked way is to reduce the amount of work you take on, which will reduce the total number of employees you need.

You can look within your existing employee pool to find additional capacity in your business and you might be able to solve your hiring issues without increasing your employee count. If you try these ideas, you might find out that you don’t actually need to hire anyone new.

1. Fire or pause unprofitable customers

Many businesses follow the principle that 20% of customers generate 80% of profits. If your business fits this description, you can look at the other 80% of customers that generate 20% of your profits and consider reducing the service they receive, or stopping to offer them your services. You’ll then free up the time your employees spend on your most valuable customers and can redirect that capacity to your areas of need.

2. Remove unprofitable products or services

Do you have employees that are spending time supporting unprofitable products or services? Consider retiring these unprofitable products from your business and you can free up the time of these employees to spend on the profitable products and services you were planning on hiring new employees to service.

3. Focus on high-margin customers or products

Another way to achieve ideas #1 and #2 is to focus on high-margin customers and products, and reduce the resources dedicated to lower-margin customers and products (rather than removing them). This will also free up the time and capacity you were looking to hire for.

4. Reduce the level of service provided

Small business owners can carefully reconsider the amount of time spent on each customer, product and service. For example, if it takes 10 employee hours to deliver a service to a customer, you can break down each segment of that service and possibly consider eliminating one of the segments.

5. Automation

Today, there are new and interesting ways to automate your business and the delivery of your products and services. Some companies are even hiring Chief Automation Officers. You can look at all of your processes and carefully determine which ones you can automate, to free up more of your employees time and reduce the need to hire new employees.

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Improve the utilization of existing employees

Next, and again before we even get on to hiring new employees, small business owners have to consider increasing the utilization of existing employees as an alternative to making new hires. By more effectively using existing employees you can free up capacity where you might otherwise have hired a new employee.

6. Measure and track utilization

Before hiring, business owners should measure and track utilization to determine their actual needs. For example, for a services business with 10 employees and 40 hour weeks, capacity is 400 hours per week. If only 200 hours of client work is being billed, you have 200 hours of space capacity in your business and should look to use existing employees better before you look to hire new ones.

7. Increase productivity of existing employees

Take a look at each employee and all the activities they need to complete to satisfy their role. Which of these could become more productive with additional training or tools? Getting existing employees to become more productive reduces hiring needs, and will also help new employees be more productive for you when they start.

8. Increase multitasking

It is important that employees have well defined roles, so they can focus on what they need to do. Oftentimes though these roles are too narrowly defined and you can find productivity gains in broadening or expanding their existing roles. For example, in a restaurant service staff can be asked to help with food preparation or cleaning pre-, during- and post-shift.

9. Optimize rostering

Effective use of your current workforce by managing the times and days they are scheduled to work can make sure customer and business needs are met, without additional employees.

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Improve retention of existing employees

The best way to approach hiring is to reduce the need to keep hiring people in the first place. This means improving employee retention. Luckily, there is a lot small business owners can do to improve employee retention.

10. Improve onboarding

It seems hard to believe but employees who have a positive first day and good joining experience, are more likely to stay longer. It’s worth investing in the onboarding journey for new employees and making sure they get off to a good start at your business.

11. Offer training opportunities

Employees value training, and employees who feel competent in their roles are more likely to be satisfied in their current roles. Thinking carefully about the training programs offered and the end-to-end development plans for employees across all roles is important for any business. Match the training to the role and the individual and you’ll have happier, more productive employees who are less likely to leave to a new challenge.

12. Collect employee feedback

It’s almost impossible to diagnose issues in your business, understand employee satisfaction and know whether you’re about to face a raft of resignations unless you actively seek feedback from employees. There are two ways to do this, employee interviews (speak with employees regularly, but try to ask a consistent set of questions) and employee surveys (set up anonymous online surveys that pulse your employees for job satisfaction ratings and general feedback). The key here is that you always make sure to action employee feedback so your people feel heard and like their voice matters.

13. Conduct exit interviews

Exit interviews are a fantastic way to collect feedback from employees who might feel a little more comfortable being honest and not hold back with the full truth. Why are we leaving? What could we have done better? What would you be looking for if you rejoined us in the future? They are such a valuable tool and you can use them to learn, and start planting the seed of a potential return someday (see Idea #20).

14. Increase pay and remuneration

Small businesses should be careful with this idea, but it is an option. There are lots of cases where pay isn’t a factor behind retention, as employees get job satisfaction in many other ways. So you might end up increasing pay, bearing the cost and not getting any benefit from increased retention. Think hard about this one and make sure you collect the information you need and do the analysis required before you make any changes, but if employees are leaving because pay is too low then it is an idea you could seriously consider.

15. Offer performance incentives

This is an alternative to increasing pay that doesn’t lock in higher costs, unless there is a corresponding increase in business performance and profits. Few small businesses use performance based incentives and it is a promising area to look into for improved retention. Another benefit, you’ll have employees who feel bought in and in for the ride with you.

16. Offer retention incentives

One really direct way to improve retention if it’s a big driver of your business, or has been really low and is becoming an issue, is to offer bonuses directly tied to retention. Whether it’s 6-month, 1-year, 5-year or longer milestone payments, these incentives can help improve retention quickly. As with everything in business, be sure to structure them properly and in line with the rules in your legal jurisdiction.

17. Build the team culture

People want to enjoy their work and have fun spending time with their colleagues, even if they have to do some hard tasks at the same time. Being intentional about creating a team culture that makes employees want to stay is a great way to improve retention.

Final thoughts

I hope you are walking away from this post with a selection of actionable ideas you can test for your business.

Truthfully, I hope for even more, that you can build and retain the right team to help your small business perform, and that all the members of your team are happy and productive in their roles.

Before you go...

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