How Can We Get Senior Management to OK New Positions?

By Staff Report

Jul. 14, 2015

Dear Out of Ideas,

When it comes to increased spending, winning over management is always a challenge, but you tip the odds to your favor when you methodically demonstrate that greater company profitability is the end result. I’m not enough of a cynic to say that the only thing management cares about is the bottom line, but it helps to speak to decision-makers in language they can understand and to provide them with quantifiable data they can use. Remember, they may later have to lobby on your behalf to higher-ups, so make it easy for them to do.

The first step in proving financial return is assigning dollar values per an appropriate calendar period to the benefits you expect to receive by adding this position. You must determine the period of time most appropriate for your situation — usually a month, a quarter or a year — and include specific numerical answers that address:

  • What is the anticipated revenue to be generated per the calendar period as a direct result of making this new hire?
  • How will productivity, customer service and overall quality improve, and what is the value of those improvements per the specified period?
  • How much money will the new hire save the company in terms of increased efficiency per the calendar period?

The sum of these figures gives you the value your company will gain by adding this position.

Now contrast that value with the expenses the company will incur by adding the position. The following formulas are useful in determining actual dollar values for expenses associated with new hires:

  • Administrative Expenses = Costs associated with advertising the new position + (the number of hours anticipated to recruit and screen applicants X the hourly compensation of all the individuals involved in the process).
  • Travel Expenses = (Travel costs + Meals/Lodging) X the number of candidates you expect to bring in for interviews.
  • Interview Expenses = (Number of interviewers X interview hours) X average hourly compensation of the interviewers.
  • Relocation Expenses = Cost of moving employee and family.
  • Training Expenses = Number of hours the new person will spend in training X that person’s hourly compensation.
  • Lost Productivity Expenses = Weekly compensation, including benefits for this new position X number of weeks you expect it to take to recruit and hire the new employee.

The sum of these six expenses — administrative, travel, interviews, relocation, training and lost productivity — equals your expense of hiring. Add the expense of hiring to the annual compensation for the new position to get your initial investment. Then, compare the initial investment with the value your company will gain to determine the overall financial impact and benefit of adding the new position. Good luck!

SOURCE: Debby Millhouse, Xcentri, Charlotte, North Carolina, June 20, 2015.

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