I thought that most of my readers were inside large-ish organizations, where they had people to worry about the budget for them. But it appears that some of you are owners of or work for smaller (generally consulting) organizations, where you (lucky you!) make the decision about when to hire another person.
There are two major components to the decision to hire another person:
- Remember that everyone's productivity decreases when you add a person into the organization.
- You need to add in your overhead costs to salary (the overhead costs are a little less with a contractor).
Here's a graphic that shows the time it takes someone to come up to speed and how long it generally takes.
When people in the organization start interviewing, their productivity goes down, and when the new person starts (at week 10), productivity drops dramatically. (That's why I recommend a buddy for a new person, so only one other person is affected for the first month.) Then, slowly, overall productivity starts to rise. About 6 months after the new hire starts, productivity is back up to where you were. And, about a year after the person is hired, productivity is up to where you wanted it to be. As far as I can tell, it takes a minimum of 6 months for a person to be completely integrated and totally useful in an organization. For some products and organizations, it takes a year. The smaller the organization, the more effective the person can be sooner.
This happens every time you add a new person, which is why I prefer to hire people in clumps rather than spreading them out, especially if you have seasonal or inconsistent periods of work. Hire people in the downtime, and they'll be up to speed by the time you need them.
Overhead costs are the costs of outfitting a person to work with you. If you hire a contractor, you have less salary to pay (for taxes and it's not an ongoing promise of work they way a salaried employee is).
It's always a tradeoff: when to hire to obtain more work hours in the week, how to manage the hit to current productivity, and how much to pay. Only you can know the risks and rewards of when to hire. The smaller the company, the higher the risk and the reward.