MBA2281 Q&A Wednesday: Is it better to hire full time or part time employees? - The $100 MBA Show

Summary

Summary of "The $100 MBA Show" Episode MBA2281: Is it Better to Hire Full-Time or Part-Time Employees?

Podcast Information:

Title: The $100 MBA Show
Host/Author: Omar Zenhom
Episode: MBA2281 Q&A Wednesday: Is it better to hire full time or part time employees?
Release Date: April 5, 2023
Description: Awarded Best of Apple Podcasts, The $100 MBA Show delivers practical business lessons for the real world. These no-fluff episodes are packed with pure business-building training from Omar Zenhom, who shares insights from over 20 years of entrepreneurship and successfully bootstrapped multiple businesses.

Introduction

In Episode MBA2281 of The $100 MBA Show, host Omar Zenhom addresses a common and critical question faced by growing businesses: "Is it better to hire full-time or part-time employees?" This episode, categorized under the "Q&A Wednesday" segment, delves deep into the strategic considerations entrepreneurs must weigh when expanding their teams.

Listener's Question

Timestamp [00:00]: Omar begins by welcoming listeners and introducing the episode's format. He presents the question submitted by Paul:

“I have a budget to make some hires. I can either hire three or four part-time employees or one or two full-time employees. My business is scaling up and I want to meet demand, but I'm not sure if it's better to make part-time hires or full-time hires. On one side, I can hire several people to do different things with part-time hires, but full-time hires seem to be more committed. Would love your advice on this topic. Thanks so much for everything you do.”

Omar’s Analysis and Insights

Evaluating Return on Investment

Timestamp [02:30]: Omar emphasizes that the decision between hiring part-time or full-time should pivot on the return on investment (ROI) each option presents. He suggests assessing how each hiring choice aligns with the business's growth, customer acquisition, and revenue generation.

“What you’re trying to do here is maximize your return on investment. If you’re going to put X amount of dollars, how many dollars will I get back and how long will it take?"

By hiring multiple part-time employees, businesses can cover diverse roles, potentially accelerating growth and achieving ROI more swiftly. Conversely, hiring fewer full-time employees might mean deeper commitment but could delay substantial returns.

Velocity and Momentum in Business

Timestamp [04:10]: Omar introduces the concept of velocity in business operations. He likens the business to a flywheel, where speed and momentum can significantly impact growth.

“Your business is like a flywheel. You want this flywheel running as fast as possible, especially in the beginning, to get your momentum and traction and get you growing.”

Faster ROI through multiple part-time hires allows for quicker reinvestment, fostering continuous growth and compounding gains.

Quality vs. Employment Type

Timestamp [06:00]: Challenging the notion that full-time employees are inherently more committed, Omar points out that commitment and quality are individual traits, not dictated by employment status.

“The quality of your hires has nothing to do with if they're part-time or full-time. I’ve had brilliant full-time workers. I’ve also had part-time workers that have done an incredible job.”

He underscores the importance of rigorous recruitment to identify individuals who align with the company’s goals and standards, regardless of their employment type.

Part-Time Hires as a Testing Ground

Timestamp [07:45]: Omar advises that part-time hiring can serve as a strategic tool for businesses, especially those new to recruitment. It offers a low-risk avenue to evaluate talent and fit before committing to full-time positions.

“If you’re not great at recruitment, it’s better for you to make part-time hires, test the waters, see it as a probation period, see it as a way for them to prove their mettle with a few projects.”

This approach mitigates financial risk and allows businesses to adapt staffing based on performance and evolving needs.

Key Takeaways

Maximize ROI: Evaluate hiring options based on the potential return and the speed at which it can be realized.
Business Velocity: Accelerated growth through multiple hires can create momentum, essential for scaling.
Quality Over Quantity: The effectiveness of hires depends more on individual commitment and skills than on their full-time or part-time status.
Strategic Recruitment: Utilizing part-time hires as a trial phase can enhance recruitment effectiveness and reduce risk.
Adaptability: Flexibility in hiring allows businesses to respond dynamically to scaling demands and market changes.

Conclusion

Omar concludes by commending Paul for his resourcefulness and strategic thinking. He reiterates the importance of smart financial management, emphasizing that investments in talent should facilitate business growth and reinvestment cycles.

“You need to rely on other smart, brilliant, talented people to take things to the next level, to build something bigger than myself.” — Omar Zenhom

This episode serves as a valuable guide for entrepreneurs navigating the complexities of team expansion, balancing commitment, resource allocation, and strategic growth.

Notable Quotes

Omar Zenhom [02:50]: “What you’re trying to do here is maximize your return on investment. If you’re going to put X amount of dollars, how many dollars will I get back and how long will it take?”
Omar Zenhom [04:10]: “Your business is like a flywheel. You want this flywheel running as fast as possible, especially in the beginning, to get your momentum and traction and get you growing.”
Omar Zenhom [06:00]: “The quality of your hires has nothing to do with if they're part-time or full-time. I’ve had brilliant full-time workers. I’ve also had part-time workers that have done an incredible job.”
Omar Zenhom [07:45]: “If you’re not great at recruitment, it’s better for you to make part-time hires, test the waters, see it as a probation period, see it as a way for them to prove their mettle with a few projects.”
Omar Zenhom [Conclusion]: “You need to rely on other smart, brilliant, talented people to take things to the next level, to build something bigger than myself.”

Final Thoughts

Episode MBA2281 of The $100 MBA Show offers nuanced insights into hiring strategies, advocating for a balanced approach that prioritizes ROI, quality, and strategic growth. Omar Zenhom’s expertise provides entrepreneurs with actionable advice to make informed staffing decisions that align with their business objectives.

For more episodes and business lessons, visit 100mba.net.

Transcript

Omar Zenhom (0:00)

Foreign hey, welcome to the $100 MBA show. The place to be to build a business you want every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Q and A Wednesday. On Q and A Wednesdays we answer a question. One of you, one of our listeners. If you got a question you want to ask, go ahead and email me over@omar00mba.net Today's question is from Paul and Paul asks, hey Omar, I have a budget to make some hires. I can either hire three or four part time hires or one or two full time hires. My business is scaling up and I want to meet demand, but I'm not sure if it's better to make part time hires or full time hires. On one side I can hire several people to do different things with a part time hire, but full time hires seem to be more committed. Would love your advice on this topic. Thanks so much for everything you do Paul. Paul, thanks so much for the question. I really like this one because every business owner is going to have to make this choice, especially in the beginning and as they start scaling their business. I've made this choice several times. I still make this choice and the points you bring up are are valid. But I'm going to offer a different way to look at this, a different way to evaluate which choice you should make. It has less to do with the pros and cons and more to do with what you're going to get in return. So let's get into it. Let's get down to business. So Paul asks in today's Q and A Wednesday, is it better to make part time hires or full time hires? He's got a budget. He can hire more people to do more things if they're part time, but if they're full time, he may not be able to make as many hires, one or two hires maximum. And yes, there are pros and cons to both of these and Paul alluded to them when he asked the question and it's true. I do feel that full time hires tend to be more committed. Now I don't want to say this is a fast and hard rule because I've had part time hires or part time team members that work hard, that do a great job, that do a better job even than some of the full time hires I've had and I understand where Paul's coming from, where like, you know, a full time hire, it's their livelihood, they need to take it seriously. It's not something they're doing on the side. But that's kind of assuming that people that do part time work don't need the. Of course they need the work, that's why they're working. And in my experience I have found that it's really just a individual attitude. Right. Some people are just hard workers, really believe in commitment, have a high level of standard for themselves and they uphold that standard. And that's something you're going to have to look for and interview for in the recruiting process. Now I want to take Paul's situation and talk about a different way to look at it. Okay. He can either make, you know, several hires with part time or a few hires, one or two hires maybe with full time. And in my opinion, the best way to evaluate this situation is to take a look. What will you get in return? What are the benefits you're going to get? And I'm talking about the bottom line. How will your business grow, expand, make more money, get more customers, be better with either option because it's going to be specific to what you're hiring for. So say for example, I make three or four hires in my marketing department and they're part time hires, but they're critical roles like copywriting and someone to run my ad campaigns and maybe somebody who is creating my videos. I know that if I invest in these areas it will equal more customers and therefore by kind of splitting my budget to cover a greater area of marketing, my return on investment will be significant. Now of course, if you make a full time hire, it's not like it's insignificant, but will it be as significant? Let's say you make one full time hire, somebody who is going to run your ad campaigns. This is great and all and it probably will help you at some level. But without a great copywriter, without a great video person, it's going to be hard for you to get as much traction as much of an roi. So when you're making this decision, what you're trying to do here is maximize your return on investment. If you're going to put X amount of dollars, how many dollars will I get back and how long will it take? If I make three of these hires, it might take me three months to get a return on investment versus maybe a year with one hire. Now why is this important? Because velocity is power in business. If I can get my return on Investment in three months. I can then reinvest in my business and make more hires and then do it over and over and over. This creates momentum. That allows me to have compound interest gains versus only getting really a good return on investment after a year. Then I can make a reinvestment into my business. Maybe I don't get another result for another nine months. You get the point. Your business is like a flywheel. You want this flywheel running as fast as possible, especially in the beginning, to get you momentum and traction and get you growing. So look at your scenario and say which one of these scenarios will get me a faster return on investment, a bigger return on investment in a short period of time? There's another thing I want to mention. If you're new to recruitment, if you're new to hiring people, then I actually do recommend going the part time route. Why? Because you need to find out if these people are actually qualified for what you need them to do, if they can actually do the job. And if you're not great at recruitment, meaning you know how to find that out before you hire them, then it's actually safer for you to do part time hires because you're not investing all your money, just part of it, right? And then they can prove their middle and then they can graduate to a full time hire if you wish. And if they don't cut the mustard, you can easily find another part time person to see if they can and have them and then replace that team member. Compare this to a full time hire. You're putting all your eggs in one basket, hoping that they're the best person for the job. And if they come up short, you've come up short financially and you've lost time and it's back to the drawing board. So if you're not confident in your recruitment skills and most of us when we get started, we're not great at it, it's better for you to make part time hires, test the waters, see it as a probation period, see it as a way for them to prove their middle with a few projects. If they work out, fantastic, you can make them full time if you wish, or increase their hours, or even give them an increment or a raise. But one thing I want to mention again, the quality of your hires has nothing to do if they're part time or full time. I've had brilliant full time workers. I've also had full time workers that were a big waste of money. They didn't do much, didn't help the business, and I had the same thing with part timers. I had part time workers that have done an incredible job, have impacted the business and our brand in a big way. And I also had part timers that just didn't do the job, just didn't cut the mustard, just didn't make it happen and actually fulfill the needs of the company. But it's easier to evaluate that when they're part time versus full time. It's like dating versus Marriage, right? Make sure they're right for you and your company before you put a ring on it. To wrap up today's lesson. I really love Paul's question because it means he's resourceful. It means that he is trying to make the most of the resources he has, the money he has, the time he has, the ability to hire. It's the right question to ask. It's the question that indicates I don't want to be wasteful with my money. I want to be smart with my money. Because at the end of the day, it's actually not your money, it's the business's money. And you need to make sure the business can take that money and reproduce something with it. Turn that talent into dollars, into growth, so that you can reinvest those dollars into more talent and growth. Thanks so much for listening to the $100 NBA show. If you love what you hear, hit subscribe and follow on your favorite podcast app. Whatever podcast app you're using right now, whether it's Apple Podcasts or Spotify or Stitcher Radio Overcast, we're on every single app. So go ahead and hit follow now so you get access to over 2,200 episodes in our back catalog. Tons of lessons for you to dig into. And if you really love the show, the biggest compliment you can give us is to share it. Share on social media. Let your friends know, Hey, I listen to the $100 MBA show podcast. Send them over to 100 MBA-NET so they could subscribe and listen as well. And of course, if you have a question you want to ask on Q and A Wednesday, go ahead and email me over at omar100mba net and I'll make sure to answer right here on the show. Let me know if you want to be a anonymous or just mention your first name. And of course, happy to give a shout out to your website or your business if you'd like that as well. Before I go, I want to leave you with this, one of my mentors and dear friends, Michael Port, New York Times bestselling author of Steal the Show Book yourself solid. The Think Big Manifesto he once told me something that's so important, he said to me, you and your business are only as strong as a team you build around yourself. And it's one of the best pieces of advice I've ever had. Because I can only do so much, I need to rely on other smart, brilliant, talented people to take things to the next level, to build something bigger than myself. And whether it's the podcast or my software company, Webinar Ninja, that has proven to be true over the years. So keep that in mind the next time you make your next higher Surround yourself with brilliant people. Thanks so much for listening, and I'll check you in tomorrow's episode. I'll see you then. Take care.