Here’s an interesting sign of cautious optimism: Many managed service providers are freezing staff salaries but still recruiting new employees to fill strategic positions — particularly sales positions. The trend emerged during a CompTIA Breakaway 2009 roundtable discussion involving about two-dozen VARs and MSPs. Here are the implications.
On the one hand, it’s wise for MSPs to continually interview new talent and pinpoint new positions that can help fuel growth. But on the other hand, your existing staff may resent a strategy that involves (A) salary freezes and (B) continued hiring. To combat the potential morale problem, one MSP participating in the CompTIA roundtable discussion guaranteed employees zero layoffs for the next two years (though employees can still be dismissed for cause).
Despite having solid recurring revenue business models, I suspect few MSPs are in a position to guarantee zero layoffs. I remain a glass-half-full type of guy and continue to hear anecdotal growth stories from many MSPs. But the harsh reality is many MSPs continue to face delayed or unpaid bills from small business owners that are struggling with their own cash flow.
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Posted In: Finance | HR | Sales
Tags: Channel Financing | Managed Services cash flow | MSP Financing | Recurring Revenue
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Guaranteeing zero layoffs is unlikely to pacify many employees. What they need to see is the reason WHY new employees must be hired, how it will affect the long term success of the company, and how everyone will benefit in the end. I doubt many of today’s employees would truly trust their employer on that promise either, no matter how well intentioned. We all know things can change all too quickly.
We have been growing this year, our technical team has grown about 30%. While I wouldn’t say we were ever tactical in hiring before, our recent hiring has an elevated focus on being strategic. What types of people will allow us to increase revenue (by taking on more project work, fixing problems instead of just temporarily treating, etc.)? What skill sets will broaden the client base we can attract? What kinds of personalities are key for delighting, not just serving, clients in shaky times? Like many businesses, we’re not settling for just anyone, and we’re tying hiring closely to increased profits.
Rebecca: You’re right, every hire is now a strategic hire. HR/payroll dollars are scarce. Every position needs to contribute to the bottom line or somehow influence the bottom line.
This is a great time to be hiring. Strong talent available — if you do your homework AND you constantly interview potential candidates, even before a position opens up…