A Single Hire Is A Big Deal To A Small Business When business was booming, Rusty George hired like crazy. Then, he had to lay off half his staff. Now the marketing executive is much more cautious about hiring, calculating the cost to add an employee down to how much more coffee he'll need to buy.
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A Single Hire Is A Big Deal To A Small Business

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A Single Hire Is A Big Deal To A Small Business

A Single Hire Is A Big Deal To A Small Business

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Markets overseas are also responding to the lasted U.S. unemployment numbers. On Friday, the Labor Department reported that employers added 103,000 jobs in September. That's about double what economists had projected. Still, those gains weren't enough to change the unemployment rate, which is stuck at 9.1 percent.

Most of the new jobs are coming from small businesses, and the decision to add even one person to the payroll is a huge leap of faith for a small company. NPR's Wendy Kaufman profiles a firm that's done the math and is ready to hire.

WENDY KAUFMAN, BYLINE: At the beginning of every week, Rusty George, the founder of a Tacoma, Washington image-building and marketing company that bears his name, holds a staff meeting.

RUSTY GEORGEFOUNDER, RUSTY GEORGE CREATIVE: And this is our conference room right here.


KAUFMAN: George pulls down a very cool-looking transparent garage door to close off the conference room. The door's a throwback to the time when this loft office was a garage. Now it houses eight employees, a number that will soon grow to nine.

CREATIVE: All right, guys. Welcome to our meeting today. Happy Monday. So the first thing about the status meeting is we are looking for a new account manager. We've gotten about three to five resumes in of good, qualified people. We're waiting on a couple more, hopefully, to come in. Then we're going to start the hiring the process.

KAUFMAN: The process, he tells them, will be careful and deliberate. Rusty George and his wife Kitura George - the firm's operations manager - have learned a painful lesson.

CREATIVE: Yeah, most definitely. I mean you...


CREATIVE: Just can't do things based off of gut feeling.

KAUFMAN: In the middle part of the last decade, their business was booming and they hired like crazy. Rusty George says he didn't spend enough time asking himself: Does this hire make economic sense? It certainly didn't appear that way when the economy collapsed, and the law firms, condo developers, museums solo entrepreneurs and other clients stopped buying their services.

CREATIVE: They just all turned their faucets off at the exact same time. And here we were, riding with 17 people, and a lot of people that were sitting around not really with anything they could be working on that was billable.

KAUFMAN: George, who a few years back was named one of the state's best small business owners, would eventually lay off more than half the staff. He soon discovered that although he was bringing in less money, he was actually posting bigger profits. But over the past year or so, business has picked up substantially. Old clients are coming back, new ones are signing up, and Kitura George says the firm now has more work than it can handle.

GEORGE: We're basically at that point where we don't feel like it would be fair to clients or our employees to not bring on somebody and, you know, grow.

KAUFMAN: You guys having these discussions over dinner, over morning coffee, going...


KAUFMAN: ...should we hire somebody?

GEORGE: Driving to work and driving home from work and...

CREATIVE: Working on Sunday...

GEORGE: Yeah. And Sunday.

CREATIVE: ...saying okay, well, I think we're at the point where we can actually bring more people on.

KAUFMAN: But they made that decision only after doing the math. Using a variety of spreadsheets and other tools, they calculated the cost of a new employee practically down to the penny.

CREATIVE: Their medical and dental and their compensation, their parking, their computer, the amount of coffee that we'll have to, you know, start increasing. And then we put that into our major overhead and figure out how much more per hour it's going to cost us.

KAUFMAN: Then they figured out how much more revenue and profit could be generated by hiring the right person for a particular job. And only after those numbers added up did they post the job opening.

Economist Ken Goldstein of the Conference Board says for any company, the decision to hire is a big deal, but for a giant company, hiring an additional employee probably won't make much difference to the bottom line. But Goldstein says...

KEN GOLDSTEIN: If you've got eight employees and you add a ninth one and you made a monumental mistake, obviously, it's a much bigger chunk of your overall activity. So it's a much bigger deal for a small company to get it right.

KAUFMAN: Rusty and Kitura George understand that.

GEORGE: As an employer and owning a business and running it, I would say failure's not an option. You've just got to figure out - it may not be the same groove you were working in four years ago, but figuring out how that works for you now.

KAUFMAN: The Georges hope their new hire will be a great addition to their staff. They are still accepting resumes, but only the super-qualified need apply. Wendy Kaufman, NPR News.

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