Reasons to justify a business case for a new hire
- Increased workload
- Business goals and objectives
- Skills gap
- Employee burnout
- Efficiency, productivity and cost
2024 has been a year of changes and challenges - from cost pressures to labour shortages, many businesses are feeling the pinch. For some, the idea of hiring new employees is as enticing as ever.
If more employees are at the top of your workplace wish list, you may be questioning how to make a justification for hiring new staff. Know this, it’s one thing to ask for new employees but, it’s another thing to build a solid business case for a new hire.
Grappling with how to convince your leadership team to approve the hiring of a new employee? Unsure what a strong business case for a new hire typically entails? Never fear, we’ve got you covered.
Join us as we unpack how to justify hiring a new employee. Together we’ll explore the key arguments and best practices that will drive a compelling proposition to boost your chances of approval.
Related: How to write a job description: your ultimate guide
Nicole Gorton, director at Robert Half, believes that building a business case for a new hire demands careful consideration. She says, “Strategy should be an essential part of your justification for hiring a candidate. If you’re looking to sell the idea to other business leaders, start by building a strong case for expanding your team.”
Nicole recommends basing your argument around the future success and sustainability of your business. She says, “Whether you’re looking at addressing a skills gap or, managing a growing workload, be sure to articulate how this new hire can help to achieve specific business goals. Ultimately, you need to emphasise that investing in your workforce is an investment in wider business outcomes.”
With that in mind, let’s look at some of the top reasons to introduce a new team member:
Take the time to understand your workforce - how they are managing the existing workload? And, how is their productivity is being impacted?
Issues like missed deadlines, low retention rates, and sliding levels of employee and client satisfaction, could signal a workload crisis.
The need to relieve stress and fill a skills gap could be reason enough to bring in new employees. It may just improve performance, productivity, and employee well-being in the process.
Be clear on what matters to your business in the way of goals and objectives. Perhaps it’s increasing market share, expanding into overseas markets or, achieving specific revenue targets.
Align your business case for a new hire with these broader goals and objectives to gain buy-in from decision-makers. Explore how the new hire could contribute to each relevant strategic growth initiative. Outline their unique skills and expertise and the crucial role they could play in driving these objectives.
If you want to strengthen your justification for hiring new staff, conduct a skills gap analysis. This will help you to gauge the disparity between the skills your business requires and those possessed by your workforce.
To formulate a compelling case, identify the skills gaps within the current team and discuss how a new hire could help to address them. Discuss these specific skills in the context of wider business objectives and explore how the candidate could fill these gaps while contributing to a more well-rounded team.
If employees are feeling burnt out, it can directly impact morale, productivity, retention and ultimately, the bottom line. With employee well-being being such a serious concern for businesses, it can serve as critical justification for hiring new staff.
Extra support can help to balance the workload, safeguard employee well-being, and prevent the risk of losing valuable talent. Be sure to highlight the importance of new hires in contributing to a healthier, more sustainable work environment.
Related: How to create an effective employee onboarding process
When building a business case for a new hire, you cannot overlook efficiency, productivity, and cost. The addition of a skilled team member can help to provide a new level of support that can level up your team’s output (not to mention their workplace satisfaction).
New skills and more expertise can inspire great results when it comes to output. However, be sure to also evaluate the potential time and cost savings associated with an additional skilled resource. The more efficiently your team works, the less time and money it takes to complete tasks. Be sure to emphasise this to key decision-makers!
A detailed cost analysis will allow you to illustrate the recruitment investment in the context of expected returns. Be sure to discuss the potential return on investment (ROI) through metrics like increased output, revenue, and service delivery.
Nicole says, “Numbers speak volumes. If you fail to provide your decision-makers with tangible ROI information, your justification for hiring a candidate could be compromised. A new employee is a major investment - leaders need to know that it will pay off.”
Below is a guide on how to measure the ROI for a new hire, along with some key data and metrics to reference:
Step 1: Determine total costs
Review and identify all of the associated hiring costs. These include:
Recruitment costs – recruitment fees, interviews, job listings etcOnboarding and training costs – orientation materials, training sessions etcSalary and benefits – annual salary, annual leave entitlements, superannuation etcEquipment and supplies – technology, office supplies, software licences etc
Step 2: Measure the financial benefits
Estimate the financial benefits that the new employee can deliver. These include:
Increased revenue - additional sales, client acquisitions etcCost savings – enhanced efficiency, decreased error rates, reduced overtime for existing staff etcProductivity gains - improved team output, greater project completion rates, improved client servicing rates etcStrategic alignment and growth – alignment with company objectives, expanding service offerings, driving innovation etc
Step 3: Calculate the ROI
Compare your costs and benefits to determine the ROI of the new employee.
Use this simple formula to calculate the ROI percentage:
ROI = (Benefits - Costs) / Costs x 100
For example, if the total cost of recruiting and onboarding your employee is $100,000 and generates $150,000 in benefits, your ROI would be 50%. Essentially, for every dollar you spend on your employee, you get $1.50 back in benefits.
Nicole says resistance from leaders is one of the biggest reservations for those building a business case for a new hire. She says, “Leaders can be hesitant to approve new hires due to cost concerns or a preference for downsizing. While this can be frustrating, it highlights the need for a strategic approach and thorough preparation.”
If you’re looking to master the art of persuasion and boost your chances of success, be sure to employ these tried and tested strategies:
1. Provide a detailed cost-benefit analysis – Break down the costs and highlight the financial benefits. Emphasise the opportunity cost by discussing the risks and costs associated with inaction (i.e., lost revenue opportunities, declining customer satisfaction, and increased employee turnover).
2. Outline the impact on the existing team - Quantify the need for a new hire. Illustrate the workload and its impact on the bottom line. Use tangible evidence to support your request for extra manpower.
3. Align your request with organisational goals – Clearly articulate how new talent brings new opportunities to align with strategic objectives. Discuss how the candidate is critical for future growth and competitiveness.
4. Leverage success stories – Reference case studies or industry benchmarks that highlight where hiring additional staff led to positive (measurable) outcomes.
5. Propose a phased hiring approach – Suggest opportunities for temporary positions or incremental hiring. Full-time hire could then be explored as the value of the role becomes clear.
6. Address risk management – Outline contingency plans and risk mitigation strategies for potential shifts (i.e., poor performance or economic downturn). This could include performance-based milestones or flexible hiring contracts.
7. Emphasise long-term ROI – Build a solid business case for a new hire by framing it as an investment rather than an expense. Reinforce the long-term ROI through increased efficiency, revenue growth, and competitive advantage.
In conjunction with these strategies, it’s important to engage in open dialogue. While it’s crucial to be convincing through clear communication, it’s just as important to listen. Encourage managers to express their concerns and work collaboratively to find solutions.
You’re sure to face different audiences when presenting your case. Each group has unique priorities and concerns that will impact the defining elements of your message.
Below is a list of common audiences, as well as recommendations for how to resonate with them.
Executive leadership - Focus on strategic goals and ROI through strategic alignment, ROI, and financial impact.
Finance department - Emphasise cost efficiency and financial benefits through a detailed cost analysis and financial forecasts.
Human resources - Highlight talent and workforce development by explaining how the new hire will enhance the current talent pool while boosting employee well-being.
Department heads and team leaders - Demonstrate impact on team performance and productivity by highlighting how the new hire will improve the current workload while enhancing efficiency, skills, and expertise.
Clients and customers - Reinforce the concept of service and value. Explain how the new hire will deliver greater satisfaction levels, better outcomes, and prosperous client relationships.
If you’re unsure about how to craft a compelling business case for a new hire, our simple template can get you started. As you’ll see below, the key is to present clear, data-driven arguments that align with the organisation's strategic goals.
[Company Name]
Business Case for Hiring a New [Job Title]
Date: [Date]
Executive summary
Clearly outline the position for which you seek approval, as well as the action required.
Summarise the need for the new hire and the expected outcomes.
Highlight the primary benefits of recruiting this candidate.
Business need
Describe the current situation (workload, capacity, and any gaps within the team)
Discuss the negative impacts of this situation.
Explain how the new hire sits in strategic alignment with company goals.
Cost analysis
Reference your ROI analysis - outline all of the associated hiring costs (recruitment costs, salary, supplies etc)
Benefits analysis
Reference your ROI analysis - outline all of the financial benefits that the new employee can deliver (increased revenue, cost savings, productivity gains etc)
Risk analysis
Identify potential risks associated with not hiring (burnout, low retention, reduced employee satisfaction etc).
Outline strategies to mitigate these risks, such as phased hiring or training existing staff.
Metrics for success
Establish key performance indicators (KPIs) that will measure the success of the new hire (revenue targets, project milestones, customer satisfaction ratings etc).
Explain how and when these metrics will be reviewed, and by whom.
Conclusion and recommendation
Summarise the main points of your case, as well as the supporting arguments for a new hire.
Clearly outline your recommendation, including any specific steps or approvals needed.
Appendices
Include any information to support your justification for hiring a candidate. This may include data, research, job descriptions, and case studies.
If you’re still having trouble selling the idea to your business leaders, equip yourself with some alternative solutions. Some recommendations include:
Engaging freelancers and contractors
Cross-training and upskilling current staff
Implementing technology solutions to automate tasks
Offering flexible work arrangements
Outsourcing non-core functions
Ready to start interviewing? Discover the tips and tricks for getting the most out of every interview: Conduct Interview questions for employers: A comprehensive guide
If you’re hoping to expand your team in the second half of 2024, knowing how to build a solid business case for a new hire is critical. Gaining approval for a new hire requires well-reasoned justification and a pitch that strikes a chord with all of a company’s key decision-makers. A powerful proposal requires careful consideration and comprehensive assessment. While effort is unavoidable, it is by no means wasted when it comes to building a compelling case. Good luck!
If you’re looking for your next candidate, our experienced team of talent specialists are here to help. Contact us today. And, don’t forget to check out our Hiring Advice page for all the tips and resources you need to improve your recruitment efforts and land the talent your business needs to succeed. If you’re seeking advice on any workplace issues within your business, our experienced team of management specialists can help.
How can I quantify the financial benefits of hiring a new employee?
Increased sales (i.e., revenue, profits etc)
Cost savings (i.e., overtime reduction, error reduction etc)
Productivity improvements (i.e., time savings, output increases)
What are the different costs associated with hiring a new employee (salary, benefits, training, etc.)?
Recruitment costs – recruitment fees, interviews, job listings etc
Onboarding and training costs – orientation materials, training sessions etc
Salary and benefits – annual salary, annual leave entitlements, superannuation etc
Equipment and supplies – technology requirements, office supplies, software licences etc
What data and metrics should I include in my business case?
Increased revenue - additional sales, client acquisitions etc
Cost savings – enhanced efficiency, decreased error rates, reduced overtime for existing staff etc
Productivity gains - improved team output, greater project completion rates, improved client servicing rates etc
Strategic alignment and growth – alignment with company objectives, expanding service offerings, driving innovation etc
How can I address concerns from decision-makers about the cost of hiring a new employee?
Provide a detailed cost-benefit analysis
Outline the impact on the existing team
Align your request with organisational goals
Leverage success stories
Propose a phased hiring approach
Address risk management
Emphasise long-term ROI
Engage in open dialogue
What are the key decision-makers' priorities, and how can I align my case with those?
Executive Leadership - Focus on strategic goals and ROI through strategic alignment, ROI, and financial impact.
Finance Department - Emphasise cost efficiency and financial benefits through a detailed cost analysis and financial forecasts.
Human Resources - Highlight talent and workforce development by explaining how the new hire will enhance the current talent pool while boosting overall employee well-being.
Department Heads and Team Leaders - Demonstrate impact on team performance and productivity by highlighting how the new hire will improve the current workload while enhancing efficiency, skills, and expertise.
Clients and Customers - Reinforce the concept of service and value. Explain how the new hire will boost satisfaction levels, and deliver better outcomes and more prosperous client relationships.
