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Human resources

How many people should you employ (including payroll tips)

Published by Editorial team, last update Nov 23, 2019
4 min read
A group of employees walking quickly

Businesses use a range of resources to make goods and deliver services. One of these most critical resources is labour. The quality of individual workers varies considerably. Each worker is unique, possessing a different set of abilities, characteristics, skills, and knowledge. It is important to know how many workers you should employ in your company so that your operations go smooth and don’t face hurdles over and over again.

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When you are thinking about how many people you need to hire, you need to do some math. There has to be a balance between hiring too many and too few employees. If you don’t have enough employees, it is common sense that you will not be able to produce enough products to fulfil the demand that your business faces.

There are similar problems if you end up having too many employees in your business. You will have to pay them too much money in wages, and this means you will lose unnecessary profit. You can use this time clock wizard online time clock to simplify this calculation of payroll easier, and that will help you plan your workforce requirements better.

Benefits of time wizard clock

  • Accurate time records of employee’s entries and exits
  • Deciding a fair and just payroll system
  • Motivating the employees by introducing a transparent system
  • Clear records that will help in deciding the incentives and rewards for excelling employees
  • Cost-effective tool for deciding the payroll and wages for a large pool of employees

Calculating production hours

The first thing you need to do is calculate how long your company will be running the production process. Of course, you are not planning to keep your factory/business premises open for 24 hours every day. You should calculate these hours for each month separately, keeping into account the holidays and vacation days that come in each month.

You will have to predict the demand for the goods which you are producing. According to that predicted demand, you can hire labour that will be able to produce just enough goods. You should keep in mind that demand will change according to many seasonal and yearly factors. For example, in December, the demand for coffee may increase because the weather tends to be colder.

Calculating non-productive hours

While calculating how many workers you need, keep in mind that people are not always working. Be prepared and hire spare labour, just in case. You can never be sure if someone is going to be available the whole time. Customers will switch to other businesses if they aren’t getting what they want. The labour hired may take emergency leaves, and you should be prepared for this. Increasing wages may be affordable, but no business can risk losing their customers because of not having enough stock. It is better to have more production than less production. At least, it would fulfil the demand, and you can always store the goods for future purposes.

However, the spare goods can be sold later, and it won’t do any harm, and it will not cost you too much. You should also inform your employees that they have a certain amount of leaves and they cannot exceed that limit. If they exceed the limit, you are free to cut their incomes.

Hopefully, it is clear that you need to account for a lot of factors when trying to consider how much labour to hire. You can never know the exact number and quality of workers you need, and as we will discuss later, there is always room for improvement in the hiring process.

When you have good approximates for both the calculations above, you can use them to start your hiring process as you will know what quantity and quality of labour you need for each of the positions in your production process.

Of course, this is just a general guide that aims to help you get started. In the world of business, there are always many other factors to consider, even when you think you have catered to everything. In this case, make sure that you account for issues like which position needs to fill first, what type of qualifications are needed and what wage will have to be paid.

Moreover, you also have to ensure that these wages come below your designated human resource budget. Hiring executives is also a major concern for most startups as they aren’t hired until the business is a confirmed go.

Sometimes, it is better to explore for employees through networking. At the time, the best employees can be found through informal networks. It is always better to ask for references from friends or people who started businesses or hire headhunters for the best results. To ensure that you get the best workforce as the cheapest cost, try to reach your prospective employees through different channels. You knowing your employees is a big advantage as it helps to create harmony within the company.

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Above all, you need to make sure that your final workforce fulfils its main purpose of running a smooth production process. If this is done, the other aspects of running your business become slightly easier to take care of. Think of your workforce as an investment, and it will definitely pay you back.

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