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Get over your fear of hiring employees

In this episode, Chip and Gini discuss the fear of hiring employees, the implications of using contractors, the financial considerations, and the benefits of having employees.

They emphasize the need to align hiring decisions with long-term business goals and not to be afraid of hiring employees when it makes sense financially.

Key takeaways

  • Chip Griffin: “You’re an owner. You act like an owner. An employee acts like an employee. A contractor acts like a contractor. They are distinct and different things. And you need to understand that and accept that if you’re going to be successful.”
  • Gini Dietrich: “I’ve certainly had clients over the years that have wanted me and my team to act like their internal resources team. And we don’t act that way because we’re not.”
  • Chip Griffin: “There’s a time and place for every kind of resource for your agency. You need to pull the right levers at the right time.”
  • Gini Dietrich: “Look at the financials, figure out what your long term plans are for yourself and your business. And then start to build in the trigger points where you might hire some employees to help you get there.”

Related

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: Gini employees scare me. I’m so afraid of them. I just don’t know what to do.

Gini Dietrich: As you should be.

Chip Griffin: Let’s talk about it right after this.

Gini Dietrich: Okay.

Chip Griffin: Employees. I think that’s a favorite topic for most agency owners, whether they have them or don’t have them, it’s still a favorite topic.

Gini Dietrich: It is a favorite topic. And I think a lot of people are scared of having employees. A lot of agency owners are scared of having employees.

Chip Griffin: Yeah, and as you say, you’re right to be at least a little scared of it.

Sure. You can’t be so afraid of it that it holds you back from achieving the goals that you have personally. And I’m not saying that every agency should have employees. It’s certainly a legitimate choice not to have one. That brings certain other things along with it and you have to accept that if you’re not going to hire employees.

You may not be able to grow in exactly the same way. And I, I think that a lot of agency owners struggle with this because they want to have their cake and eat it too. They want to not hire employees because they’re afraid of it. But they also want to continue to grow. And so therefore they have a whole laundry list of contractors that they use, but act almost as if they’re employees.

Gini Dietrich: Yeah, I think, I think that’s actually really accurate. So I think one of the things that’s, that’s really important is to think about what you want, what your long term success looks like. Are you going to… do you always want to be, for lack of a better term, a solopreneur who brings in contractors to help?

And when you think about whether or not what your retirement plan looks like, you know, 10, 15, 20, 25 years from now, what do you want that to look like? Is it something that you would want to sell your business to employees? Would you want to sell your business to a larger agency? Would you want to just ride off into the sunset and say, I did something that created a lifestyle for me and I’m done.

Do you want to have something that you hand off to, to children? Like think about what the longterm success looks like, because that will dictate. Some of these decisions you make. And then write a list of pros and cons. Like there are pros and cons to having employees and there are pros and cons to using contractors, just like there are at anything else.

So think about, you know, what, what’s my longterm goal and how can I in this moment help get there, you know, and, and it’s hard because some of us might be 20 years away from that, right. or longer. So thinking about that from the perspective of here are the things that I should do, and if I want to sell my business in any fashion, I probably need to hire employees at some point.

Chip Griffin: Absolutely. And it really does come down to understanding what you want from the business. I love that you’ve talked about sort of your, your short and long term goals. And if you understand where you’re trying to take it and you know what you want from the business, it helps you to make some of these decisions.

But I think the, what I see is the common problem is that owners don’t want to hire employees, so they hire contractors and try to get them to behave like employees.

Gini Dietrich: Correct. Yes.

Chip Griffin: And that is difficult and risky and all of that because, you know, we always talk to folks who say, well, you know, why don’t my employees act like owners?

If you’re not an owner, you don’t act like one. And then I talked to owners who are like, why won’t my contractors behave more like employees? How can I get them to act more like that? They won’t because they’re not. They’re not. Everybody acts like what they are. You’re an owner. You act like an owner. An employee acts like an employee.

A contractor acts like a contractor. They are distinct and different things. And you need to understand that and accept that if you’re going to be successful.

Gini Dietrich: I mean, think about it from your own perspective. I’ve certainly had clients over the years that have wanted me and my team to act like internal, their internal resources, their, their team.

And we don’t act that way because we’re not. Like, can we do the work and serve as an external marketing department for you? For sure, but we are not employees. We don’t participate in staff meetings and all hands and one on ones and all that because we have that on our side. Like, we were, my employees work for me in my business.

They don’t work as an employee for the clients. And so if you have a client who’s like, well, I want you to come to staff meetings and I want you to come to all hands, and I want you to have one-on-ones, and I want you to manage and direct and lead our team, our internal team, that’s not, you’re not an employee.

So think about the, from that perspective, if a client asks you to do that, how you would behave. And now translate that to your own contractor. Do if you want your contractors to come to staff meetings and have one on ones and have one on ones with one another, and, you know, have a hierarchy of contractors and have contractors reporting to contractors, you need to have employees.

Chip Griffin: Yeah, I think, you know, when you have contractors reporting to contractors, that’s a warning sign that you at the very least should be taking a very close, hard look at how you are structuring things. And I am not in any way saying you should not have contractors. I think most successful agencies should and do have contractors. Contractors are available to you to bring in additional expertise to help you flex on capacity from time to time. But if you’ve got enough work that you’ve got a whole army of contractors working for you, you seriously should be thinking about having employees instead. And it may not, you may not be able to convert the existing contractors.

I think this is one of the hurdles that people have is, you know, the contractor that you have may not want to become an employee. Sure. That said what’s right for you may be to have an actual employee who is working for you full time or even part time, right? I mean, there’s, there’s a time and place for every kind of resource for your agency.

You need to pull the right levers at the right time. And the toughest one is that first hire. That first employee is the largest hurdle. It’s the most work. You’ve got to set up all sorts of systems and processes and get a payroll vendor and understand the tax filing requirements and all that kind of stuff.

But once you get past that hurdle and you have that first employee, it becomes so much easier after that. And, and I would, I mean, I will tell you that one of the biggest mistakes that I made as an agency owner, and one of the biggest regrets was in my very first agency, I did not hire an employee. And I should have, because I had plenty of work.

I had another business that was going. And so I decided basically to sell off my clients instead of having an employee. That was a huge mistake. I could have grown a much larger secondary business out of that agency, if I had made that move.

Gini Dietrich: Interesting.

Chip Griffin: For me, I had never hired an employee before personally. And so I had that same mental block that a lot of people do, which is, geez, now I’m, now I’m responsible for somebody else. And well, what if, you know, the, the clients don’t keep showing up and what if the revenue’s not there, I might have to let them go. That’s life. That’s, you know, that’s one of the things that you have to be willing to accept as a business owner, there are going to be uncomfortable conversations from time to time.

Yeah. Try to avoid them. Sure. But sometimes you have to have them. And if you, if you act only in avoidance, you will hold back your growth.

Gini Dietrich: Yeah. So I actually was really lucky. And when I started my agency, because, I, I started out with a pretty big client. and he said he, he was with us for a really long time, but in our second year of working together, he said to me, Hey, would you hire my niece?

As an intern this summer. And I was like, what? No, I don’t want to hire an employee. And he, he forced it on me. He forced her on me. She was great. She was great. She ended up being great, but it got me over that hurdle of not wanting to hire employees. And I think he saw that. He thought, saw that I was, it was, I was holding back growth and he was a great mentor and what that sort of, he forced it on me.

to get me over that hurdle. And then from there I was able, I wasn’t scared of it anymore. I was able to hire and I saw the value and all that. So even just starting out with an intern is a great way to do it. Like have somebody for the summer who’s majoring in communications or marketing or digital or whatever it happens to be, bring them in. And You know, that way you can set up all of the processes that you, you are going to need, you’ll understand how it works, you’ll understand what’s missing, you’ll understand how to onboard, you’ll get all of that practice with somebody who’s going to be there for 90 days and then, you know, send them back to college and maybe they’re great and they come back, and by then you’ve hired one or two employees and you’ve gotten in the groove and understand it. But getting over that hurdle is probably the hardest part.

Chip Griffin: Right. And seriously, once you hire that first one, it becomes so much easier. So much easier. Yes. And you sit there and you say to yourself, why didn’t I do this before? Why didn’t I do this before? It’s like letting go of an employee that’s not performing well. Correct. Once you finally fire them, you’re like, why didn’t I do this before?

Gini Dietrich: Why was I so? Yeah.

Chip Griffin: I never talked to owners who were like, I regret ever having employees.

Gini Dietrich: No. Never. Yeah.

Chip Griffin: There are days where you will perhaps have that regret. Yes. But there are days that we regret owning our own business or having clients or whatever. I mean, it’s not every day is perfect. That’s okay.

But if you’re, if you are so afraid of employees that you will only rely on contractors, you will not get to where you want to go in all likelihood.

And let’s talk about some of the specific problems that we’ve seen with contractors, particularly some recent examples that we’ve seen in various forums and other places.

Let’s And so one of the, examples, would be if you’ve got contractors and you’re trying to plan as a business. I often see agency owners say to me, geez, you know, I, I’m trying to have these staff meetings with my contractors. I’m trying to get them to contribute to the strategy, but they’re, they’re off doing this or that and it’s hard to get them all together.

Well, yeah, because they’re contractors, so they’ve got their own businesses to run, right? Hopefully. If they’re not running their own business, you’ve got a whole other problem because now you really just have an employee that is masquerading. So trying to corral your contractors into employee roles and trying to put them down on an org chart in the same way that you would employees is never going to work well.

It just can’t.

Gini Dietrich: Yeah, and I think there’s some things happening too in the business world where I, I noticed this year, this year when we, we did our audit for, insurance for workers comp, the insurance, the, the insurance agency asked who our contractors were, and then we had to prove whether or not they had their own, insurance.

Business insurance and workers comp. Because if they didn’t, the insurance company is requiring that we cover them. So all of that stuff is happening at the same time. So if you’re going to pay workers comp anyway, And other kinds of expenses for your contractors, 1099s, then really think about, am I actually saving any money?

Because a lot of times people will want to do that too, just because they feel like they’re saving money if they’re hiring contractors versus employees. But when you actually look at the financials, you may not be saving money as you’re hiring contractors and as the gig economy becomes more of a thing, you know, insurance companies and others are looking at, at your contractors as we need to have these people covered too.

So really look at the financials of it. And if you’re not comfortable with that, then find somebody who is comfortable with it, that can advise you to make sure that you’re actually, you may not be saving money by hiring contractors.

Chip Griffin: You know, one of the other challenges is on the business side of things, because agencies will have contractors and they try to pass them off effectively as employees to their own clients.

And so this creates a host of challenges because, you know, now a lot of times you’ve got them trying to manage using an agency’s email address, and they got to make sure that they don’t accidentally send something from their own and You know, you’ve got to kind of, you know, go through all of these twists and turns to try to keep it from the client, which doesn’t make any sense to me.

If you’re working with contractors, be open and honest with your clients about it, because that saves you a lot of hassle. If you are, and I, and I’ve tried this myself over the years, trying to have contracts, I’ve done white label arrangements when I had my software company, that was really hard to do. And occasionally we’d get tripped up because we would, you know, reskin our software for another provider.

And then someone would be doing a trial of their service and a trial of ours. And they’d be like, other than the colors, this looks pretty much the same.

Because it is. Because it is exactly the same. And so, you know, basically at that point we decided to just stop doing the pure white labeling where we tried to completely hide the relationship because it wasn’t worth it. Right. Most people don’t care.

Gini Dietrich: They don’t care. They don’t care.

Chip Griffin: All they care is are they getting what they want. The results they need.

Yes. At a reasonable price. Yes. They don’t care how the sausage is being made. Yep. 99 percent of the time. If they’re part of the 1 percent that cares how the sausage is made, they’re probably going to be a miserable client anyway. Yes. Yes. So it doesn’t really matter that you’re trying to hide it. And so, and if you’re trying to hide it, it becomes harder to use these individuals to help talk about your own business, right?

They can’t be posting on LinkedIn about what it is that they’re doing for you because they’re trying to hide in the shadows. Right. And so, and that, that hurts both of you. That hurts you as an agency, because if you’ve got an employee and they can talk about the great things that you’re doing, that helps boost you because people care more about what other people are saying, not what your logo is saying on social media.

But it also holds back that individual in the business that they are running. Right. Because if they can’t talk about anything that they’re doing, it gives them a lot less material to work with. And that’s not fair to them either. So it’s really just better to be open, honest, transparent, and not try to go through all of these contortions to try to hide that you’re using contractors.

Gini Dietrich: Yeah. I, and to your point, clients do not care. They don’t, they care if they’re getting, if deadlines are being met, if the work’s getting done, and you’re getting results, that’s all they care about. So if you’re using a writer, who’s fantastic, but they’re not part of your team, okay, who cares?

It’s not that big of a deal. 10 years ago, maybe. But in today’s world, like there’s no reason on earth. We should be white labeling contractors as part of our team.

Chip Griffin: And I mean, I think, you know, as always, a lot of these problems come back to pricing. So part of the problem is that, you know, if agencies are getting their pricing wrong, it can look scary to hire employees because, you know, you go out there and you’re like, wow, you know, geesh, I’m going to have to pay for payroll and I have taxes now I have to pay, I have to pay for health insurance. I have to pay workers comp, all these things. But as you’ve pointed out already, some of these things are coming along with having contractors anyway. Yep. Generally speaking, you should be paying contractors more for the same work than you would pay an employee anyway.

So part of it is baked in there, but yeah, part of it is that, you know, there, there will be some greater expense and healthcare is certainly a core example, particularly here in the United States, because health insurance is a very expensive benefit to provide. But even with that, there are ways to control those costs.

You know, when I first got started 30 plus years ago, it was common for a business to pay, you know, between 50 and 100 percent of your health insurance, right? It was just, it was very common. And, and because it was, it wasn’t cheap, but it was not as out of control as it is today. Nowadays, agencies need to look long and hard at that and be very careful.

And so a lot of agencies will cover just the amount for the individual premium. And then if you want to add your family to it, you have to pick up as the employee that the cost above and beyond that. Or, I mean, there’s a lot of different ways that you can structure it to control what your costs are while still providing it as a benefit, because it is important depending on the state in which you live to, to be providing this kind of benefit, because it can be really hard to get individual insurance

in certain markets. For example, here in New Hampshire, the options for individuals are not great here. So you really want to have something from your employer. But that’s just, it’s part of the cost of doing business and you need to bake that into your pricing. And so you, as we always say, you should not go find other ways to solve your pricing problem.

The way you solve your pricing problem is not by cheaping out on contractors and trying to take the shortcuts and the risks and all that, right? Just price correctly.

Gini Dietrich: I just had to do some quick math. So let’s say you’re paying a contractor $75 an hour. Let’s just say that’s $156, 000 a year. And if somebody’s 75 bucks an hour, they’re probably mid level.

So you’re probably not going to pay them 156, 000 a year. They’re probably going to be closer to 100, 110, something like that. So now you’re saving 56, 000. And let’s just say you pay him a hundred and then you’ve got 20 percent in benefits. So you’re at 120. So now you’re saving 36, 000. So it’s easy for you to say, okay, look at the math.

Let’s say you’re paying them 150 bucks an hour. Now you’re at 312, 000 a year for a 40 hour a week employee. Right? So you start to look at that. No one, almost no one on your team is going to cost you 300,000 a year. Almost no one, like most agency owners don’t even pay themselves that much.

Chip Griffin: If you are, then you really probably don’t need to be listening to this show because you’re probably already doing so well that it just doesn’t even matter. Because you should absolutely be paying yourself more than anyone else in the business.

Yes. If not. There is a serious, serious issue.

Gini Dietrich: Yes. Yes. So crunch the numbers. You saw how fast I did that. How, if I’m paying a contractor a hundred dollars an hour, if they were to work for me 40 hours a week, 52 weeks out of the year, how much would that be? And then start to deduct it because you can say, okay, actually I’m going to save money if I have an employee. And, and they’re with me full time.

So. I can have them come to staff meetings, and we can have one to ones, and I can expect them to do some marketing on behalf of the agency, and, and, and, and, and, right? It’s not just, oh, I’ve hired them for this one specific thing, so I can’t expect them to do all this other stuff.

Chip Griffin: Well, I think that’s a, that’s a great point, is that, you know, when you have someone as an employee, you’re less afraid to, Leverage them for some of these other tasks, whether that’s business development or marketing, strategic planning, or these kinds of things.

Because you, when they’re contractors, you either have to pay them or you have to feel like you’re imposing upon them. Yep. And so if you’ve got an employee, those are not problems. Those are, those are expectations that you would have an employee that they’re going to help you on those kinds of things.

Yes. And so there are a lot of hidden benefits in my mind to having employees. And again, not to the exclusion of contractors. Contractors still bring lots of good stuff to the table, but you need to use the right people for the right things. If your contractors are generally low level work, right. If it’s, if it’s just general, like things that you would hire an account manager, account executive to do, and not something that you would hire a specialist, a department head, something like that. That’s probably something that should be an employee, assuming you have enough of it. If you’ve only got five hours a month of it, then sure. It’s low level. You still got to go and have a contractor do it because you’re never going to find an employee who’s going to agree to work five hours a month.

Right. Right. So, but if it’s something that is core to your business, if it’s someone, particularly if it’s someone having relationships with your clients, right? This is, this is the one that always gets me. When you’ve got a contractor and you’re trying to put them in charge of the client relationship, that’s really challenging.

It doesn’t mean it can’t be done, but it’s really, really challenging. And it’s, it’s where a lot of times the agency owner is afraid of, well, what does that mean? You know, I, I want to have them manage the client relationship because I don’t want to have to do it. And, and so it makes sense from that perspective, but on the other hand, they’ve got their own business.

And if they’re, you know, I mean, I, and I can put in writing that they’re not allowed to poach my clients and all that kind of stuff, but at the end of the day, you know, human nature is what human nature is. And if they’re the ones building the relationship, then the client may end up feeling, you know, as if they’re working with that contractor and not with your agency.

So just, I guess my, my bottom line message is don’t be afraid of hiring employees. Take advantage of using that as a lever in your growth. and you will be better off.

Gini Dietrich: Yeah, I agree. Don’t be afraid of it. Look at the financials, figure out what makes most sense for your agency. To your point, if you only have five hours a month or five hours a week of work, then it doesn’t make sense to have an employee.

But if, if you’ve got somebody that’s closer to 40 hours a week, then yeah, it makes sense. So look at the financials, figure out what your long term plans are for yourself and your business. And then start to build in the trigger points where you might hire some employees to help you get there.

Chip Griffin: Absolutely. There’s nothing to be afraid of here. There’s lots of things to be afraid of on that. One of the things not to be afraid of is the end of this podcast, because we come to the end of this episode and mercifully we’ll let you go. So I’m Chip Griffin.

Gini Dietrich: I’m Gini Dietrich.

Chip Griffin: And it depends.

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The Hosts

Chip Griffin is the founder of the Small Agency Growth Alliance (SAGA) where he helps PR & marketing agency owners build the businesses that they want to own. He brings more than two decades of experience as an agency executive and entrepreneur to share the wisdom of his success and lessons of his failures. Follow him on Twitter at @ChipGriffin.

 

Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, the lead blogger at Spin Sucks, and the host of Spin Sucks the podcast. She also is co-author of Marketing in the Round and co-host of Inside PR. Follow her on Twitter at @GiniDietrich.

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