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For many start-ups the prospect of hiring people is both exciting and fraught with trepidation. As a milestone in the lifecycle of a new business, it’s a sign that things are healthy and growing.

By the same token, growing too quickly or hiring the wrong people can undo all that progress and take a chunk out of your profit margin.

From a management perspective, taking on additional staff can help ease the operational burden and free up time to do the things that bring in business and make money.

But this also means that you as a business owner will add another role to the many you already occupy, and that’s becoming a manager of people. Making sure you have the right people on your team is pivotal to continued growth, the alternative being taking many, many steps backward.

Growing in the wrong direction

While South Africa’s labour laws are extremely restrictive, for SMEs the biggest inherent risk of employing more staff is the financial outlay of recruiting, training and paying a new staff member.

For Puseletso Modimogali, owner of Theraputic Touch Studio in Pretoria, a major challenge she faced was growing too fast when the business was not yet ready and hiring leaders who were not up to the task.

“Because of budget restraints I made the mistake of not hiring the best I could. In the end what were we saving by getting the cheaper person if they were the wrong person?” she explains. “In hindsight I should have outsourced to a recruitment firm because those hiring mistakes resulted  in losing my way with my business plan and it took a long time to redirect,” she says.

The cheaper choice

With unemployment extremely high in South Africa, employers are inundated with applications for available jobs from both experienced and inexperienced applicants.

While hiring graduates or less experienced applicants may be the cheaper option, the outlay in extra tools and resources, as well as the risks of not fitting company culture, not meeting job expectations followed by resignation, and a loss of reputation if new hires fail to perform, can outweigh the savings, explains David Leigh, CEO of talent management company SHL South Africa.

A friend in need

What could be better than working with your best friend? You operate on the same wave length, never tire of each other, gosh, you’re practically family. It’ll be great! When a friend comes knocking for a job though, the answer should be a resounding “Hell no!”

While it seems like a great idea at the time, would you still do it knowing it could kill your friendship? When you hire a friend, loyalty can cloud your objectivity. Think that’s not so bad? The friend you hire will have a disproportionate amount of power in the company due to your personal relationship.

This can destabilise sensitive office politics and mean other staff are not honest about your buddy’s performance or behaviour.

Things are also always easier to get into than out of. If things aren’t working out chances are only one of you is aware of it.

This can lead to a whole load of hurt feelings and resentment. But if you still believe you’re the exception to the rule and things will be great, consider the following to prevent things getting ugly. First hire on a trial basis, put your expectations in writing, set boundaries, and the ultimate acid test: imagine firing them.

In short, although it’s a big ask for an SME, spending a bit more time, money and energy on securing the right person for the job is more than just making a sound financial decision.

As dramatic as it sounds, hiring smart rather than cheap or out of loyalty can be the difference between growing a strong business or ruining its prospects.

Hot Tip

How would you weigh your head?

Learn from Google’s innovative interview techniques.

Google is known throughout the tech world as one of the coolest places on earth to work. They’re also notorious for asking really weird interview questions like the one alongside.

While there is a correct answer to this question (you’ll have to Google it), the point of asking odd or open-ended questions with no definitive ‘right’ answer is to showcase the candidate’s ability to think creatively, under pressure and provide the interviewers with an answer they haven’t already heard from every other candidate.

So, room, desk or car – what would you clean first?

Tracy Lee Nicol
Tracy-Lee Nicol is an experienced business writer and magazine editor. She was awarded a Masters degree with distinction from Rhodes university in 2010, and in the time since has honed her business acumen and writing skills profiling some of South Africa's most successful entrepreneurs, CEOs, franchisees and franchisors.Find her on Google+.